Last week at the Beltwide Cotton Conference, Gary Adams, VP Economics and Policy Analysis for national Cotton Council spent some time with Southern Farm Network’s correspondent Randall Weismann discussing projected cotton acres in 2013:
“It is a big question in terms of acreage this year. We have our survey that is ongoing and we hope to have results back and released in February. When you look at where futures markets are for cotton today, compared to grains and oil seeds, and look at numbers from a year ago, cotton doesn’t sit in a favorable position. The expectation from the industry is that cotton will see a decline in area, the extent is still the question. But we do anticipate fewer acres of cotton because that is the signal that the market is sending. Looking back over the last few years, cotton acres have moved around a lot, as low as 9 million acres and high as 14 million acres. If you plot that compared to the market signal from the futures market, there is a strong correlation between the two.
The farm bill creates another challenge for the cotton farmer who is making these decisions, looking at markets and trying to plan their own farms financials. There is still a lot of uncertainty. We do have the one year extension, essentially the direct and counter cyclical program that was in place under the 2008 farm bill is what would apply for the 2013 crop. The only caution to growers is they keep in mind that those direct payments for the 2013 crop are not scheduled to be made until October. As they look at the work that congress has in front of them, they still have some big issues to deal with on debt limits, sequestration, and continuing resolution to fund the government. Those are going to be opportunities that require work by congress, where some in congress are going to demand spending cuts – if those calls for spending cuts are strong enough the farm program would not be immune. So I caution farmers to keep that in mind.
In 2013 we would like to see a lot of cotton but growers are businessman. They will look at the mix of crops that work best for them. I would say keep in mind when you are making decisions to not lock yourself out of any long term adjustments. We know things are cyclical.”
Special correspondent Randall Weismann with NCC’s Chief Economist Gary Adams.