It’s time to take a second look at cotton. Why? Because new supplies of cotton (cotton production plus unaccounted cotton) in 2007/08 are expected to decline 1.5 million bales, to 120.1 million. supply of cotton is primarily due to lower production in the United States, where a 4.1-million-bale drop is expected. This year, the USDA reduced its estimate of the size of the U.S. cotton crop to 17.5 million bales. Meanwhile US cotton exports will rise to 16.7 million bales in the year that ends July 31, from 13 million in the previous year, the USDA said. US farmers planted 11.06 million acres with cotton in 2007, 28% less than a year earlier, according to the USDA. Looking ahead, planting in 2008 may drop to around 9 million acres from 11.1 million this year. A crop of 9 million acres would be the smallest since 1983.
Seeing this, won’t many farmers switch back to cotton? Well, there are costs to factor in. The cost of fertilizers, herbicides, seeds and farm equipment runs to about $400 per acre for cotton, compared with $225 for corn, $170 for soybeans and $150 for wheat.
Indeed, if anything, farmers are planting more wheat. The price of wheat is up 78% this year, so growers from Kansas to India are preparing the world's largest wheat crop in 10 years, overwhelming demand and refilling barren grain bins. Lowly cotton is being left like a wallflower at the dance.
That will make for higher prices down the road, and probably sooner than anyone realizes.
Labels: agriculture
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