Cotton harvest is starting to commence across Oklahoma, with one-third of the crop stripped from the stalks. USDA’s weekly Crop Progress Report shows harvest progress is right in line with average, but for cotton producers in Oklahoma, this year’s crop is a pleasant surprise.
“Many people did not give us much optimism on the ability to raise a crop,” says Matt Muller, a farmer in Jackson County, Okla., told AgDay.
2021 was a year that started off in drought, which painted a dire outlook for the state's farmers.
“We went into planting season in the drought with almost no irrigation water supply, and skyrocketing input prices,” Muller says.
That all changed the first week of July when rains started to fall and farmers saw a welcome reprieve from what had been extreme heat.
“We started catching some rain and instead of temperatures spiking, they cooled off. We went to readjusting and managing the crop tighter to respond to the positive rainfall,” Muller says.
While cotton yields are proving to be variable, farmers harvesting cotton today are reminded yields are dependent upon which areas saw those sufficient rains.
“Now we're going to end up with an average crop, which we are thrilled with, because we thought we would be much below average at the beginning of the year,” he says. “Overall I think it's going to be average to slightly below average. But with prices being up, that's all right.”
Prices Hit a 10-Year High
Those prices are another bright spot for cotton producers across the U.S. Currently, cotton futures are sitting at a 10-year high. And while prices had improved heading into planting, to many farmers’ surprise, those prices continue to climb and hold strong. That turn of events is what was so unexpected during harvest this year.
"A year and a half ago, I sold some cotton when the pandemic was crashing at 49 cents a pound, and I took it in the shorts,” Muller says. “So, I'm thrilled cotton's in the $1 per pound range.”
In March 2020, after the COVID-19 pandemic took hold and the world started to shut down, cotton demand fell nearly overnight. As people started to work from home and schools were shutting down, demand for clothing took a nosedive. As a result, cotton prices followed.
What's Pushing Prices Higher?
Mississippi State University Agricultural economist O.A. Cleveland watches cotton closely. He will even tell you the price run right now is historic.
“We've not been in this territory very often, and we're in the top 1% of the historical price range. So, it's a good time to have cotton,” Cleveland says.
The price boost is taking place during harvest, which Cleveland says only happens twice a decade. And in 2021, it’s thanks to low stocks and stellar demand.
“We're looking at something like a 40% to 35% stocks-to-use ratio around the globe. And we've actually had something in the 80% to 90% range, many of the last 10 years,” he explains.
The majority of world stocks are sitting in China today, and those are bales that will go untouched. At the same time, demand for cotton products is also record high.
“That demand is related to cotton scrubs, the old uniforms, medical community wires, most of them have been that acid base polyester. But now they're switching back to cotton. And we see a lot of also cotton swabs and things that have some synthetic fibers in them, but a huge demand,” says Cleveland.
Even with Muller and other cotton farmers showing the early signs of a bountiful cotton crop in the U.S., Cleveland thinks the high cotton prices could roll into next year.
“And because of the demand that's out there, the March, May and July 2022 contracts are still seeing strong prices, which will bring in some cotton acres in this coming season," he says.
Cleveland says farmers are also forward contracting cotton at a record pace, which he typically doesn’t see. That’s as farmers like Muller continue to harvest a crop that’s just now ready to pick.
“We're getting good grades, we didn’t had hardly any rainfall at harvest in October. So, our color grades are good. Our cotton grades are good, and that’s to our surprise, because we thought we might have short staple.”
Attracting Acres for 2022
This year's quality crop is one that could buy even more acres in 2022.
“There will be a big shift in the cotton next year. Just like grain sorghum was a huge shift 2021 versus 2020 because of prices,” says Muller.
And it’s a shift that could happen in more than just Oklahoma next year.
“I would anticipate somewhere a minimum of 1.3 million acres increase in cotton up to about 1.5 million acres increase,” says Cleveland.
As more farmers are high on cotton right now, 2022 may prove to be the year cotton becomes king.