Cotton Pencils Out Nicely In This Example

How is cotton penciling out for farmers in the Southeast?

Eddie McGriff, Extension Agent in Coffee County, Georgia, said today that he ran the numbers for irrigated cotton for one of his growers and found that – at least with the grower’s yields – cotton was the best choice.

Here’s how McGriff made his calculations:

“December 2011 cotton futures were at $1.13 and March 2011 was at $1.61. I put $1.09 per pound for cotton in his budget when trying to decide if he should plant more cotton or other crops (peanuts, corn or soybeans). I used his irrigated crop yields of 1,100 lbs/acre for cotton, 3,500 lbs/acre for peanuts, 160 bu/acre for corn and 40 bu/acre for soybeans.”

To beat the potential return on cotton at $1.09 a pound, he said, the farmer would need:

• $750.00 per ton peanut contract.
• $9.98 per bushel for corn.
• $26.00 per bushel for soybeans.

Individual farmers’ yields will vary, McGriff pointed out, but it is possible to make a strong argument in favor of irrigated cotton.

Later in the morning, McGriff added, the cotton market moved 1.5 cents higher.