Lower cotton acreages, a persistent Texas drought and a recent dip in cottonseed prices add up to the following advice for dairy producers: check prices now and consider locking in at reasonable prices for the balance of 2012.
According to Larry Johnson of Cottonseed LLC, of La Crosse, Wis., dairy producers may be able to purchase whole cottonseed from March through December at considerably lower pricing than 90 days ago. “For example, in the Memphis North market, we recently traded cottonseed in the $225-240 range, about $65-85 per ton lower than in December.”
Tom Wedegaertner, director of agricultural research at Cotton Incorporated, says producers need to weigh the market factors: “It’s possible that we could actually have a larger supply of cottonseed in 2012 compared to 2011, despite an anticipated 7.5 percent reduction in acres, but the fate of that supply hinges largely on the weather in Texas.”
The USDA's March 6 Drought Monitor reported “mounting lack of precipitation” in western Texas and the Texas Panhandle — a stark reminder of 2011, which saw the cotton crop shrivel under extreme drought.
“It’s no surprise many producers aren’t aware that cottonseed prices have come down,” Johnson says. “We saw a lot of dairies scaling back on cottonseed three years ago when prices got extremely high, and many haven’t looked into prices since. With milk prices falling, dairy producers are looking to reduce feed costs.”
Regularly checking cottonseed prices is “just good practice,” Wedegaertner adds. Cotton Incorporated launched the Cottonseed Marketplace last year to aid the process. Using one simple form at WholeCottonseed.com, producers can request quotes from multiple merchants.