Cotton News

The U.S. Department of Agriculture (USDA) Risk Management Agency has now concluded sign-up for the 2022 Pandemic Cover Crop Program (PCCP). The program provides premium support to producers utilizing cover crops in their production systems. Since its original enactment in 2021, PCCP has vastly increased the number of cover crops now being grown and/or reported to the USDA Farm Service Agency (FSA).

Prior to PCCP’s development, U.S. farmers on average reported 2 to 3 million acres of cover crops annually. In 2021, over 14 million acres of cover crops were reported to the USDA FSA. 

In 2021, the PCCP program provided $59.5 million in support to eligible farmers across the U.S., of which Texas presumably received $6.2 million — the Plains Cotton Growers region received $5.1 million of the total amount.

While it is recognized that not every region in the U.S. can produce a cover crop based on various agronomic conditions, weather patterns and other factors, PCCP has certainly proven to be a successful program for farmers that have an interest in cover crop systems.  -Kody Bessent

We moved to Dickens County when I was five years old. I still remember looking out the window of my grandparent’s house watching my mother run around in the rain directing the truck on where to park our trailer house. “The Farm,” as we called it, houses magical memories from my childhood. I know I’m not the only one.

I’m not the only one who learned to drive way before I should have. Who woke up early to feed animals before school and stayed up late to do the same. Who rode in the tractor as my dad plowed until dark. My story is important to me, but your story is important to the world.

You are the face of agriculture. The ones responsible for the clothes we wear. We need you. And most people don’t realize just how much.

I’m starting a new series of stories titled, “Faces of Cotton.” To participate, visit:
plainscotton.org/story-submission.

The Federal Reserve slashed interest rates during the pandemic in an effort to boost the economy. Now, two years after the initial COVID-19 outbreak, the Fed is raising the rates to compete with increasing inflation — which is the highest its been since 1982. With hopes of curbing inflation, the Fed is increasing the benchmark interest rate to 0.25%. It’s likely they won’t stop there as experts estimate there could be as many as six more interest increases this year.

Price is always an important part of the equation. A good year production-wise can be offset by low price. And, also higher than expected costs.

A high price is needed for 2022 production. Pricing low can be costly financially. But in markets, we don’t know what’s low and what’s high until after the fact. Case in point, some growers priced a portion of expected 2021 production at 85 to 95 cents and felt good about it — but then watched price go to $1.20.

Growers are reluctant to jump in too early this year for fear of making that mistake again. They know price is going to be especially important because any profit margin is going to be slim.

New crop December futures has thus far made a run to $1.06 before retreating back to the $1.00 area. December presently stands about $1.02. Some producers have already priced a portion of expected 2022 production. I sense those who have not are waiting on another run and if already priced, uncomfortable doing more.

University of Georgia Extension estimates are used to compare costs this season to last season. The estimates show the increases for seed, fertilizers and lime, chemicals, and fuel. Assuming a generous 2-bale (1,000 pounds) average yield, these cost increases alone add an extra 17.7 cents per pound to the price needed for cotton.

Events of the Russia-Ukraine situation seem to often override other factors in the market. It is not at all clear, however, if these events are positive or negative for cotton and for what reason. Using February 23rd (before the Russia invasion began) as the baseline, corn and wheat have increased. Cotton and soybeans have not.

USDA’s March supply/demand numbers last week were mostly bullish. This market continues to ride on the expectation of strong demand continuing for the 2022 crop and underlying uncertainty in U.S. production due to continued dry conditions.

Don Shurley, University of Georgia Economist
(Story originally published on AgFax.)

Update from The Hill

NASS Provision in FY 2022 Spending Package

CRP Sign-Up Deadline Extension Requested

$5 Per Gallon in Our Future?

Dicamba Training for 2022 Crop Season

In Case You Missed It

At 1:30 a.m. Wednesday morning, House leadership officially unveiled its $1.5 trillion fiscal year (FY) 2022-2023 omnibus spending package, including emergency aid for Ukraine and COVID-19 relief. 

