Many cotton growers face a critical decision over the next few weeks: whether to switch some acreage to wheat, soybeans or other crops because of the significantly higher market prices for those commodities.
According to the National Cotton Council’s annual planting intentions survey, farmers are expected to seed 11.4 million acres this year, 17% less than 2022. Acreage in Texas, by far the largest state for cotton production, is expected to drop 21% to 6.2 million.
The price ratios of cotton to corn and soybeans are at their lowest levels since 2009, according to the council.
Martin Stoerner, president of Texas-based Plains Cotton Growers, said he’s weighing whether to plant cotton into his stand of winter wheat or else leave at least some of the wheat alone to harvest in the spring. Winter wheat is often used as a cover crop on the Texas Plains to protect the soil from the wind.
He and other farmers have until a March 15 crop insurance deadline to decide what they plan to do.
“Planting intentions are still going to be determined by the ratio of cotton to corn, cotton to soybeans and cotton to wheat … $9 wheat could buy a few of those acres of cotton,” said Stoerner, who farms near Lockney, northeast of Lubbock.
In other regions of the South with higher rainfall, farmers could switch to soybeans or corn.
Cotton futures were trading at historic highs in the winter and early spring of 2022 — soaring to more than $1.50 a pound at one point — as were prices for corn, wheat, soybeans and other commodities. But cotton prices dropped precipitously later in the spring, and futures are now around 85 cents.
Hard red winter wheat for March delivery was trading for about $9.10 a bushel at Kansas City, about 90 cents higher than a year ago.
Adequate water remains a major uncertainty for Texas producers. Some 46% of the acreage last year was abandoned — the largest amount on record. The situation is somewhat better this year. At this point a year ago, 24% of Texas was rated in extreme or exceptional drought, according to the U.S. Drought Monitor; that’s now down to 8%.
Stoerner, who can irrigate only 10% of his land, was like many growers who were unable to harvest a cotton crop last year.
The National Cotton Council estimates the abandonment rate will drop to 22.6% this year and farmers will harvest 8.8 million acres. That math would put U.S. production at about 15.7 million bales, up from 14.7 million bales in 2022.
U.S. cotton exports are expected to rise from 11.8 million bales in 2022 to 12.5 million this year.
Crop insurance proved crucial for growers in 2022. Because of the relatively high prices a year ago, about 6.9 million acres of U.S. cotton — including 4.3 million acres in Texas — were covered by a supplemental revenue protection policy, known as STAX. Just 1.5 million acres of cotton were covered by STAX in 2021.
STAX indemnities will be paid to farmers for 2022 after the marketing year price is determined, Stoerner said.
“If the moisture doesn’t improve, we’ll probably have STAX on our policy again this year,” he said.
But STAX also comes with a key caveat: Farmers who buy the policy can’t have the same base acres enrolled in the farm bill’s Price Loss Coverage program or the Agriculture Risk Coverage program.
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