In the land of Cotton: CORN

cat's meow · #1 (**permalink**) 01-07-2007, 01:51 PM

Folks, here is some business news that was in our Sunday paper that you might find interesting. Looks like we might be hosting a corn growers convention too (the big cotton one is here every year). If I was a cotton grower then it might be time to invest in the technology to convert cellulose into ethanol. That is a three+ step process as opposed to only one or two that your deal with corn. They are try to change that with new technologies.

Quote:

Cotton is losing ground, if not crown

© Copyright 2007 Morningstar, Inc.

Ethanol demand driving up corn as textile industry lags
By Jane Roberts

January 7, 2007

By economists' best guesses, cotton acreage in the Mid-South this year could be down as much as 20 percent as farmers rush to cash in on decade-high corn prices.

While cotton still will be king, it's reign here has grown considerably iffy. Changes in agricultural subsidies and a fast-deflating domestic textile industry have taken a serious toll on demand. Since June, March cotton has dropped from 63 cents a pound to 54.42 Friday afternoon.

"We're going to lose substantial acreage to corn in the Mid-South," said Billy Dunavant, chairman of Memphis-based Dunavant Enterprises Inc., among the largest cotton merchants in the world.
He predicts farmers here will plant 3.5 million acres of cotton this spring, down from the 4.2 million they planted in the Mid-South last year.

"Yes, it's a big deal. But we're still going to have too much cotton anyway. That's the sad part. The U.S. has become a residual supplier of cotton in the world."

Planting decisions are being made right now in thousands of households across the region as farmers try to gauge the run on corn due to demand for ethanol, the corn-based renewable energy source getting nearly all the credit for driving up the price of corn.

In 13 months, the futures price has nearly doubled to around $4 a bushel.

"Everybody's talking about corn around here," said Tommy Dickerson at Tate County Co-op in Senatobia, Miss.

"Our cotton acres will be down 25 percent in the hills, and statewide, about 20 percent."

Because corn costs about $100 an acre less to plant than cotton, some economists say the net effect, if the planting trend continues, is that more wealth will be held in fewer hands.

"Corn is less expensive to grow, which means there will be fewer jobs available," said Carl Anderson, professor emeritus at Texas A&M. "It will affect the entire economic infrastructure of the smaller communities," hastening, for instance, farm consolidations, which put production in fewer hands.

"This makes me very worried about our U.S. cotton industry," Anderson said. "We're going to have to get our price low enough to compete with the rest of the countries that export cotton, including places like Uzbekistan that clear their warehouses out no matter what."

For Mid-South farmers planning on planting more corn, the proposition is equally complex in a region with hot, dry summers, said Bruce Scherr, chairman and chief executive of Memphis-based Informa Economics Inc.

"This is not the Corn Belt. Farmers are responding to a market price today that has a significant production risk," he said.

Informa predicts U.S. farmers will plant 86 million acres in corn compared to the 78.6 million they planted last spring.

If the crop produces at yield trends, the price at harvest next fall will be "considerably lower," Scherr said.

"In a normal year, the Southern producer will do better with cotton than corn," he said.

Producers can alleviate some of the the risk by locking in prices now on the futures market.

If they are planning on corn, "they better be standing in line now" for the elite seed genetics, said John Anderson, ag economist at Mississippi State University.

"The best genetics will be gone by March."

Ultimately, the whole price scenario hinges on the price of fuel. If oil continues to trade around $60 a barrel, "there will be substantial growth in the amount of grain that will go to ethanol," said Don Frahm, senior vice president at Informa.

"If it's $40 a barrel, then it's a different story."

Dom1 · #2 (**permalink**) 01-07-2007, 02:01 PM

Good article Cat. I think this shows that we have plenty of acreage to plant corn for ethanol production. It also shows that it would help farmer economically. There is plenty of land which is not being used for corn or anything else presently.

cat's meow · #3 (**permalink**) 01-07-2007, 02:38 PM

Quote:

Originally Posted by Dom1

Good article Cat. I think this shows that we have plenty of acreage to plant corn for ethanol production. It also shows that it would help farmer economically. There is plenty of land which is not being used for corn or anything else presently.

Dom, one of the biggest cotton people in the country is a friend of mine; at one point he was the main cotton broker for the mercantile exchange. RS is retired now and follows the U's sports teams and travels the world seeing Opera at the Met, La Scala, Paris, and Amsterdam. He is the name sake and main donor for our school of music at the university (He LOVES music and gives millions to our U); he has gotten us halfway to the 85 million we need for a new building (he has many friends that he has 'tapped'). The guy is wonderful and is a very progressive person who would like to see all this happen the right way: corn vs. cotton. Very interesting guy to talk to about this stuff and had even negociated the cotton brokering to China for the Nixon administration; he was with Richard Nixon during the famous China trip. He has the ear of people like Steve Cohen who replaced Harold Ford Jr as our US Repres. to the US House/Congress (Cohen is another business minded Dem like Ford was, I've talked to Steve a couple of times and he is sharp). We are all hoping Steve can help move the ethonal initiative forward in this region, we are way behind in the mid-South. I am not getting the impression farmers in this region are moving as fast as those in the upper midwest like in MN, NE, and Iowa. I did write a letter to Steve Cohen this week with the new congress starting about how important it is for the U.S. to move to ethanol fast so to be more energy and politically independent.