Cotton looks good in northern Oklahoma and southern Kansas
Apr 6, 2009 10:25 AM,
By Larry Stalcup
Contributing writer
Cotton prices are stagnating at about loan level. But when compared to corn, soybeans, wheat and other crops, cotton should yield a better profit in northern Oklahoma and southern Kansas.
BI-STATE COTTON Producers Co-op President Monty Kahle likes the benefits of cotton in his wheat and soybean rotation.
Growers are getting a glimpse of whether cotton can compete with corn, soybean, wheat, grain sorghum or sunflower from presentations from Monty Kahle, a Newkirk, Okla., grower who is also involved in a local cotton gin co-op.
Bi-State Cotton Producers Gin was built in the late-1990s in Blackwell, Okla., at a time when cotton was virtually unheard of in the region dominated by hard red winter wheat, some double-cropped soybeans and corn. Kahle was among the early co-op owners.
The gin handled about 13,000 bales from growers on the Oklahoma/Kansas border region in 2008. Kahle expects the facility to gin about 16,000 bales this year. And according to production budgets he’s developed, cotton can compete with and even surpass other cash crops, which are also facing depressed prices.
“We could even see 20,000 bales come through the gin,” says Kahle, who regularly farms wheat, cotton and soybeans, but has had sorghum, corn and sunflower in his rotation in past years.
“Cotton pencils-out better than soybeans, wheat and corn, as well as milo and sunflower,” he says. “That’s for both irrigated and dryland cotton.”
Kahle’s crop budgets include data on an Excel spread sheet. It compares potential profits for irrigated and dryland cotton with an estimate price of 56 cents (based on government loan and quality premiums), dryland and irrigated corn priced at $3.20 a bushel, dryland and irrigated soybeans priced at $8.50 per bushel, dryland wheat priced at $5.50 a bushel, dryland sorghum priced at $2.75 a bushel, and double-cropped (after wheat) cotton, soybeans and sorghum.
In his crop projections, irrigated cotton, yielding 1,200 pounds per acre showed a net income about $261 per acre, the highest of the other crops. Dryland cotton yielding 600 pounds per acre has data that projects net income of about $102 per acre.
Those prices compare to 40-bushel dryland wheat showing a projected net income of about $91 per acre. Dryland corn yielding 100 bushels should produce an average net income of about $6 an acre. Irrigated corn yielding 185 bushels pencils in a net income of about $227 per acre.
Dryland sorghum yielding 80 bushels shows a projected net income of about $68 per acre. A 25-bushel dryland soybean crop should have an average net income of about $70 an acre. Irrigated soybeans yielding 50 bushel have a projected net income of about $217 per acre.
Kahle says that cotton also shows the best return in a double-crop situation. It’s expected 400-pound yield projects to provide net income of about $78 an acre on top of the wheat income. Double crop soybeans yielding 20 bushels pencil-out at a $48 an acre net income. Double-crop sorghum yielding 65 bushels per acre would produce an average net income of about $38 an acre.
Cost of production
Dryland cotton input costs amount to about $246 per acre (without crop insurance). Total cost of fuel, fertilizer, seed and chemical is projected at $155 an acre. Other charges, including labor, supplies and repair are $8 an acre. Ginning and warehousing charges are about $34 and harvesting at a custom rate of $48 an acre. Deducted from the gross income of $348 per acre provides the $102 net income.
Irrigated cotton input costs are about $434 per acre. They include fuel, fertilizer, seed and chemical charges of an estimate $259 an acre; other charges for labor, supplies and repairs of $10 per acre; ginning and warehousing $68 per acre; and harvesting $96 per acre. A gross income of $672 per acre (without insurance costs) less the total inputs produces the $261 net income.
Kahle’s projected budgets show wheat with a gross return of $220 per acre, less input costs of $129, to provide the $91 an acre net income. Dryland corn’s gross return is set at $320, but $313 in input costs produces the small $6 net. Irrigated corn’s sound $227 an acre net income comes from gross returns of $592 less input costs of $364.
Dryland soybeans have a projected gross income of $212, with $142 in input costs resulting in the $70 an acre net income. Irrigated beans gross $425 and yield the $217 net after input costs of about $208 are deducted. Dryland sorghum’s input costs are $152. Deducted from a $220 gross return produces the $68 net income.
Cotton cleans up fields
Kim Anderson, Oklahoma State University grain marketing economist, says crops like cotton are more in the picture, but wheat “will always be the No. 1 crop” in the northern Oklahoma area. And even if other crops like cotton can produce a profit, they are also good at helping control weeds.
“Using cotton and other crops as a rotation helps clean up weeds in wheat fields,” he says. “In some years they will budget-out and some years they won’t. But you always have to pencil-in the value of cleaning up the fields.
“The rotated crops break those weed cycles and disease cycles. To me, that’s the big value of rotating wheat with cotton and other crops, especially since we have gone to minimum-till and no-till. It makes the alternative crops all that important.”
Kahle says cotton may not work for everyone in his region and returns for tenant and landlord agreements will vary. He encourages growers to examine in detail the projected crop budgets he has developed at BiState Cotton Producers Coop.
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