Once the nearly 2,700-page spending bill was released, chaos ensued. More than a dozen Democratic lawmakers objected to a deal struck by Democrat and GOP leadership without their knowledge that re-purposed nearly $16 billion in previously allocated COVID-19 relief — originally intended to pay for COVID-19 supplies and treatments. After hours of in-fighting among the Democratic Party, Democrat leadership eventually pulled the COVID-19 aid provision entirely from the final package with the hopes to address it at a later date.

To ensure the bill cleared the House, Democrat leaders split the spending package into two separate votes: defense spending and non-defense — Ukrainian emergency aid — to appease more progressive members who oppose increases to national defense spending measures.

Finally, around 10:00 p.m. Wednesday evening, Democrats were able to pass the FY spending deal along with a separate four-day continuing resolution to avoid a government shutdown set to take place on March 11th.

Thursday evening, the Senate cleared the spending package for President Biden’s signature. The bill should be enacted by or before March 15th

– Kody Bessent

While agriculture-related provisions of the spending package are still under review, one key item involves directing the National Agriculture Statistics Service (NASS) to communicate with stakeholders regarding capturing supplemental information for certain crops, like cotton, at an agricultural statistics district (ASD) level estimate of which NASS discontinued without Congressional oversight in 2018.

Addressing cotton ASD level projections for both in-season and end-of-season reporting estimates is a provision prioritized by both Plains Cotton Growers Inc. and the National Cotton Council. We are very appreciative of the leadership led by Chairman Sanford Bishop (D-GA), Congressman Henry Cuellar (D-TX) and Senator John Cornyn (R-TX) on this issue.

President Biden banned importation of Russian oil Tuesday, warning that gas prices would go up. Some analysts are upping the odds of a $5-plus regular gasoline average on the horizon. While oil came back down after surging to nearly $140 a barrel early Monday, investors are betting it’s going to spike again soon, said Jim Wisemeyer with ProFarmer. “Currently, the price for a gallon of regular gasoline soared to a new record high of $4.14, breaking the previous record of $4.11 set in 2008,” Wisemeyer added.

Sen. John Boozman (R-Ark.), ranking member on the Senate Agriculture Committee, asked U.S. Department of Agriculture Secretary Tom Vilsack to extend the sign-up deadline for the Conservation Reserve Program (CRP) because of the war in Ukraine. 

Boozman also asked Vilsack to consider an increase in the flexibility of crop insurance purchases. Allowing U.S. farmers to evaluate whether it is better to raise and insure a crop or enroll the land in CRP — given the uncertainties in Ukraine — necessitates an extension in the sign-up deadline, he argued.

“Further, should conditions in Ukraine continue to deteriorate, consideration should be given to continued opportunities to graze livestock on CRP ground without penalty, and a one-time waiver to plant a spring crop on CRP cropland, that is not environmentally sensitive, to offset anticipated product losses in Ukraine.”

Thus far, there is no change in USDA’s position.

Impact of Ukrainian Invasion on U.S. Cotton Industry

Q&A with Oobree Martens

Cracking Down on Ocean Freight Companies

Price Discovery Period Closes at $1.03 Per Pound

In Case You Missed It

On Feb. 24, 2022, the world woke up to find Russia had launched a large-scale military invasion of Ukraine. Global markets went into a tailspin, particularly in the energy sector, but what does this mean for U.S. cotton?

The grain complex saw a hike in prices, according to Jeff Thompson with Autauga Quality Cotton. Ukraine is the fifth largest exporter of wheat while Russia exports 20% of the world’s corn.

However, little impact is expected on the cotton crop. Russia only imports 125,000 bales annually, and Russian retail is responsible for a mere 3.2% of the world’s cotton consumption.

So, how will cotton be affected? Inflation.

ENERGY
Russia is the third-largest producer of petroleum in the world. According to the American Fuel and Petrochemical Manufacturers trade association, the U.S. imported an average of 209,000 barrels of crude oil and 500,000 barrels of other petroleum products per day last year.

While the U.S. has not sanctioned Russian oil, traders are avoiding it; therefore, fuel prices are expected to rise.

