As expected, U.S. cotton farmers have planted more cotton than they “intended” to plant based on USDA’s survey numbers at the end of March. USDA’s first estimate of what is actually planted is 11.37 million acres compared to the March “intentions” of 11.1 million.
This is a 9.2 percent increase more than last year. Most notably, overall cotton acreage in the Mid-South shows a big increase. This is likely due to lower relative prices for corn and soybeans compared to 2013. Louisiana is up 54 percent, Mississippi up 38 percent, and Arkansas up 16 percent. Tennessee is unchanged and Missouri down 2 percent.
Acreage actually planted was higher than originally intended in 12 of 17 states. Georgia has planted 100,000 acres more cotton than USDA’s March estimate. This is in line with expectations. Also in the Southeast, Alabama, Florida, South Carolina and Virginia planted more cotton than originally intended. In Georgia, actual cotton acreage planted was higher than intentions in part because farmers planted 70,000 acres fewer peanuts than intended.
Market breaks lower
Dec14 futures prices broke below the important support level at 76 cents this past week. Prices tumbled 223 points for the week and are down further (June 30)—currently standing at roughly 73 ½.
Failing to hold at 76 cents is a sign of too much bearish under-current in play. Crop prospects have shown improvement. Also, the most recent weekly export sales numbers have disappointed.
Also worth noting, expectations are starting to take hold than USDA’s July numbers will reflect improved crop conditions (yield prospects) and less abandonment. Of course, this was somewhat the case with the June numbers as well. So, the decline we’ve seen over the past week could be partly in anticipation of what’s expected to be a larger U.S. crop. If so, the market may not move much lower but could move higher if expectations don’t materialize.