Cotton makes a comeback in U.S. Plains as farmers sour on wheat

A cotton plant that was left unharvested is seen in a field near Wakita, Oklahoma, U.S., May 11, 2018. REUTERS/Nick Oxford

By Michael Hirtzer

ANTHONY, Kan. (Reuters) – Farmers in Kansas and Oklahoma are planting more land with cotton than they have for decades as they ditch wheat, attracted by relatively high cotton prices and the crop’s ability to withstand drought.

A 20-percent increase from last year marks a sharp turnaround for the crop that once dominated the Mississippi Delta into Texas. Just three years ago, low prices led to U.S. farmers planting the fewest acres with cotton in over 30 years.

The switch to cotton in the southern plains of the United States could be long term as farmers move away from a global wheat market that is increasingly dominated by fast-growing supply from top exporter Russia. U.S. farmers have struggled to make a profit on wheat due to a global glut.

Cotton is a safer bet than wheat because it can be grown with less water, at a time when drought has hit some areas of the U.S. farm belt.

“I have switched out of grain pretty much completely,” said southern Kansas farmer Darrin Eck. “It’s rough to raise beans or corn. But, if we get a little bit of rain, the cotton works.”

Eck said he will plant 3,000 of his 4,000 acres with cotton, up from 1,700 last year. He also spent around $500,000 to purchase a used John Deere cotton harvester.

Even with expectations for more planted acres, cotton futures are hovering above 80 cents per pound, near the highest levels in about four years. Wheat futures have recovered from 2016’s decade-low of $3.60, fetching about $5.43 per bushel on Friday.

The other that crop farmers typically turn to during periods of drought or low rainfall is the animal feed sorghum. Both cotton and sorghum need less water than soybeans, corn or wheat.

But China in April targeted sorghum for punitive import tariffs in a tit-for-tat trade dispute with the United States, a move that sent prices plunging and made cotton the clear winner for many farmers this year. China has since removed the sorghum tariffs, but by then, most farmers had made their planting choice.

Growing more cotton is still a gamble. China had threatened to impose tariffs on U.S. cotton imports, before tensions eased last week between the world’s two largest economies.

In Kansas, farmers planned to sow 130,000 acres of cotton, the most ever, according to the U.S. Department of Agriculture. Oklahoma cotton plantings were forecast at 680,000 acres, the largest since 1980.

Across the country, farmers will likely plant 13.469 million cotton acres, the most since 14.735 million in 2011, after total acres of wheat planted last winter fell to 32.7 million, smallest in about a century.


Seed firms are already seeing the benefits. U.S. sales of Monsanto cotton seeds and traits in the first half of fiscal-year 2018 were $243 million, up from $224 million during the same period in 2017, according to a company spokeswoman.

With both Monsanto and rival DowDuPont offering cotton seed with traits that help boost yields, the crop will likely be an option for many farmers for years, said Kansas farmer Eck.

“Cotton will be here to stay until the grains get better,” he said.

Some peanut farmers in states such as Georgia are also turning to cotton. USDA projected peanut plantings will drop 18 percent. Peanut production reached a record last year, but high cotton prices are luring farmers who need to rotate crops.

“Because cotton prices are attractive… it gives peanut farmers a chance to get their rotation back in order,” said Bob Parker, president and chief executive of the National Peanut Board, an industry group.

Demand for cotton harvesters, which strip cotton from the plants and make bales, is “off the charts,” said Greg Peterson, founder of the Machinery Pete website which hosts auctions for farm equipment.

The Southern Kansas Cotton Growers in Anthony, Kansas, plans to double its capacity to separate cotton fibers from seed this year.

The machine that does that, the gin, has already run at record capacity after a big harvest last year, said Gary Feist, president of the Kansas Cotton Association that operates the gin.


At Hurst Farm Supply in Lorenzo, Texas, there are roughly five farmers interested in each Deere  CS690 cotton harvester they have to sell, said Randy Sparks, a sales manager. The store collected names from farmers interested in the equipment and pulls a name out of a hat when a harvester becomes available, to ensure they are fair to their local customers.

“These guys out of Oklahoma and Kansas, there’s no local machinery for them to purchase so they have to come where it’s at,” Sparks said.

The machinery demand is a bright spot for Deere, which has been battling tepid demand in North America due to four years of declining U.S. farm income.

Equipment sales suggest the turn to cotton may be longer-term, said CoBank analyst Ben Laine.

“When you see producers making that type of investment, it gives confidence… You are going to see more acres switching,” Laine said.

(Additional reporting by Tom Polansek in Chicago, Chris Prentice in New York and Arpan Varghese in Bengaluru; Editing by Simon Webb and Cynthia Osterman)

Facing potential wheat crisis, Egypt plays down poppy seed risk

A farmer holds wheat grains on a field in the El-Menoufia governorate, north of Cairo, Egypt May 16, 2017. REUTERS/Mohamed Abd El Ghany

By Maha El Dahan and Eric Knecht

CAIRO (Reuters) – Poppy seeds found in two cargoes of imported wheat halted by Egyptian authorities are “not very dangerous”, Agriculture Minister Abdel Moneim Al-Banna told Reuters on Wednesday, in comments that could avert a trade row.

