ANALYSTS PEG U.S. COTTON SEEDINGS 10.6 MLN ACRES
U.S. cotton farmers are likely to
plant about 10.6 mln acres in the coming season, based on an
average of estimates offered by cotton market analysts gearing
up for the U.S. Agriculture Department's 1987 planting
intentions report next Tuesday.
    The annual report gives cotton traders their first glimpse
of what U.S. production might be in the 1987/88 season, which
begins August 1.
    Trade and commission house forecasts ranged from 10.2 to
10.9 mln acres.
    On March 18 of last year, the USDA reported that cotton
farmers in 1986 intended to plant 9.71 mln acres.
    Four months later, the USDA estimated that 9.67 mln acres
had been planted as of June 1. By January, its estimate of 1986
planted acreage nationwide was 10.06 mln.
    Analysts said their forecasts for even greater acreage in
1987 were spurred in part by belief that this year's good
demand and firm prices will be repeated next year. Analysts
said those factors make cotton a profitable crop.
    "With cotton more attractive price-wise, I think there is
going to be a switch in acreage from soybeans to cotton.
Soybeans are dirt cheap," said Lisbeth Keefe of Cargill
Investor Services, whose comments were echoed by other cotton
market specialists.
    Changes in the U.S. cotton program also could lead to
increased acreage, analysts said.
    They recalled that under the 1986 program, cotton farmers
who used part of their crop as collateral for government loans
were not responsible for the cost of storing that cotton in
government warehouses. But under the 1987 plan, the government
will not pick up the tab for storage.
    Analysts said the change will discourage some farmers from
participating in the program, which could result in more
cotton. "The cotton program stipulates a mandatory set-aside of
25 pct of a farmer's base acreage," noted Judy Weissman of
Shearson Lehman Brothers. But farmers who elect not to
participate in the program are free to plant all the acreage 
they have.
    Some analysts said cotton farmers in the high-yielding
Western states would be most likely to steer clear of the
program. "Western acreage should be up at least 20 pct," said
one commission house analyst, whose estimate was based in part
on forecasts made by the National Cotton Council during its
annual meeting in late January.
    But others disagreed. "I think some Western growers have
decided they should be in the program for security reasons.
There's a lot of comfort in knowing you'll be guaranteed the
government's loan price of 52.25 cents a lb. Anyone outside the
program is subject to the wiles of the market," said Walter
Brown, market analyst for a major California cotton producer.
    Some cotton specialists said their expectations for
increased acreage might not be verified in Tuesday's planting
intentions report. "Anything the USDA is announcing now is
based on information they gathered before their cotton program
was announced (on March 20)," one analyst cautioned. She said
traders will get a better idea of next year's cotton output
when the USDA's planted acreage report is released on July 9.
    Brown took that opinion a step further. "I don't think
planted acreage is important. What counts is the abandonment
rate," the difference between acreage planted and acreage
harvested.
    Brown said the abandonment rate this year was "pretty high"
at 15.5 pct because of weather problems in key producing
states. "More normal would be about six pct," he said.
 Reuter
