Cotton Outlook: U.S. Production Forecast Higher

According to USDA’s first survey-based forecast of the 2019 cotton crop, U.S. cotton production is estimated at 22.5 million bales, compared with July’s projection of 22.0 million bales and last season’s final estimate of 18.4 million bales. Compared with 2018, a higher estimate for harvested area contributes to this season’s crop increase, as a lower yield is forecast.

Based on the August forecast, total cotton planted acreage in 2019 is estimated at 13.9 million acres, slightly above the area reported in the June Acreage report. While 200,000 acres below 2018, this season’s U.S. cotton planted acreage remains one of the largest of the decade.

Harvested area is projected at 12.6 million acres this season, indicating an abandonment rate of only 9 percent, one-third the 2018 rate of nearly 28 percent. The U.S. cotton yield is forecast at 855 pounds per harvested acre this season, 9 pounds below 2018 but above the 5-year average of 848 pounds.

Upland cotton production in 2019 is forecast at 21.7 million bales, nearly 4.2 million bales above 2018 and, if realized, the largest crop since 2005. During the past 20 years, the August upland production forecast was above the final estimate 12 times and below it 8 times.

Past differences between the August forecast and the final production estimates indicate that chances are two out of three for the 2019 upland crop to range between 20.1 million and 23.3 million bales.

Compared with 2018, U.S. upland production is projected to increase in each of the Cotton Belt regions this season, with the Southwest and Southeast rebounding while the Delta continues its recent resurgence. Based on the August estimates, 2019 Southwest upland production is forecast at 9.7 million bales (45 percent of the U.S. crop), the second largest crop on record behind 2017’s 10.5 million bales.

With improved growing conditions this season in the Southwest—compared with a year ago—2019 abandonment is projected to be significantly below last season and below the 5-year average; Southwest abandonment is forecast at 14 percent this season versus 42 percent in 2018.

The Southwest yield is projected at 683 pounds per harvested acre, below both last season and the 5-year average, as a higher percentage of the lower-yielding dryland cotton is expected to be harvested in 2019.

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In the Southeast, 2019 production is estimated at nearly 5.7 million bales (26 percent of the U.S. crop), the largest crop since 5.9 million bales were produced in 2012. In 2018, production reached 4.2 million bales. Southeast area in 2019 is forecast at its highest since 2011, while the yield is projected at 929 pounds per harvested acre, the third highest on record.

Meanwhile, the 2019 Delta cotton crop is estimated to approach 5.6 million bales (26 percent of the U.S. crop), compared with 4.7 million bales in 2018. Higher area and a 1,132-pound-per-acre yield—slightly below last season’s record—is projected to increase the Delta crop to its largest since 2006 when 8.2 million bales were produced.

In the West, upland production is projected at 744,000 bales in 2019, similar to last season. Lower area is expected to be offset by an above-average yield (1,501 pounds per harvested acre) in 2019.

In addition, extra-long staple (ELS) cotton production, which is primarily grown in the West, is forecast at 790,000 bales and one of the largest crops of the decade; while ELS area is estimated to increase in 2019, the yield is expected to average 1,462 pounds per harvested acre, which is 5 percent below last season.

U.S. cotton crop development is running ahead of both last season and the 5-year average. As of August 11, 20 percent of the cotton crop had bolls opening, compared with 12 percent in 2018 and 10 percent for the 2014-18 average. Meanwhile, 2019 U.S. cotton crop conditions remain well above last season and are also above the 5-year average.

As of August 11, 56 percent of the cotton area was rated “good” or “excellent,” compared with 40 percent last year, while 10 percent was rated “poor” or “very poor,” compared with 34 percent a year ago. Favorable moisture conditions, particularly in the Southwest, have helped overall crop conditions generally improve this season.

U.S. Cotton Exports and Stocks Adjusted in August

U.S. cotton demand for 2019/20 and 2018/19 were revised this month based on recently released data. For 2019/20, demand is forecast at 20.3 million bales, slightly above the July projection and 3.1 million bales above the revised 2018/19 demand of 17.2 million bales.

Higher supplies—from both larger beginning stocks and the higher August production forecast—are projected to increase U.S. cotton export opportunities in 2019/20 as global trade improves.

In 2019/20, U.S. cotton exports are forecast at 17.2 million bales, 200,000 bales above last month’s projection and nearly 3 million bales above the adjusted 2018/19 export estimate; final marketing year data for 2018/19 were reported in USDA’s U.S. Export Sales report on August 8.

With both higher U.S. exports and global trade forecast for 2019/20, the U.S. share of world cotton trade is projected to increase from 35 percent in 2018/19 to 39 percent in 2019/20, similar to the U.S. share in 2017/18. U.S. cotton mill use remains forecast at 3.1 million bales for 2019/20, up slightly from the 3.0-million-bale estimate for 2018/19.

With U.S. cotton production expected to surpass demand for the third consecutive season in 2019/20, ending stocks are forecast to increase further to 7.2 million bales, compared with 2018/19’s estimate of 5.25 million bales and 2017/18’s estimate of 4.3 million bales.

As a result, this season’s stocks-to-use ratio is expected to rise to 35 percent, the highest since 2008/09. Consequently, the 2019/20 upland farm price is forecast lower at 60 cents per pound for 2019/20, compared with 2018/19’s estimate of 70 cents per pound.

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