Jun. 16, 2017
The United States Department of Agriculture (USDA) is forecasting a big cotton crop in the United States this year at 12.2 million acres overall, a 21 percent increase from 2016.
The Adobe Walls Gin in Spearman, Tx. is preparing for that potential increase in acres by expanding its capacity with a goal of one day becoming the largest gin in the United States.
"We felt like we needed to expand to do a better job, a timelier job of ginning the producer's cotton," said Jerrell Key, general manager for Adobe Walls. "We jumped in and built another gin. Someone was going to [build it]. It was imminent."
Cotton is a fairly new crop in this part of the Panhandle. First built in 2006, the gin is now adding on a $14.5 million expansion with four new lines and a press, which may make it the largest in the United States.
"We can gin about 1,000 bales a day to 1,100 bales a day," said Key. "We will be doubling that."
There's potential to add another phase of construction after this expansion for even more capacity.
"[The next phase,] if we ever go all the way, it will be the biggest gin in the world," said Key.
The gin is expanding for two reasons: an increase in cotton yields from last year and the expectations for more cotton acres this year.
Key expects a 25 percent increase of irrigated cotton acres and possibly three times more acres of dryland.
"I get calls every day saying, 'Hey, I planted 700 acres of dryland,'" he said. "These are people who couldn't even spell 'cotton' last year."
Ryan Johnson, a producer from Ochiltree County, Tx., is planting more cotton in the Panhandle.
"I'll be increasing [cotton acres], I'd say by 65 percent," said Johnson.
USDA's prospective plantings report estimates Texas will see a 22 percent increase in cotton acres this year.
"The [growers who are] switching acres last minute are cotton guys," said Johnson. "They may say now they want to [plant it]. Since we have moisture, it's worth a try."
"What we're really picking up are wheat acres, irrigated wheat acres, more so than irrigated corn acres," said Key.
"Producers I work with, especially in the Texas Panhandle region, they didn't plant wheat," said John Payne, senior futures and options broker and market strategist with Daniels Trading. "A lot of them looked at corn and it didn't go in as well. I look at [the national cotton acreage] to be closer to 12.5 million acres. It's a stretch but I think you have to be prepared for it."
However, not everyone is sold on USDA's high cotton acreage expectation.
"Some of those places [where growers are] planting cotton and have not before, we don't know what those yields are going to be," said Ashley Arrington, founder and consultant for Agri Authority. "There are still some ifs in the market in terms of if it will actually be a bumper crop. It's weighing on the market a little right now. The market is waiting to accept it to see if it is a bumper crop."
As seeds go in, there's expectations a new gin will buy acres for years to come and those growers hope King Cotton will stick around.
"Our biggest obstacle is getting new growers and getting people comfortable with growing it," said Key.
"At the end of the day, I need to make money," said Johnson. "It doesn't matter if it's cotton or sunflowers."
Johnson says another reason he's planting cotton is the crop does not use as many inputs with water, which is a benefit since some pockets of Texas struggle with having enough water.