Cotton is going to have to work harder for acres.
Other crops have won the opening exchanges of the battle for acres in the 2023 US spring planting season, if a Farm Futures survey has it right.
Cotton, which will end 2022-23 with its tightest US supplies in 98 years, according to the US Department of Agriculture, looks like it needs to scrap harder for area if it is to resolve its squeeze.
Corn was the big victor of the survey, which showed US farmers intending to plant 94.3m acres with the grain, up by nearly 4.5m acres year on year, and the biggest seedings in a decade.
But it wasn’t the only one. Wheat seedings in 2023, at 48.8m acres, were forecast rising by 1.85m acres year on year to the largest in seven years.
And not much of that was seen coming at the expense of soybeans.
Soybean seedings of 87.3m acres would fall by a modest 690,000 acres year on year, and still rank as the fourth biggest on record.
Indeed, combined corn and soybean seedings would, at the 181.6m acres suggested by the survey, expand by 3.8m acres to rank as the largest ever.
… which raises the question of where the area for other crops will come from. Particularly now wheat is back in favour, after seeing its US plantings tumble in 2020 to the smallest in more than a century.
Cotton, which has seen its US seedings fall in three out of the past four years, looks an obvious target for giving up acres.
Whether the fibre can afford to is another matter.
US cotton stocks are set to end this season at 1.80m acres, near-halving year on year to the lowest on data going back 60 years – and look even more squeezed when compared with use, measuring up at the tightest since 1924-25.
Against that backdrop, it might be expected that cotton would be fighting hard to boost its appeal to farmers.
Yet December 2023 New York cotton futures aren’t busting a gut.
At 3.88 times November 2023 Chicago soybeans, on a per-tonne basis, their relative value versus the oilseed is a little less than the equivalent a year ago. Against corn, they have lost even more ground.
Nor is the December 2023 cotton contract shaping up well against current-season lots.
At 87.68 cents a pound, December 2023 cotton futures closed on Wednesday with a discount of more than 25 cents against the December 2022 lot. That compares with a gap of less than 10 cents a pound for the equivalent lots a year ago.
La Nina factor
The depth of that discount might make sense if a large cotton crop looked on the cards for 2023.
But with the relative crop values that futures are currently indicating, that cannot be taken for granted – especially given the prospect of an extended La Nina, which can leave long-lasting effects in Texas, the top US cotton growing state, official US meteorologists believe.
Cotton futures for 2023 look placed for a slice of outperformance.