It’s been a long, strange season for Mid-South cotton growers. Early on, they dealt with wet weather which delayed planting, and market volatility which led to difficulties in booking rising cotton prices. Late in the season, a major cotton merchant buckled under as volatility struck again, only this time, the run went in the wrong direction.
About the only thing going right for producers — particularly those in the north Delta — appears to be the average to better crop coming out of the fields. Here’s the view from some past winners of Delta Farm Press’s High Cotton award.
Marty White, Jonesboro, Ark., farmer and 2003 High Cotton award winner for the Delta states, was one of many cotton growers who had booked cotton with Paul Reinhart, Inc., which filed for Chapter 11 bankruptcy on Oct. 15, citing losses of around $80 million. The “good” news, if you will, is that according to an Oct. 30 article in the Arkansas Democrat-Gazette, courts authorized Reinhart to reject all of its outstanding cotton purchase contracts. This meant that producers holding Reinhart contracts are free to put their cotton into the marketing loan program, which guarantees a minimum of 52 cents per pound.
“My biggest fear was that all our cotton would get tied up in the courts and we would be an unsecured creditor,” White said. “That would have killed farmers in this area. It’s bad enough that we have to take a price of 52 cents. We had ours (through Reinhart) booked at 82 cents net to us.”
As to whether something can be settled from that, White noted, “We’re cautiously optimistic that something will get settled before the first of the year. If there’s a lawsuit, we probably won’t see much from that. If it drags on, it’s never a good deal for anybody.”
Meanwhile White’s cotton crop is yielding extremely well. “We’re probably going to pick 1,100 pounds to 1,200 pounds. We have some fields that are doing very well. We have some fields with dryland corners on the big pivots that didn’t do as well. Overall, we’re having a good cotton crop. If we can just get something out of it.”
White trimmed cotton acres back considerably in 2008, going from 6,200 acres in 2007 to 2,300 acres this year. “So I did one thing right. We went with more corn, beans, wheat and rice. We went from being 80 percent or more cotton, to being evenly split among the various commodities to take some of that risk out. We have pretty much diversified ourselves now.
“It’s cost us money because we’ve had to buy grain equipment. But that’s what we have to do to stay in business. We’ll be ready when cotton prices come back. Four years ago, no one around here wanted to be a rice farmer, and now everybody wants to be a rice farmer. It will be that way on cotton, too. It’s a part of farming.”
Early rice planted on time “did real well,” for White. “We had about 1,500 acres of June 5- to June 11-planted rice, and yields on that fell off quite a bit. We had it booked at a good price, so we did alright on it.”
White said soybean yields hit a homerun this year. “Even with half the acres in wheat/beans, we’re still going to average 50-plus bushels. On the early beans, every field is 60-plus bushels. And we’re talking some pretty good-size soybean fields. Corn yields are coming in at 160 bushels to 170 bushels, even with some big pivot corners hardly making anything.”
Those good yields in other crops are nice because White feels he’ll lose money on his cotton operation this year “because of the low prices. The high yields may get us to breakeven.”
With oil prices headed down, White is looking to lock in fuel prices at current levels. “The price now is close to half of what we were paying this summer for our diesel. I can live with that. I got a tanker load the other day and it was about $11,000 cheaper than what we were paying back during the summer. We used 25 or 30 tanker loads this year.”
White believes that reduced cotton acres might be just what the U.S. cotton industry needs right now. “We need to get that carryover out of here, so we can get some higher prices. I don’t think we’ll get back to that position (high carryover) again because now it’s not possible to grow cotton for the government. For the last few years, you could afford to take the government price and still do alright. You can’t do that now except on your best ground. We need to be growing our cotton for the marketplace and not for the government.”
B. Lindsey, 2008 High Cotton winner from Caldwell, Ark., says his cotton crop is a little off from last year’s crop, “but we still made a good crop of cotton. A lot of farmers are disappointed. We can get spoiled on 1,250-pound to 1,300-pound yields.”
Lindsey says two ginning operations owned by the farm will likely drop from around 84,000 bales to around 70,000 bales this year, “mostly due to a drop in cotton acres, rather than yield. We’re at 30,500 acres this year compared to 35,000 acres last year.”
Good cottonseed prices have helped offset some of the production decline, according to Lindsey, “but I’m still waiting for that $400-a-ton price,” he said. “It did get to $340 a ton, which is pretty good when you look at the big picture. We booked ours at different levels and came out with a real good average.”
Lindsey plans on keeping his cotton acres about the same in 2009. “If there’s any way possible, we’re not going to take this real good cotton land that we’re making 2.5 bales on and put it in soybeans. There is a misconception about soybeans. You still have to spray them twice for weeds and worms, and you may have to piggyback a fungicide. You can’t just plant them and forget them if you want to make 50 to 60 bushels.
“Depending on the new farm bill regulations, I don’t see cotton producers in this area being down over 10 percent. I don’t see corn coming in and pulling a lot of acres unless a farmer wants to rotate. The fertilizer cost for corn is going to be about the same, and the water costs greater, than cotton. But soybeans will be the culprit to come in and get the biggest amount of cotton acreage.”
Justin Cariker, 2007 High Cotton winner, says his cotton crop “wasn’t a banker’s crop, one that looked good from the turnrow, but it’s turning out to be better than I expected. We’re picking some good cotton. I would have thought we would be picking a bale and a quarter, but we’re picking two and a quarter. I’m really pleased with it.”
Cariker was expecting to finish picking the crop in early November. The sunny weather has made for a smooth harvest season. “We had about a 3-inch rain a couple of weeks ago. But the ground got back in shape real quick, and I don’t think we lost a lot of cotton on the ground.”
Cariker says he has little idea on his crop mix for 2009, “but we are definitely going to add some rice. We haven’t grown any in about 10 years. I’ll probably cut back on my cotton acres some, especially if the market doesn’t get up there by February or March. Luckily, in 2009, we forward contracted a lot of cotton in March when the price ran up.”
Cariker says if Mid-South growers are able to capitalize on lower fuel prices, “It can save us some money on irrigation next year. We do so much no-till and minimum-till that I think we burn more fuel irrigating than we do getting the crop ready.”
Last year, Cariker, whose farming operation owns a fuel company, pre-booked almost all his fuel in the last week in January at a “decent” price. “We bought almost seven tanker loads last year, and we just ran out last week. We saved about $50,000. That’s real money. I’m hearing we may need to wait another month before we do any booking for 2009.”
Cariker adds that he’s a little leery about expanding his soybean acreage in 2009. “Soybeans can promise you more and give you less. We have some dryland fields that picked two bales of cotton this year. It’s not a lot of money at the price, but what kind of soybean yield could I get off the field? That’s what scares me.
“Being in the cotton business, we have a tremendous amount of overhead. Ten dollar soybeans and 50 bushels still is not a lot of money to cover overhead after you spend $150 in rent and $250 to grow it. The farmers who are growing a lot of beans probably don’t have that much overhead. We still have picker notes and employees.”