Cotton Outlook: Domestic

USDA’s October Crop Production report forecasts 2021 U.S. cotton production at 18 million bales, 500,000 bales below last month’s forecast but 23 percent (3.4 million bales) above the 2020 crop.

U.S. Cotton Crop Forecast Lower in October

USDA’s October Crop Production report forecasts 2021 U.S. cotton production at 18 million bales, 500,000 bales below last month’s forecast but 23 percent (3.4 million bales) above the 2020 crop. The smaller October forecast is attributable to a lower national yield projection, largely the result of a reduced yield for Texas. If realized, 2021 U.S. cotton production would be the second smallest crop in 5 years.

The 2021 U.S. upland cotton crop is forecast at 17.65 million bales, compared with last season’s 14.1 million bales. During the previous 20 years, the October upland production estimate was above the final estimate 11 times and below it 8 times; no production forecast was published in 2013. Past differences between the October forecast and the final production estimates indicate a 2 out of 3 chance for the 2021 upland crop to range between 16.45 million bales and 18.85 million bales.

Upland cotton production this season is forecast higher in two of the Cotton Belt regions while lower in two regions (figure 2). In the Southeast, 2021 cotton production is projected at 4.3million bales—9 percent above 2020 but 3 percent below the 2016–20 average—as a higher yield is partially offset by lower area. Cotton area in 2021 is forecast at its lowest in 5 years, with harvested area estimated at about 2.3 million acres. The Southeast yield is projected at 914pounds per harvested acre in 2021, compared with the 5-year average of 855 pounds.The 2021 Delta cotton crop is estimated at approximately 3.9 million bales, the smallest since 2016, as area is also the lowest in 5 years. In 2021, cotton harvested acreage is forecast at about 1.6 million acres, compared with the 5-year average of 1.9 million acres. In contrast, the region’s yield is projected at a record 1,175 pounds per harvested acre, compared with the 5-year average of 1,115 pounds.

In the Southwest, the 2021 upland crop is forecast at nearly 9 million bales, the second highest on record behind 2017’s 10.5 million bales. While 2021 planted area (6.9 million acres) was the lowest in 5 years, improved crop conditions this season reduced abandonment and increased harvested area to an estimated 5.8 million acres, similar to 2019. As a result, 2021 Southwest abandonment is projected at 17 percent, well below last season’s 49 percent and the lowest in 5 years. The 2021 Southwest upland yield, meanwhile, is projected higher at 747 pounds per harvested acre, compared with last season’s 692 pounds.

In the West, the 2021 upland crop is projected at only 466,000 bales, 7 percent below 2020 and the lowest production in more than 8 decades. The region’s upland cotton harvested area(172,000 acres) is the lowest since 2015, while this season’s yield (1,300 pounds per harvested acre) is forecast 4 percent below the 5-year average. The extra-long staple (ELS) crop—grown mainly in the West—is projected at only 353,000 bales in 2021, down from 546,500 bales in 2020 and the lowest crop since 1994. Despite this season’s considerably lower beginning stocks—a result from 2020/21 demand reaching it highest in 8 years—ELS area is at its lowest in 35 years.

Total 2021 U.S. cotton harvested area is estimated at 9.9 million acres, compared with last season’s 8.3 million acres. The national yield is projected at 871 pounds per harvested acre, compared with 2020’s 847 pounds. As of October 10, 20 percent of the U.S. cotton crop was harvested, slightly below last season’s 25 percent and the 2016–20 average of 26 percent. Meanwhile, 2021 U.S. cotton crop conditions have continued above last season and the 5-year average. As of October 10, 64 percent of the cotton area was rated “good” or “excellent,” compared with 40 percent last year, while only 6 percent of the crop area was rated “poor” or “very poor,” compared with 30 percent a year ago. For current production estimates by State, see table 10 published separately with this report.

U.S. Cotton Demand Estimates Unchanged; Stocks Lowered

The U.S. cotton demand estimate for 2021/22 remains projected at 18 million bales in October, 4 percent below 2020/21 but similar to the 3-year average. U.S. cotton exports account for the bulk of demand and are forecast at 15.5 million bales in 2021/22, with mill use expected to contribute the remaining 2.5 million bales. Despite a higher world mill use forecast this season and a relatively strong foreign import demand, U.S. cotton supplies—expected to be their lowest in 5 years—are limiting export prospects. In addition, ongoing supply chain disruptions and the recent surge in cotton prices add additional uncertainties to the global cotton market. Based on the October projections, the 2021/22 U.S. share of world trade is forecast near 33.5 percent—slightly below last season (figure 3).

With the U.S. cotton demand projection unchanged this month and a lower production estimate,the 2021/22 U.S. ending stocks estimate is reduced to 3.2 million bales, marginally above last season and among the lowest of the last decade. Similarly, the stocks-to-use ratio is forecast at18 percent at the end of 2021/22, slightly above last season but below each of the previous 3 years. Based on the U.S. and global cotton supply and demand estimates and recent prices, the 2021/22 average U.S. upland cotton farm price is forecast at a record 90 cents per pound, compared with the final 2020/21 estimate of 66.3 cents per pound.