FOOD
Fertilizer prices have already increased because of shipping and logistics issues tied to the pandemic, but now the increased prices on natural gas — a key production input — are adding to the problem, said Elizabeth Elkin with Bloomberg Businessweek.

Since Russia — who exported $55.5 billion worth of natural gas in 2021 — invaded Ukraine, these prices may rise even higher.

“No other nation has the same breadth of readily exportable fertilizer supply,” said Alexis Maxwell, an analyst with Bloomberg’s fertilizer analysis and news publication “Green Markets.”

The U.S. Department of Agriculture’s 2022 food price inflation forecast showed increased food prices as expected, according to Jim Wiesemeyer, with ProFarmer. USDA expects food price inflation in 2022 to be from 2.5% to 3.5% based on the Consumer Price Index. Rates may rise higher if geopolitical tensions escalate further.

“There’s two sides to the impact on cotton,” said Darren Hudson, Ph.D., Professor and Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech University. “On one side, prices are moving in favor of grains, which will affect producers’ planting intentions going forward. And on the input side, costs continue to rise.”

As far as planting, the High Plains region won’t change much, Hudson added. “We may see more sorghum, but the climate doesn’t support a lot of corn up here.”

Spending habits will change, too. As prices increase, consumers may postpone purchasing nonessential items, like apparel, which can impact the textile trade.

However, up to this point, cotton exports show no sign of weakening demand. Exports were down 6% from the previous week, but up 14% from the prior four-week average, according to USDA. Net sales were up 41% from the previous week and up 51% from the prior four-week average.

So, where to from here?

“Suffice it to say, markets often overreact negatively to such black swan events,” Thompson said. “Once viewed in a calmer manner, the situation often appears less bleak. It’s too early to hit the panic button. Nonetheless, the window of opportunity is closing as world consumption of 124 million bales comes into question here soon.”

Oobree Martens with his wife, Nellie, and daughter, Ivy.

Oobree Martens, cotton and peanut farmer in Terry and Yoakum counties, talks drones, social media, farming practices and farm advocacy.

How did you become involved in posting on social media?

I originally bought a drone just to use as a hobby. I enjoy capturing images and videos of the farm while I’m working and decided to start an Instagram account. When I first started posting on social media in 2017, I wasn’t gaining much traction, but now it’s really taken off. (Martens has 27,300 Instagram followers. His Instagram handle is @Oobree Farms and his Oobree Farms YouTube channel has more than 7,000 subscribers.)

Has your social media presence provided educational value to your followers?

Yes, I get a ton of questions about farming practices and what I use in terms of equipment and products. I didn’t expect that to happen, but it’s good to see interest in agriculture and farming.

What’s the most rewarding part for you?

I enjoy the connection I now have through social media with farmers from other parts of the country and the world. It’s interesting to see how farmers grow and harvest crops in different geographic locations. Though sometimes, I do get jealous of dryland cotton farmers up north who get more precipitation than I can irrigate here.

When did you begin farming?

I helped my dad from an early age and started farming my own land at age 18. At that time, I had one circle of land (120 acres), but I’ve grown my operation to about 1,000 acres of cotton and hundreds of more acres in peanuts. Farming is all I’ve ever known and it’s all I’ve ever wanted to do. I would love to pass my business on to my children. My daughter is 18 months old — if she wants to do it, I’ll certainly support that.

What kind of drones do you use?

I use a DJI Mavic 2 Pro, which is a bit of an investment. I did some research and watched YouTube videos comparing different drone models and figured out quickly that you get what you pay for. I wanted high-quality images and videos so I invested in a high-caliber drone.

How much talent does it take to fly one?

It’s easy enough. I often fly my drone while I’m driving the tractor. Everything is GPS enabled so that makes it easier. My drone is covered in sensors so that it can locate objects in the way and not run into them, but I turn those off. One time when I had the sensors on, I was flying too close to the tractor tire and the drone told me it was about to shut off because the sensor told it the tire was near. So had I not had quick reflexes and jerked it up into the air, I would have plowed it into the ground — it does take a little practice.

