Cotton acres are set to hit a record high in Kansas this year, with the USDA forecasting the state's farmers will plant 130,000 acres. The excitement about the crop's potential is palpable, and it's not just in Kansas. USDA's Prospective Planting report indicated acreage is going to be up 7% nationwide at 13.5 million acres. Kansas's total contribution is small in the grand scheme of things, but outsize when it comes to percentages.
|Upland Cotton Acreage (1,000 acres)|
A look at acreage estimates shows double-digit percentage gains in some of the nation's largest cotton growing states. While Texas acreage is only forecast to increase by 6%, it's a 400,000-acre expansion -- three times what the state of Kansas intends to plant.
"This year's move to cotton acres, especially in places like Kansas, is a result of how unprofitable the U.S. wheat market has become," DTN analyst Todd Hultman said. "Years of decline in the U.S. share of world wheat exports has wrung the profitability out of U.S. wheat prices and forced producers to look for better alternatives. Russia's bumper harvest in 2017 was the nail in the coffin for many who looked up and saw opportunity in spot cotton prices trading near their highest levels in four years.
"The current bullish dynamic for cotton prices is being helped by the anticipation of a nearly 4% increase in world cotton demand in 2018-19, according to USDA, while world production holds steady to lower. Here in the U.S., drought in the southwestern Plains is a concern, but it is not keeping cotton from being planted."
Cotton is largely replacing irrigated wheat and grain sorghum acres, and it's even edging out corn in some areas. One of the interesting things to note here is that some farmers are playing a wait-and-see game when deciding what to on their dryland acres. Many told me if they receive a good rain in May, they'd choose cotton over sorghum. It takes a good rain to get the crop up and growing, but once established, it sends a deep taproot to search for moisture. If there's some water in the top 6 feet, cotton will find it.
While some growers could flex in and out of cotton alongside prices, most I spoke to said they're planning to make it a regular part of the rotation for years to come. Improved genetics, better harvesting equipment, improved management of water and rotational benefits all factor into their thinking.
You can see more on these factors here: https://www.dtnpf.com/…
One way to tell a long-term trend from a one-hit wonder is to look at supporting business, in this case gins and warehouses. Northwest Cotton Growers Co-op Gin in Moscow, Kansas, is one of those that's expanding, building a second gin next to its existing one. That's a big investment, especially given that just a few years ago, the co-op only ginned about 4,500 bales. Manager Jerry Stuckey told me that grew to about 10,200 bales in 2016-17, and then to 63,215 for 2017-18. He thinks that number could at least double, if not triple, this year. All four gins in Kansas are expanding in anticipation of this year's harvest.
Gin expansion, like acreage expansion, is more than just a Kansas story. Gins across Oklahoma and Texas are adding new stands and building new facilities. In Texas, Adobe Walls Gin -- currently the nation's largest -- is set to become the largest in the world when its expansion is finished later this year. A Texas Farm Bureau video about this gin partially inspired me to write this story, and showcases the larger trend. You can check it out here: https://www.youtube.com/…
Why does gin expansion matter? Farmers have to wait until after their cotton is ginned before they're paid, since price depends on how the cotton is graded. Investments like these mean gins are gearing up for big harvests, not just this year, but for years to come.
Watch out, wheat. Cotton is coming in hot.
To see the Reporter's Notebook video about the cotton expansion, see: https://www.dtnpf.com/…
Katie Dehlinger can be reached at Katie.email@example.com
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