Favorable Arkansas weather boosts cotton planting; December contracts trade at 11-year high as drought intensifies in western U.S.
December contracts highest in 11 years
May 17, 2022
By Mary Hightower
U of A System Division of Agriculture
- Arkansas gin numbers remain at 30
- Intense drought in western US brings uncertainty to total cotton acres
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JONESBORO, Ark. — A much-needed stretch of sunny days has enabled Arkansas’ cotton farmers to get more than half of their planting done as December futures prices hit their highest level in 11 years.
For the week ending May 15, Arkansas cotton was 53 percent planted, up from 32 percent the previous week and betting the five-year average of 49 percent, according to the National Agricultural Statistics Service, part of the U.S. Department of Agriculture.
“We basically doubled this for the last reporting period,” said Bill Robertson, extension cotton agronomist for the University of Arkansas System Division of Agriculture. “We were 60 percent planted on our county variety demos starting this week and were going to be 80 percent planted by end of the day Tuesday. Planting progress of our county tests often runs very similar to the state’s planting progress.”
Scott Stiles, extension economist for the Division of Agriculture, said that cotton acres are expected to be up 40,000 this year to a total of 520,000 acres, about the same number of acres in 2020. The number of active Arkansas gins remained at 30 in 2021, same as 2020. By comparison, there were 138 active gins in Arkansas in 1991.
Highest contracts in 11 years
“For 2022, cotton looks to have very favorable margins. This is despite input costs increasing close to 40 percent over the past year or about $210 per acre,” he said.
“Assuming a 1,250-pound-per-acre yield, growers needed an additional 17 cents per pound to offset input cost increases,” Stiles said. “Fortunately, the trends in the cotton market have provided growers some cushion to offset the dramatic increases we've seen in fertilizers, chemicals and fuel.”
Stiles said that December 2022 cotton futures were trading at $1.32 per pound on Monday, the highest the December contract has traded since June 2011.
Drought in the west
In USDA's May 12 supply/demand report, U.S. cotton ending stocks for the 2022 marketing year are projected to decline 500,000 bales to 2.9 million. This would be the lowest U.S. ending stocks since 2016.
“This outlook may seem odd as U.S.-planted acres are expected to increase by 1 million this year,” Stiles said. “However, the severe drought conditions in Texas and Oklahoma are expected to increase the number of acres abandoned or unplanted.”
Lubbock has received .56" of rain year-to-date or 13 percent of normal. The May 10 U.S. Drought Monitor indicates all of the Southern High Plains area of Texas as being in "exceptional" drought — the most intense category.
“This creates a great deal of uncertainty about the size of the 2022 U.S. cotton crop,” Stiles said. “Texas, Oklahoma, and Kansas are projected to have 61 percent of the total U.S. cotton acres; about 7.5 million acres. All three states are dealing with very dry conditions at planting.”
To learn more about Division of Agriculture research, visit the Arkansas Agricultural Experiment Station website: https://aaes.uark.edu. Follow on Twitter at @ArkAgResearch. To learn more about the Division of Agriculture, visit https://uada.edu/. Follow us on Twitter at @AgInArk. To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit www.uaex.uada.edu.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices.
Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 25 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension and Research programs to all eligible persons without regard to race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.
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