US farmers will increase the land dedicated to cotton in 2016 from their smallest acreage in more than three decades after fibre prices gained last year, outperforming the biggest commodities rout in years, according to a Reuters survey. Farmers in the United States, the world's top exporter, are expected to plant 9.7 million acres this year, up 13 percent from 2015, according to the median of 14 estimates.
That is still below recent historical averages as concerns linger about demand from top consumer China where bumper inventories have kept pressure on prices over the past two years. But after rising 5 percent in 2015, cotton was one of the few commodities to end the year higher, escaping the broad losses seen in the bellwether 19-component Thomson Reuters Core Commodity Index.
Snowstorms and heavy rains over the past week in Texas, the nation's top growing state, are also expected to prepare land that has been parched by years of drought, encouraging farmers to increase acreage. Last year, farmers en masse switched acres to more lucrative crops, like grains, as cotton prices languished near 2009 lows and as rains in key regions caused planting issues.
The latest outlook for this year's plantings suggests that the trend will reverse this year, as huge supplies have caused prices of crops like corn and soybeans to drop, analysts and traders said. To be sure, much will depend on prices when farmers begin to plant in the Northern Hemisphere spring. A price recovery is broadly expected to be muted, as inventories remain high even as demand is poised to outpace supply for the first time in six years. Global stocks are projected to remain above 100 million 480-lb bales by the end of the 2015/16 crop year in July, even as they decline from the prior year's record level, US government data show.