A bull market for cotton lint could drive 2011 cottonseed production and supplies available to dairies to levels not seen since 2007, says Tom Wedegaertner, director of cottonseed research and marketing, Cotton Incorporated. In the meantime, old crop cottonseed remains a "competitive value, despite rising prices."
U.S. average spot prices for cottonseed fluctuated between $200 and $250 per ton in 2010, but began creeping higher toward the end of the year and closed in on $250 per ton in early 2011, according to a recent report from the National Cotton Council.
"Competing feed prices tend to move together, and everything is moving up right now," Wedegaertner says. "When you consider $7 corn, cottonseed still is a very good buy."
He adds that some relief may be on the horizon with more cotton acres expected in 2011.
According to the National Cotton Council's planting intentions survey released Feb. 4, cotton is expected to reclaim more than 1.5 million acres this spring — a 14 percent increase over 2010 — and produce a crop that could net 6.5 million tons of cottonseed, up from the 6.2 million tons produced in 2010 and up sharply from 2009's 4.1 million tons.
"Based on early predictions, and assuming good growing conditions and average seed-to-lint ratios, dairy producers could see about 4 million tons of cottonseed in 2011, compared to 3.7 million tons in 2010," Wedegaertner says.
A boost in cottonseed supplies may not necessarily translate to lower prices in the fall, however.
"Even though we're looking at huge increases, strong and steady demand from cottonseed crushers could keep new crop prices firm."
In addition to a bullish vegetable oil market, Wedegaertner says a strong export market for cottonseed could emerge as supply grows and exchange rates remain favorable.