USDA has released its planting intentions report for this growing season. Market Analyst Mike Stevens says the report for cotton wasn't quite what most were expecting:
“People were a little bit surprised when USDA says that cotton farmers in the US intend to plant only 12.6 million acres. I think the average guess was probably like 13.1, and as high as 13.5 in their guessing. In fact, I didn’t see anything below 12.8. So, this is really kind of a surprise.”
Stevens says the reduced acreage number is probably due to the high prices farmers are receiving for their grain crops:
“Apparently corn and soybean prices are high enough and, to at least a lot of producers, must be easier to grow. Cotton prices are high, but not enough for those with different planting options. There’s some people that say that the cost of growing cotton has gotten out of balance with grain. Of course, when you start looking at the cost of crude oil at $105 a barrel, then, that really gets your attention. The market reacted right straight up with this figure, it immediately put December cotton back at that $1.30 area, where we’ve been running into trouble all month. If you’ll remember, back at the first of March, we got up to $1.35, but since then the market rallies have been kept in check between $1.28 and $1.30.”
According to USDA's National Agricultural Statistics Service, the 12.6-million acres farmers intend to plant to cotton is a 15-percent increase from last year. Increases are expected in every state with the largest increase, 548-thousand acres, expected in Texas.
Along with the prospective plantings report, USDA released a new grain stocks report yesterday. USDA Chief Economist Joe Glauber says the numbers surprised some analysts and the markets. He says the reports showed a tighter situation than a lot of people were expecting. Corn stocks were down 15-percent from last year as of March 1st, at just over 6.5 billion bushels:
"That implied about a 3.6 billion bushel disappearance for second quarter, just enormous usage..."