Oobree appeared on Rob Sharkey’s podcast, “SharkFarmer XM” March 2, 2021. Click here to listen. 

President Biden announced Monday an agreement between the Department of Justice (DOJ) and the Federal Maritime Commission (FMC) and that the White House will “make sure large ocean freight companies cannot take advantage of U.S. businesses and consumers.”

Right now, three global alliances, made up entirely of foreign companies, control almost all of ocean freight shipping, giving them the power to raise prices on American businesses and consumers, which threatens our national security and economic competitiveness, the White House said.

Under the new initiative, the DOJ will provide the FMC with the support of attorneys and economists from the Antitrust Division for enforcement of violations of the Ocean Shipping Reform Act (revised at the end of last year) and related laws. The FMC will provide the Antitrust Division with support and maritime industry expertise.

The agencies’ announcement explains that competition in the maritime industry is integral to lowering prices, improving the quality of service, and strengthening the resilience of supply chains.

The projected insurance price for upland cotton for counties with a March 15th sales closing date was set at $1.03 per pound by the U.S. Department of Agriculture Risk Management Agency. The price discovery period ended on February 28th.

Producers have until March 15th to finalize their crop insurance purchase decisions and complete their Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) election and enrollment decisions at their local Farm Service Agency office.

Shawn Wade, director of Policy Analysis and Research, breaks down ARC/PLC and crop insurance options in this video.

Drought Conditions Expected to Continue

Three Big Weather Factors for 2022 U.S. Crop Season

Glyphosate Plays Catch Up

‘Are Input Price Increases Justified?’

2022 USDA Commodity Outlook Report Released

2021 Cotton Quality Summary

In Case You Missed It

According to the U.S. Drought Monitor, parts of Texas are experiencing severe or extreme drought, especially in the Panhandle region and parts of West Texas.

“Compared to my farm’s rainfall totals last year, I am minus 8 inches for the year,” said Jeremy Brown, producer in Dawson County. “That’s how dry it is right now.”

While West Texas weather is unpredictable at times, meteorologists are confident these dry conditions will extend deep into the spring. Jody James, warning coordination meteorologist for the National Weather Service (NWS) in Lubbock attributes much of the drought conditions to La Niña.

“We had a break from (La Niña) last summer for a couple of months,” he told the Lubbock Avalanche Journal. “But we look at the three-month moving averages, and 15 of the last 17 sessions have been in La Niña.”

Current drought conditions posed a fire risk for more of the Texas Panhandle on Monday and Tuesday of this week, which is likely to continue most of 2022.

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Eric Snodgrass, principal atmospheric scientist with Nutrien Ag Solutions, identifies three big weather players in the 2022 crop season during the Top Producer Summit held Feb. 16th in Nashville, Tenn.

No. 1: Drought in Brazil

Brazil’s commodity output is significant enough that its current drought conditions are capable of upending production numbers and influencing market scales, according to Farm Journal.

No. 2 Drought in the Plains

As of now, 72% of the U.S. is in at least a minimal stage of drought — the highest percentage since 2012.

No. 3: Ocean Temperatures in the Pacific

Ocean temperatures are a symptom of the behavior of the atmosphere. If the cold water presently in the Gulf of Alaska expands south to California by June 1st , the 38% risk of drought in the middle of the U.S. goes to 60%.

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Hurricane Ida disabled the Bayer glyphosate plant in September.

China bans exports into June while hosting the Winter Olympics.

A supplier of an ingredient for glyphosate experienced a mechanical failure.

Combined with shipping and logistics issues, glyphosate shortage stories have dominated agricultural news outlets. However, the shortage divide is closing according to Mike Massey, with pesticide manufacturer Ragan & Massey.

In September, the world’s acid production necessary for glyphosate was less than 5%, he said. “But in the past 60 to 90 days, plants have been online and shipping hard,” he added. “So, as I see it, we may have a week here or there where inventory is interrupted, but it’ll get resolved. Unless another one of these crazy things happens, we won’t have any supply issues.”

