Cotton futures continue to rally as strong export demand and lower production in the US slash projected cotton ending stocks for 2020/21 to half their levels seen a year earlier.
The recent price rally sets up intense competition for acreage in the upcoming season, with prices for other major crops such as corn and soybeans already high. Gro data shows total cotton export commitments (accumulated plus outstanding sales) for the 2020/21 season have reached 3.01 million tonnes, the highest since 2010/11.
Halfway through the marketing year, total cotton sales already represent 89% of the USDA’s export forecast for the full year. The US is the world’s largest cotton producer and exporter, and the USDA raised its estimate for cotton exports in its February WASDE report.
Accurately estimating the final acreage mix between cotton, corn, and soybeans will be unusually critical and challenging this year.
US acreage planted to cotton has fallen sharply since a recent peak in 2018. Early USDA estimates peg 2021/22 acreage at roughly 12 million acres, unchanged from last year. But industry estimates anticipate a decline to around 11.5 million acres.
The Gro Drought Index shows extreme drought conditions are continuing in West Texas, which, along with Georgia, is the main cotton-growing area in the US. This could have a significant impact on cotton acreage and yields.
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