COLLEGE STATION – With cotton prices projected to be sideways in the near term as oversupply continues to pressure prices, growers will have to evaluate all aspects of planting costs to boost profit margins in 2015, according to Texas A&M AgriLife Extension Service experts.
Dr. John Robinson, AgriLife Extension cotton economist in College Station, said growers should prepare themselves for prices to trend lower or be range bound for much of the year.
“In hindsight, the 2014 crop should have been sold or hedged much earlier when futures prices were in the 70 to 80-cent range,” he said. “Near-term cotton futures prices remain range bound, having traded from the upper-50s to the mid-60s since October 2014, referencing May 2015 futures contract. That implies cash prices for average quality old crop cotton to be between the upper 50s and the grower’s loan rate value.”
Robinson said the price outlook for the 2015 crop will be “more of the same.”
“This is based on the expectation that the reduced planted U.S. acreage will see slightly lower-than-average abandonment and slightly above-average yields,” he said. “That would result in over 14 million million bales of new crop production and about 19 million bales of supply. Taking out domestic mill consumption and exports leaves about 5 million bales of leftover ending stocks, which is about the same as the 2014 crop leftovers.”
Meanwhile, Dr. Gaylon Morgan, AgriLife Extension state cotton specialist in College Station, said farmers can look for ways to cut input costs and boost their bottom line in light of low price projections prior to planting.
“In most fields, a significant amount of nitrogen remains in the soil profile from previous years when nitrogen application rates exceeded crop removal,” Morgan said. “This residual nitrogen should be credited when calculating nitrogen application rates for the 2015 crop. In most cases, crediting this soil residual nitrogen will equate to significant cost savings. However, soil sampling is required to know how much residual nitrogen exists.”
Morgan said it is important to optimize yields and it starts with genetics and varieties which impact both yield potential and fiber quality.
“Fertility and varieties are two of the biggest things you can do to optimize income. Reducing seeding rates to decrease input costs may also play a role for some producers. Variety and seed technology fees, to my knowledge, will remain relatively flat. Producers are wondering how low they can go to save on seed and technology costs.”
Morgan recommends getting good quality seed.
“Seed quality is paramount if a producer is going to the lower end of the recommended seeding rates, ” he said. “Know the cool-warm vigor index for the seed. Make sure your planting equipment is in the best shape with regards to seed placement. Plant stands as low as two per foot, but the stand has to be unified.”
Morgan said that South Texas has more of a buffer than the High Plains to compensate for lower plant stands due to more heat unit accumulation.
He also recommends producers pay attention to soil temperature when planting.
“If you are going to push the envelope and plant early, you need to plant a variety known to have lots of vigor and a good cool-warm vigor index,” Morgan said.
[By Blair Fannin via AgriLife Today]