USDA is forecasting 1 million fewer tons of cottonseed to be harvested in the United States this year than in either 2004 or 2005. The developments are causing the market to firm and current spot prices to creep up to as much as $225 to $230 per ton (delivered to dairies in the western United States).
“The current cotton crop got off to one of the worst starts we’ve seen in five years,” said Tom Wedegaertner, director of cottonseed research and marketing, Cotton Incorporated.
“Last month, USDA reported that 31 percent of the current cotton crop was in very poor or poor condition, compared to 12 percent a year earlier. Forty percent of the current crop was reported to be in good to excellent condition, compared to 60 percent a year ago.”
And crop losses are mounting. Cottonseed merchandiser Austin Rose, Abilene, Texas, reported last week that between 1.5 million and 2 million acres have been destroyed in Texas, and that the next 30 days will determine whether that number creeps up to 2.25 million acres.
“If we get some relief from rain, we’ll see less abandonment. But the rain is going to have to hurry. Based on current crop conditions, we would recommend that dairy producers look at contracting seed now — anywhere from one-third to one-half of their usage for the year.”
On Aug. 3, the Colorado State University Hurricane Forecast Team reaffirmed above-average hurricane and cyclone activity in August and September. Hurricanes present a major threat to the current cotton crop, including those in Texas and the Southeast. Regardless of where hurricanes come ashore, they inevitably cross a cotton field.
Low cottonseed oil prices may add some supply back into the feed market, according to Wedegaertner. “Normally, a strong demand for premium-priced cottonseed oil would put further pressure on the amount of cottonseed supply available for feeding. However, because of low cottonseed oil prices, cottonseed oil crushers may be less aggressive buyers of cottonseed this year.”
The reduced crush “might make up 100,000 tons to 200 ,000 tons, but not enough to make much of a difference.”
Wedegaertner says to keep in mind that the new crop could start affecting the market by the third week of September.
The bottom line is that cottonseed prices don’t appear likely to go down. “Clearly, the decision of when to book and when to wait lies in the comfort level of the individual. We just want to provide information that helps producers sort out the facts.”