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U.S. Department of Agriculture (USDA) Secretary Tom Vilsack put the question of input price increases to the U.S. Department of Justice (DOJ) February 17th, requesting an investigation.

The DOJ said it was undertaking a new initiative aimed at ensuring companies weren’t taking advantage of the supply chain snags by raising prices on consumers, said Progressive Farmer DTN Staff Reporter Todd Neeley.

The DOJ asks for anyone with information on “price fixing, bid rigging, market-allocation agreements or other anticompetitive conduct” to call in a report to the Antitrust Division Citizen Complain Center at 1-888-647-3258.

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2022 USDA Commodity Outlook Report Released

The 2022 Commodity Outlook Report was released at the U.S. Department of Agriculture’s annual Ag Outlook Forum on Thursday.

Read the full report here.

The following is a summary of the cotton classed at the Lubbock and Lamesa USDA Cotton Division Cotton Classing Offices for the 2021 production season.

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Legislative Update: Protect Dicamba Usage

2022 NCC Officers and Award Winners

Should I Buy STAX?

Sourcing Inputs for the 2022 Season

Tracing Cotton to Geographic Source

2021 Cotton Quality Summary (Weekly)

Economic Outlook Infographic

In Case You Missed It

Rep. Jim Baird, R-Ind., and 65 of his GOP colleagues are urging the Environmental Protection Agency (EPA) to take steps to ensure growers can continue to use dicamba in over-the-top applications, according to an article by Agri-Pulse.

EPA announced in December that it was considering further restrictions on the herbicide, stating that measures imposed for 2021 had failed to reduce complaints of herbicide drift.

Lawmakers claim this report to be flawed, noting that producers have already placed orders for the chemical to use during the upcoming growing season.

“Bottom lines of producers would be negatively impacted should new restrictions arise for dicamba,” said Kody Bessent, Plains Cotton Growers Inc. “Considering the shortage of glyphosate that is on the horizon, producers need to be able to use dicamba as a tool for crop protection.”

Got Glyphosate?

A “substantial reduction in production rates” at a manufacturing plant that supplies one of the raw ingredients needed to make glyphosate herbicide will affect Bayer’s ability to deliver products containing the chemical, the company says.

The following producers, ginners and cooperative officials were named officers or award winners at the 2022 National Cotton Council of America (NCC) Annual Meeting in Houston, Texas.

NCC Vice Chairman: Shawn Holladay

NCC Advisory Board Member: Barry Evans

Cotton Council International (CCI) President: Carlos Garcia

National Cotton Ginners Association Chairman: Curtis Stewart

CCI Director: Kevin Brinkley

NCC Board of Directors: Robert Lacy, Eric Wanjura, Keith Lucas

American Cotton Producers State Producer Chairmen: Brent Nelson, Stacy Smith

One of the questions we’ve been asked the most is whether a producer should purchase a Stacked Income Protection Plan (STAX) insurance policy for the 2022 crop year.

While we would never presume to know what’s best for a producer — because we are neither on the hook for paying the premiums, nor do we know a particular producer’s financial situation or appetite for risk — we have been encouraging producers to take a closer look at STAX.

Read the full article by Bart Fischer and Joe Outlaw with the Agricultural and Food Policy Center here. 

Technology that identifies the source of cotton sampled by analyzing its genetic or chemical footprint is appealing to fashion brands worried about their fibers’ origins. However, turning this concept into reality is not as simple as it sounds.

Polymerase chain reaction (PCR) testing, which deploys the same concept described above to detect COVID-19, could potentially analyze cotton’s DNA as well. “The results can then be checked against a database of known samples to separate, say organic material grown in Gujarat from cotton coming from Xinjiang, which the U.S. banned from import last year,” said Marc Bain, journalist for the Business of Fashion.

While far from reality at the moment, producers should expect rising demand for genetic tracing from brands and retailers in the future.

The following is a summary of the cotton classed at the Lubbock and Lamesa USDA Cotton Division Cotton Classing Offices for the 2021 production season.