Al-Banna said the cargoes from France and Romania would be sieved before a decision was taken on whether to allow them into the country.

The world’s biggest wheat buyer has panicked global suppliers in recent weeks by referring the two cargoes to its public prosecutor for containing what it said were drug-producing poppy seeds. The prosecutor has yet to issue a final decision on whether the wheat should be re-exported.

Supplier Transgrain France and the French embassy in Cairo sent letters to state-buyer GASC arguing that the strand of poppy, papaver rhoeas, in the wheat was a harmless variety not used in opium production and commonly found in wheat fields.

Banna’s comments are the first by an Egyptian official to take a similar view. He said the seeds were “not very dangerous”, and that “there is still a study that has not been completed to determine whether to re-export it to the country of origin or use it after the sieving.”

GASC later said it had determined that the seeds present in the Romanian cargo were not harmful as per an agriculture quarantine report and that it would be sieved.

“The poppy seeds found on the Romanian vessel according to a report that was signed by the head of the agriculture quarantine are not of the harmful opiate kind. The procedure therefore is sieving,” GASC Vice Chairman Ahmed Youssef told Reuters.

Traders are watching closely, and have said that any rejection could lead them to boycott the state’s massive tenders, protesting what they describe as excessive inspection measures that have made doing business increasingly risky.

“All suppliers will wait and see what will happen,” said one Cairo-based trader.

In a similar trade row last year, Egypt temporarily banned any trace of ergot, a common grain fungus, in cargoes. That move halted the country’s billion-dollar grain trade after suppliers said the zero-tolerance level was impossible to guarantee.

GASC expects to buy about 7 million tonnes of wheat in the fiscal year that began last July in order to supply a bread subsidy program relied on by tens of millions of Egyptians.

Inspectors from Egypt’s agriculture quarantine service have slammed a food inspection system launched this year that was intended to streamline trade following the ergot dispute.

They say the new system, which ends the process of sending Egyptian inspectors abroad to check on grain, has allowed harmful contaminants to enter the country. They successfully challenged the system in court, but a verdict to suspend it has not been implemented and is being appealed.

“We are being exposed to the biggest campaign to enter the largest quantities possible of poor quality wheat into Egypt and to make it the wastebasket of the world,” a quarantine inspector said.


(Reporting by Maha El Dahan in Dubai and Eric Knecht in Cairo; Writing by Eric Knecht; Editing by Susan Thomas and Mark Potter)


Australia’s wheat crop threatened as La Nina climate indicator rises

A dirt road cuts through a wheat crop in a farm near Condobolin, 285 miles (489 km) west of Sydney in this file photo

By Colin Packham and Naveen Thukral

SYDNEY (Reuters) – The quality of Australia’s near-record wheat crop will likely be hit, as a sudden spike in a climate indicator shows there is a high chance of crop-damaging rains linked to a La Nina weather event over the next few months, analysts and traders said.

The La Nina – which brings cooler, wetter weather for much of Australia’s key wheat growing region on the east coast – had in 2010 decimated the region’s crop and downgraded the quality of the grain to animal feed.

As of now, Australia, the world’s fourth-largest exporter of wheat, is expected to harvest its second-largest crop on record during the 2016/17 season after near-perfect conditions across much of the country, the country’s chief commodity forecaster confirmed this week.

But with the Southern Oscillation Index (SOI) – that measures sea level pressure differences and is one of a number of indicators of a La Nina – rising to its highest level in two months, analysts and traders say the outlook for Australia’s silo-bursting supplies remains in doubt.

“The SOI after remaining in neutral range has risen above seven, a threshold for La Nina. Today it is at 11.8 which means there are higher chances of La Nina developing in the near future,” Rajesh Singla, head of agriculture research at Societe Generale, said on Friday.

“If there are excessive rains from La Nina in October and November, it could hit the quality of Australian wheat crop.”

Australia needs dry weather in October to ensure good quality and to get the crop ready before the harvest at the end of the year.

Lower export supplies from Australia could support global wheat prices, which are mired near 10-year lows in a world market that is flush with supplies following a bumper output in the northern hemisphere.

However, Australia’s Bureau of Meteorology (BOM) said the SOI reflects more unseasonably warm waters around Australia’s north rather than an imminent La Nina.

Wet conditions are likely, but not in the same intensity as five years ago, the BOM added.

(Reporting by Colin Packham; Editing by Himani Sarkar)

Britain To Lose Up To 1/3 Of Wheat Crop

The National Farmer’s Union of Great Britain says the country’s wheat harvest could be over 30% smaller than last year due to the extreme weather that has battered the country since last fall.

Flooding, severe rain and snow has caused significant damage to crops. A figure released in April showed that the area planted with winter wheat was already ¼ lower than the previous year. Continue reading

Farmer Finds Illegal Genetically Modified Wheat In Oregon

An Oregon farmer has been found by the U.S. Department of Agriculture with a form of genetically modified wheat that was never approved for use in the United States.

Biotechnology company Monsanto, which recently received special dispensation from the federal government for other products, developed the particular strain of modified wheat but it was kept from being put into use after worldwide outcry against genetically modified wheat. Continue reading