What is in this article?:
- Donâ€™t count on 2012 corn, soybean price levels this year
- Alabama situation
• “We had a pretty good year, but don’t get caught up on $17 soybeans and $8 corn, because I think those prices are probably behind us. We need to be looking forward,” says Max Runge, Auburn University Extension economist.
“In Alabama, we were basically equal to our corn production in 2011, we were up by 39 percent on soybeans, up slightly on cotton, and up significantly on peanuts.”
Turning to yields in 2012 versus 2011, Runge says U.S. corn was down quite a bit, soybeans not much, cotton was about the same, and peanuts were significantly higher.
“In Alabama, our corn yields were down from the previous year, soybeans were up, cotton was up, and peanuts were up. Cotton yields were a record-high 891 pounds per acre in Alabama this past year, breaking the old record — which had stood since 1985 — by almost 100 pounds, and peanuts were slightly higher than the previous record. Overall, 2012 was a pretty good year, and prices were pretty good too.”
Compared to a year ago, Runge says corn and soybean prices are higher, cotton is down slightly, and wheat prices are up significantly.
“It is still extremely dry through the Plains area and in the Midwest. In Alabama, it’s dry in the east-central area of the state. We’re not out of the drought yet. It’ll take a lot more rain yet to get the Mississippi River level up.”
The weather outlook, from Dec. 6 through the end of February, predicts the drought will persist or intensify in the Midwest, he says.
“We are in a neutral phase weather-wise, so we’ll probably have some periods of very cold weather.”
The latest crop budgets from Southern Illinois University show a return to operator and land of almost $467 per acre from corn, $314 from soybeans, $152 from wheat, and $204 on double-cropped.
“If you’re looking at it from a budget perspective, there will be a lot of corn grown in the Midwest this year. If corn is $6 per bushel, soybeans will have to get up to about $16 to pull acres away from corn in the Midwest.”
Looking at production input costs, nitrogen will be up this year and phosphate and potassium will be down slightly, he says.
“There will probably be a shortage of seed, especially on specific varieties you might want. The cost of money should be down a little bit, as interest rates will hang in there fairly low. The Federal Reserve says it will keep the cost of money low until unemployment reaches 6.5 percent, and we’re now at 7.7 percent”.
Land rent should be steady, says Runge. “Peanut acres will be down, with a tremendous of peanuts in the warehouse. Cotton acres will be down, but some growers will stick with their rotations. Eighty cents or so per pound could pull some acres from corn.”
Runge says it’ll be interesting to watch the cattle market this year. “Have you priced steak recently? They’re really expensive. Our cattle numbers are down, which means that one of the main uses for corn is down.”
He advises growers to price some of their crops early.
“I say that with hesitation, because if the drought goes through the 2013 crop year, we could see rallies like we saw this past year. That’s an unknown. The opportunity is there to price early in 2013, and watch for rallies. We’re seeing more and more variability in these commodity markets as commercial funds come in and out.
“If you can get some corn in early and get it out early, toward the end of July, you might get a premium. There could be some shortage in that July to early August time period.
“As we get into 2013, I think we could see some higher prices on July corn. I also think we’ll see some opportunities to book some cotton at more than 80 cents per pound.”