U.S. cotton farmers are expected to boost acreage by 6.2 percent this year as weak market prices for competing crops including corn and soybeans lead them to devote more area to the fiber, an industry group concluded after a survey.
The National Cotton Council, or NCC, expects plantings in the world's biggest exporter to rise to 9.1 million acres (3.7 million hectares) in 2016, slightly lower than median expectations of 9.7 million acres (3.9 million hectares) according to a Reuters poll.
Last year, farmers planted 8.6 million acres (3.5 million hectares) of cotton, the NCC said. That was the lowest level since 1983, according to U.S. government data. With an abandonment rate of 11 percent, just 8.1 million acres (3.3 million hectares) were harvested last year, the NCC said.
The NCC survey, widely watched as one of the earliest indicators of the next season's production, is based on a questionnaire mailed in mid-December to producers across the 17-state cotton belt.
The group said on Saturday that while cotton prices had changed little over the past year, drops in grain prices, which compete with the fiber for acreage, would likely encourage farmers to plant cotton.
Benchmark cotton futures settled at 59.97 cents a pound on Friday, 5 percent higher than 5-1/2-year lows touched in January 2015. Prices have traded in a tight range for much of the past 1-1/2 years amid uncertainty about China's plans to release its massive cotton stockpile.
Front-month corn prices closed 2015 down nearly 10 percent and benchmark soybean futures closed the year down nearly 15 percent. Both are still trading well below year-ago levels.
"Price ratios of cotton to competing crops are a bit more favorable than in 2015," said Jody Campiche, the group's vice president of economics and policy analysis.