Cotton acres are expected to drop nearly 27 percent in 2013 as U.S. cotton producers respond to market signals and plant more corn and soybeans, according to the National Cotton Council’s annual planting intentions survey.
For dairy producers, this means potentially tighter supplies of new crop cottonseed. Total U.S. cottonseed production in 2013 is forecast to reach 4.38 million tons, compared to 5.27 million tons in 2012.
Cottonseed merchant Larry Johnson of Cottonseed LLC, La Crosse, Wis., says that even with the shorter supplies, he expects that dairies will continue to have ready access to cottonseed, and that cottonseed prices will adjust with other commodities.
“Cottonseed is not a collectible,” he says. “Just because there is less of it does not necessarily mean it’s worth more. It still needs to sit in the ration alongside other ingredients. We routinely run the nutritive values, and cottonseed remains a strong fit.”
Tom Smith, a cottonseed merchant with Cape & Sons, Abilene, Texas, anticipates slightly higher prices for cottonseed, relative to other feed ingredients. “The numbers may come down in the fall, but cottonseed may not come off nearly as much as other feed ingredients.”
Currently, new crop is trading at a discount to old crop, Johnson notes.
Experts agree that cottonseed production will vary greatly from region to region, and that both dairies and crushers will be looking to access available supplies.
“Some crushers are located in areas anticipating the biggest losses, such as the Mid-South, which is losing more than 50 percent of its cotton acres,” Smith says. “Despite this, I expect the crush to remain fairly constant. Crushers will figure out a way to get seed to the mill. They will have to originate from nontraditional sources.”
Other factors potentially offsetting the anticipated shortfall are imports and exports, Johnson says. “We may see more seed from Australia going into California, and less being exported.”