What is in this article?:
• With few exceptions, the 2012 crop in the Southeast will be the most valuable crop to buy and the most expensive crop to produce on record.
COTTON ACRES are down, and prices are not great, but the Southeast should produce a good crop this year.
Soybean risk score
In 2013, the overall risk score for soybean growers is expected to come down from 3.97 to 3.56 due to the rising price of corn.
In fact, corn use in the food industry will likely suffer more from high corn prices than will livestock production. The biggest single loser may be the $3.5 billion tortilla industry, which depends on corn for virtually all its basic ingredient for tortilla chips.
Other corn-based products in the food chain will also likely suffer greatly from what is projected to be an extended period of high corn prices.
Corn may have in fact fared too well in the overall 2012 agriculture industry, because a number of politicians have gotten involved by petitioning the Federal Government to temporarily, or permanently, suspend federal incentives for ethanol production.
Few actively involved in producing either livestock or grain crops think neither government involvement, nor suspension of the Federal Fuels Act is a good way to help livestock producers weather the storm of high grain prices.
In the long-run, losing both of their primary customers — livestock producers and ethanol producers — could be a real bad thing for corn growers.
It’s hard to know what impact record high prices for grain and near record prices for peanuts and other crops will have on other crops, like cotton, that are trying to compete for acreage.
Next spring, the battle for acres in the Southeast will likely be fierce and the input prices to grow these in demand and high prices crops will likely continue to climb.
Prices for equipment has climbed significantly over the past few years, but in return growers have benefitted from technological advances that decreased labor demands and likely helped overall profitability across the region.
Despite notable advances in seed technology, which offer the opportunity for higher yields, the average yield in some crops, corn for example, has been on a slow decline in the Southeast. Cost for high tech seed clearly has not declined.
In some crops, like cotton, high tech failures in weed and insect control have resulted in low tech add-ons to make technology work. For example, cotton growers regularly use old technology insecticides, typically pyrethroids, to bolster insect control on high-tech, high priced seed.
Some growers, who are making double passes in their fields with herbicides and insecticides, are looking closely at conventional cotton seed, which sell for $300-400 per bag less than some high-tech cotton seed.
Fertilizer is no doubt going to be a high priced input next year. From 1992 to 2012, the price of anhydrous ammonia, for example has nearly quadrupled from slightly more than $200 per ton to $785 per ton last year. Urea jumped from $198 to $380 per ton in the past 20 years.
And P and K jumped from 150 and 206 dollars per ton in 1992 to 647 and 665 dollars per ton in 2012, respectively.
Despite dodging the brunt of record breaking heat and drought in 2012, growers in the Southeast won’t be able to dodge the economic and political fallout of much-publicized crop failures in the Midwest.
And, the high cost of production is likely to play a key role in the acreage breakdown for the 2013 crop.