Experts Anticipate “Reasonable Value” For Whole Fuzzy Cottonseed Despite Lower Cotton Acreage

While 2009 cotton acreage is projected to decrease for the fourth consecutive year, to the lowest levels since 1983, experts anticipate that cottonseed prices will remain “surprisingly reasonable.” That’s because planting numbers alone do not tell the full story.

“Compared to the 2008 cotton crop, where abandonment was unusually high at nearly twenty percent, we may actually see slightly more cottonseed supply produced on fewer acres in 2009,” says Tom Wedegaertner, director, cottonseed research and marketing, Cotton Incorporated.

According to the USDA’s March 31 prospective plantings report for 2009-2010, cotton acreage is expected to shrink by seven percent, down to 8.81 million acres.

“While seven percent is significant, it is important to note that cotton acreage has dropped by double digit percentages for the past two years,” says Wedegaertner. “This lower rate of decline may be a sign we’ve hit the bottom from an acreage standpoint, and that cottonseed prices could be stabilizing. Additionally, with favorable growing conditions and a return to historical average abandonment rates, it is possible that the 2009 cottonseed supply could meet or exceed last year’s supply.”

Latest planting intentions higher than expected
USDA’s March 31 report increased anticipated cotton acreage by more than 700,000 acres since earlier industry projections. “The added acreage was a nice surprise, especially for the dairy producers who rely on this important feedstuff,” says Wedegaertner. “Several market and weather factors contributed to the increase. Lower corn and peanut prices, along with normal crop rotation practices, contributed to the shift to cotton. In addition, early drought in Texas and excess moisture in the Mid South during prime planting season influenced crop planting decisions for the benefit of cotton.”

If abandonment rates return to average levels, actual cotton production is projected at 12.8 million bales of cotton and 4.5 million tons of cottonseed. After the crush, about 2.2 million tons of cottonseed will be available for feeding, about the same as last year.

With lower abandonment rates, and this year’s unique market conditions, dairy producers should not only see adequate cottonseed supply, but also moderate prices, Wedegaertner says.

Cottonseed a “reasonable value,” even for producers buying week to week
According to Austin Rose, a cottonseed merchandiser for Cape & Son, Abilene, Texas, lower feed prices can’t come soon enough for dairy producers, who’ve been hit hard by plummeting milk prices.

“Unlike in previous years, forward contracting on feed isn’t happening quite as much, as producers’ cash flows are being pinched,” says Rose. “Many of our customers are buying week to week.”

Normally, producers who don’t pre-book can find themselves facing steep price increases when supply shrinks. “This year, those dairies that didn’t pre-book are no doubt relieved to see feed prices continue to trend downward,” says Rose. “With last year’s record high cotton prices, dairy producers will probably look at cottonseed as a reasonable value this year.”

Nutrition at the right price
Rick Titel, a ration analyst for Agri-Nutrition Consulting, Inc., DeForest, Wis., and dairy nutrition consultant for TLC Tech Services, Eldorado, Wis., says many producers are using more cottonseed in their rations as the price of cottonseed comes down.

Some producers may even sell the soybeans they grew and buy cottonseed. Titel recommends 1 to 6 pounds of whole fuzzy cottonseed per head per day, depending on the specific needs of his producers’ herds.

“Most of my clients are in the 2 to 4 pound range. From a nutritional standpoint, I would consider the need for fat, effective fiber and protein to determine the amount of cottonseed to use in the diet. The quality of the forages and grains available on the farm, along with the supply and cost of other commodities already purchased or booked, is also taken into consideration,” says Titel. “If you can replace some forage with cottonseed, and get value from the fiber, it is even more cost effective.”

Cottonseed is an excellent source of fiber, protein and energy. Typical rations can include up to 15 percent cottonseed on a dry matter basis. For more information, including reports on market conditions, feeding information and a list of suppliers, visit www.cottoninc.com.

Cotton Incorporated, funded by U.S. growers of upland cotton and importers of cotton and cotton textile products, is the research and marketing company representing upland cotton. The Program is designed and operated to improve the demand for and profitability of cotton.