Prices, competition to cut pima acreage in central Arizona

Pima cotton's return to significance in Central Arizona with the start of the pink bollworm eradication program there was less than encouraging.

Yields were low last season when acreage almost doubled from 1,300 acres the year before to 2,200 acres for '06. It looks like low prices and high grain corn prices will quickly reverse that trend this season.

In 2006, average Pima yields totaled 1.92 bales per acre, about equaled to '05 yields, according to River Co-op Gin manager Steve Straussner in Coolidge, Ariz. River Co-op is the remaining roller gin in Central Arizona ginning Extra Long Staple Pima cotton from Maricopa, Pima, and Pinal counties. The '06 increase was largely caused by the first-year pink bollworm eradication efforts in Central Arizona, Straussner said.

“Pima quality in '06 was real good, mainly 1 and 2 grades. Weather-related discoloration was really not an issue.” Varieties grown were Deltapine (DP) HTO Pima, DP 744 Pima, and some public variety S7.

Straussner predicted fewer Pima acres and grower numbers in '07. He said 10 growers would likely plant Pima in '07, down from 15 growers in '06.

“2006 prices were less than what everybody hoped for and a little discouraging,” Straussner said. “If Pima prices jump to $1.10 to $1.15, it might be worth trying. To make two bales per acre work, Arizona growers need about $1.15.”

Pima yields in Central Arizona are generally one-half bale less than Upland.

Another factor marring Pima planting prospects is unavailable heat tolerant Pima varieties. Heat took a heavy toll last season.

“The seed breeding over the last 7-10 years has been for California weather and this stuff just doesn't have the heat tolerance it used to,” Straussner said. “While the varieties do well in California, they do not do well here.”

Unless Pima prices rebound to about $1.20 per pound by spring planting, cotton growers Greg Morrow and Clayton Golson of Coolidge, Ariz., will reduce Pima acreage to 150 acres in '07, compared to 360 acres in '06.

The first-generation farmers own M&G Farms growing mostly cotton plus 220 acres of alfalfa and wheat on 1,600 acres. The '07 planting breakdown - 140 acres of DP 744 and 10 “experimental” acres with Phytogen 800.

The DP 744 Pima farmed in '06 yielded two bales per acre, lower than expected due to weather-related planting delays. Yet the crop generated all grade 1 quality, 4.5-4.9 micronaire, and good fiber. '05 yields were 2.5 bales in better weather with the same seed variety. The farmers plant Pima before the short staple.

S6 and S7 showed disappointing results. Golson said, “We've never had any luck with S7. It grows off, gets too tall. You have to Pix it, and it requires more management. If you let it start growing a little too much and you don't get the plant growth regulator on, then it takes off on you. Whenever it does that, there's very few bolls - it's all plant.”

Morrow, treasurer of the River Co-op Gin, is concerned about decreasing Pima acreage in the area and the continuation of gin closures across the state. Just three roller gins remain in Arizona including the River Gin, Glenbar Gin in Safford, and the Yuco Gin in Yuma.

“If Pima acreages don't go up much, some of the remaining gins may shut down due to economics. At the River Co-op, we're getting Pima from a 50-mile radius. If we can't get the (Pima) acreage and the growers, we'll have to shut our gin down.” Morrow said.

The farmers are closely eyeing the exploding ethanol industry and increasing grain prices.

On the Gila River Indian Reservation, Karl Button of the Button & Bohnee Farming Partnership in Sacaton, Ariz., farms 3,400 acres of cotton, alfalfa, durum and white wheat, bermudagrass, oats and beans.

While he usually plants 600-1,500 acres to cotton, '06 plantings totaled 1,018 cotton acres including 842 acres of Upland and 176 acres of Pima. Pima yields with DP 340 generated 2.09 bales per acre, and Button remained disappointed.

Disappointing price

“Going into last year, the anticipated price for Pima was $1.10 to $1.25 a pound. If you made two bales Pima at those prices it was equivalent to four bales of short staple,” Button said. “When we went to sell our Pima, there were no bidders on the market so we sold at $.94. That was disappointing.”

Using S5, S6, and S7, the same land 15-20 years ago yielded a whopping three Pima bales to the acre.

With high heat and low prices, Button just might forego planting Pima in '07.

“We're not certain we'll plant any Pima unless we hear good news on the price horizon,” he said. “We need a spread of about 200 percent over the short staple price to make it worth it. I'm not sure if that will happen. If we do grow it, we would likely plant 150 acres possibly with DP 340.”

Button's decision may hinge on California's ‘07 Pima intentions, competition that could reach 320,000 Pima acres, according to the National Cotton Council's January '07 planting intentions.

“If that occurs, there will be no price for Pima, just the loan price. If you put Pima in loan, they don't pay the storage and insurance. Your 82-cent loan quickly erodes to about 72-cents by the time you get rid of it. Even if Pima traded at $.90, it's not a rosy picture when we can't break the two-bale mark or hit 2.5 bales.”

Button's '06 Pima generated all 1 and 2 grades, 38 to 40 staple lengths, and a micronaire of 3.9 to 4.4.

“No one was bidding for it. They (buyers) are getting all they want from California. There is also a slight bias against Arizona cotton because of the whitefly issue from 1992-1996 before we had the introduction of insect growth regulators over the honeydew issue,” said Button. “We're still looking in some cases at a 2-3 point spread even though we don't have sticky cotton anymore. If a buyer is looking for cotton and sees it's from Arizona and sees a similar lot from California, he'll probably pick the California cotton because of the bias.”

For two-bale Pima to work on Button's farm, his calculator suggests a $1.10 - $1.20 price need. But he reiterated that it all goes back to California.

“Since the mid-1990s, California has taken over the bulk of the Pima production in the western United States. They can produce 2 ¾ to 3 bales on a regular basis and plant a lot of ground fast. It has the tendency to warp the contract market,” Button said.

Bollworm eradication

The Arizona Cotton Research and Protection Council (ACRPC) launched its four-year pink bollworm (PBW) eradication program in central and eastern Arizona in '06. The eradication effort encourages Button to hang in there with Pima.

“The pink bollworm has always been a big problem with Pima production as bolls stay vulnerable for a longer period of time,” Button said. “With the eradication program even while it's early in the program, our PBW control expenses shrunk to $32 for pink bollworm control. That is substantial.”

Yet Button is keenly aware of soaring, ethanol-enhanced record grain prices. “We used to grow grain sorghum as a second crop for $5.25 per hundredweight and complained. Now they're offering us $8 contract. You won't make as much money net return on grain sorghum per acre as cotton but you won't put nearly as much into it.”

Morrow has inked contracts with a grain broker. Some of his grain will fuel one of several Arizona ethanol plants expected to come online in the near future.

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