Cotton Cotton Everywhere

Well my November 30 post said farmers are content with planting cotton.

I have been doing grower meetings and it seems farmers are still happy to plant cotton and forgo planting peanuts.

Cotton prices reached 113.74 yesterday and were a bit lower today so farmers had a decision to make and some went ahead and booked more cotton.

Except for a pitiful offer of $550 for southeastern producers back late in the Fall, there has been no activity in the peanut market so farmers are pretty much getting tired of waiting. There is a desire to continue rotations pretty much at previous levels but not at all cost.

In a meeting with two buying points yesterday the comment was made by one operator and agreed to by another that they don't know right now if acres will be off by 25 percent or 50 percent.

In a meeting 100 miles removed from yesterday's meeting farmers told me today that in the absence of a $660 contract they will plant no peanuts. Still another factor which is an indicator was a County Agent who worked through the numbers with one producer who had a cotton yield of 1100 pounds and a peanut yield of 3500 pounds and for that producer cotton and peanuts do not meet mutual profitability until peanuts got to $748 with cotton at $1.10.

Also, the carry out of peanuts in to the 2011 crop will be among the lowest in decades and perhaps as low or lower than the 1990 carryout. In 1990 market fundamentals pushed farmers stock prices to levels up to $1400 per ton with more common offerings being in excess of $1000 per ton.

So what does all this mean?

For farmers uncontracted peanuts, provided something doesn't change and we plant acres, seem very attractive. For shellers who contracted some peanuts, perhaps a up to a fourth of their needs, a $550 farmers stock peanut is increasing in value every day. I would hate to be a peanut product manufacturer this year because the calendar has about run out and decisions on the farm have in all too many cases been made.

My only regret is for the market itself and if we have $1200 peanuts based on the strictest fundamentals of supply and demand then we will likely see a repeat of the loss of market we realized after the 1990 crop.

I am quite optimistic for farmers in the short run because they have other choices and they are exercising their right to make those choices.