Cotton Harvest Prices

Farmers were pickin' and a grinnin' during the 2021 cotton harvest, with prospects of record-high prices and strong yields.

Justin Cariker was all smiles in October as he watched his two John Deere cotton pickers harvest what he expects to be one of his most profitable crops in years, if not ever. The owner of Maud Farms, based near Dundee, Mississippi, about 50 miles southwest of Memphis, Tennessee, grew 3,150 acres of cotton. He says cotton was yielding some 1,260 pounds per acre, which is about average.

"With prices up, this is very exciting," Cariker says.

The 2021 U.S. cotton harvest is projected at 18.2 million 480-pound bales, according to the November USDA World Agricultural Supply and Demand Estimates report. The average yield nationwide is estimated at 880 pounds per acre, which is 33 pounds higher than 2020 and 49 pounds more than 2019.

The recently concluded harvest promises to be a memorable year for most cotton producers despite challenges during the growing season. Commodity analysts say growing cotton in 2022 will likely be financially rewarding, as well, though rising input costs could minimize earning power.

PRICES ON THE RISE

Strong cotton demand and low inventories, along with logistics disruptions, during the past year sent cotton prices soaring. The USDA projects the 2021-22 season average farm price for upland cotton at a record 90 cents per pound. That's nearly 2% above the previous all-time high in 2011-12. Upland cotton comprises nearly 99% of all U.S. production, USDA acreage data shows.

Cotton farmers in northwest Mississippi and northeast Arkansas point out 2021 yields are good to a little better than average, at 1,200 to more than 1,300 pounds of lint per acre.

The USDA forecasted the break-even price for 2021 cotton production at $774.56 per acre.

Most of Cariker's cotton is sold through Staplcotn, a marketing cooperative based in Greenwood, Mississippi. He hopes to sell about 8,100 ginned bales during the 2021-22 marketing year. Staplcotn brokers market members' cotton, though members have the right to sell some on their own.

Cariker is hoping for an average sale price in the 80-cent-per-pound range for the 2021 crop.

"That's really good," he says. "I've already sold some 2022 cotton." December 2022 futures hit 90 cents per pound in the fall when sales were made.

Cotton farmer Jake Dodd harvested about 9,000 bales in 2021. He grows 3,500 acres of cotton near Wilson, Arkansas.

"For cotton, I didn't get the high, but I sold for a profit the whole way," he says. "There's a couple trades I wish I had back, but that's everybody. The last little bit I have left to sell will be really good."

March 2022 cotton futures have consistently been higher than $1 per pound since October.

Crop quality also appears to be good. Tri Watkins, co-owner of Rabbit Ridge Gin Co., near Dyess, Arkansas, says cotton being ginned at his facility is mostly getting a white color grade of 41 (average) or 31 (above average). Watkins shares that many farmers he works with are getting a 2- to 4-cent price premium per pound for quality.

GROWING SEASON

Mississippi and Arkansas Delta farmers say 2021 cotton production ended up remarkably good even though plenty of obstacles existed before and during the growing season. Both states make up about 8% of the U.S. 2021 cotton acres, at 11.7 million, according to USDA data.

A wet spring delayed planting 10 days to two weeks in the Delta region, farmers say. Cariker says June rains inundated some of his fields that stunted some plant growth, but it was too late to replant.

"I worked with the stand I had," he continues. "It (June rains) hurt us on some of our late-planted cotton. Cotton doesn't like wet feet."

Graydon Flowers, who operates Wolf Lake Farms, near Clarksdale, Mississippi, with family, says they lost about 300 acres of cotton out of 4,000 total to June flooding.

Insect pressure was an issue during the growing season in many areas of the Cotton Belt. Plant bugs, particularly tarnished plant bugs, were the biggest problem, according to farmers and Extension officials at Alabama A&M and Auburn universities.

Flowers says heavy infestations of plant bugs required weekly spraying to prevent the pests from feeding on and damaging squares and young bolls.

"There was a lot of pressure. It was an expensive plant bug year," Flowers says.

Still, farmers in the Delta region say disease issues were limited and pests were controlled enough to minimize yield losses. Timely rains and irrigation in July and August, improved plant genetics and herbicide-resistant varieties that helped keep fields relatively clean also contributed to good yields.

"It was a challenging year. We weren't expecting it to be as good of crop as it turned out to be," Dodd says.

DEMAND DRIVEN

It appears that cotton farmers won't have a tough time finding buyers for their crop, which led to the meteoric rise in prices.

Jeff Johnson, a vice president at Allenberg Cotton Co. and head of U.S. domestic sales for the cotton merchandiser in Memphis, Tennessee, contends cotton demand is strong in spite of the COVID-19 pandemic. Allenberg, a subsidiary of Louis Dreyfus Co., is reportedly the largest cotton merchant in the world marketing well over 10 million bales annually.

"There was a drawdown of global apparel inventories during the COVID lockdown to levels that are just untenable," Johnson says. "With stimulus payments, unemployment benefits and people sitting at home and shopping online, U.S. demand for apparel didn't go down. It went up, especially for leisure wear that is cotton rich.

"Fast-forward 12 months," he continues. "We're in a situation in the U.S. where wholesale inventories are small, and we need to get inventories built back up. Orders started to hit textile mills (domestically and overseas). At the same time, we're having massive bottlenecks in our logistics system. That's created a massive demand for cotton."

Cotton buyers received good news in November. USDA increased overall 2021 U.S. cotton-production estimates by 200,000 bales. The agency increased ending stocks by the same amount to 3.4 million bales.

With strong demand and exports, and domestic use holding steady at 15.5 million bales and 2.5 million bales for the 2021-22 marketing year, respectively, analysts expect prices to remain strong into 2022. World cotton ending stocks in 2021-22 are projected at 86.9 million bales, 2.4 million bales less than the previous year.

If farmers have 2021 cotton to sell, Johnson says it might be a good idea to take a profit.

"Cotton has only been over $1 (per pound), I believe, three different times in the last 40 to 50 years," he says. "This is rare territory. But, we have to be careful not to get the price of fiber so high that we start destructing demand."

DTN Lead Analyst Todd Hultman adds that farmers should consider selling up to 25% of their anticipated 2022 crop in the next few months.

"I think prices will stay well supported through the winter ... people with the supplies are in charge," Hultman says. "When you get into spring, a whole new Pandora's box of risk opens again."

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-- Watch a video of cotton harvest at Maud Farms at https://www.dtnpf.com/…

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