CHICAGO (B)--Cotton futures may have a difficult time showing much of a positive reaction to the annual U.S. Department of Agriculture cotton acreage forecast despite USDA coming in slightly below the average trade estimate. USDA forecast cotton acreage at 15.558 million acres March 31. That is some 150,000 acres below the average trade forecast but still some 700,000 acres above last year's plantings.
While USDA expects American pima cotton plantings to be down about 25% this year to 217,000 acres, upland cotton acreage was forecast to rise 6% to 15,341 million acres.
Every cotton growing state in the U.S. is looking for more cotton plantings this year, with California leading the upside surge with a 31% jump in expected upland plantings to 800,000 acres and overall cotton plantings seen 15% higher at 975,000 acres.
Cotton continues to make further advances into Oklahoma, with acreage seen up
17% to 280,000 acres.
In the largest producing state in the U.S., Texas acreage was forecast to rise 2%, or 144,000 acres, to 6.327 million acres.
And traders emphasized that this forecast was before the "near-drought-breaking rains" recently in west Texas and more forecast for this weekend.
"Weather looks awfully bearish for this acreage number to save the bulls," said one trader.
He emphasized that USDA has a pretty good track record of understating cotton acreage in years when cotton plantings are expanding and of overstating acreage potential in March when cotton acreage is contracting.
In the past 20 years, USDA predicted cotton acreage below the final total U.S. seedings eight times and above the final tally 12 times. The average miss in those 20 years for the March forecast was 478,000 acres.
Traders emphasized that there remains the potential for cotton plantings to rise closer to 16.0 million acres this year than to fall to 15.2 million.
Market bulls have been using an average national yield closer to 640 to 645 pounds per acre in coming up with supply and demand balances this year. But trendline yields are closer to 665 to 670 pounds.
That is an important differentiation given the improving plantings and growing weather outlooks, trader agreed.
Even using a planted acreage figure of 15.58 million acres this year and assuming an 8% abandonment rate and moving up to an average yield of 665 pounds per acre, the potential exists for a U.S. cotton crop in excess of 19.8 million bales. test