When Edgar Woods talks most farmers pay attention. Woods is one of the top grain marketing experts in the Southeast, and he says the outlook is especially good for soybeans, but there appears to be good demand for corn and wheat for 2009 and on into 2010.
Speaking at a recent field day at the Pee Dee Agricultural Research and Education Center in Florence, S.C., Woods says by 2030 U.S. farmers will need to double food production. That alone, he notes is a good reason for optimism among farmers.
To accomplish this demand, Woods says it will take an ongoing collaborative effort among farmers, university researchers and scientists working with fertilizer and pest management companies. Technology is the key, and working together is the only way to best apply technology to increased farm productivity.
“We have an excellent corn crop in the Southeast this year, which is indicative of the expansion of corn yield potential brought about by new, improved corn varieties. In the past 40 years in the U.S. we have increased average corn yield by five-fold,” Woods says.
“In our business we are seeing lots of 150-200 bushel per acre corn. This is a testament to the role of research and development at our land-grant universities, working in harmony with plant breeders and seed and crop protection leaders in our agri-industry.”
Woods says corn in particular is a reason for optimism among farmers in the Southeast. “A year ago talk was common on how ethanol and biofuels were going to deplete corn supplies. I’m here to tell you today we have a surplus of corn,” Woods says.
“Corn prices are all about supply and demand. Here in the South we are fortunate to be in an area in which demand always exceeds supply. That doesn’t always mean high prices, but it does put our growers in competitive advantage over corn grown in other areas of the country.
“Corn has come down in price more than $2.00 a bushel from this time last year, and I can’t guarantee you we won’t see corn selling for less than $3.00 a bushel during the glut that comes around harvest time. Still, it’s a great time to forward contract some corn. We are picking up corn from a grower next week that sold for $7.00 a bushel,” Woods says.
“It’s no secret the livestock sector of our ag economy is suffering. Declining hog, dairy and egg prices have driven grain prices down some in recent months. The poultry industry already has reduced the number of chickens and good growers are beginning to make money growing broilers.
“A rebounding livestock industry is just one reason for optimism among grain growers in the Southeast. Our area has a strong poultry industry, and the more efficient broiler producers are now able to afford to feed $4 a bushel corn,” Woods adds.
The soybean market could turn corn prices upward, Woods says. “We have to slow down exports of soybeans. For example, the first week in August we exported 18 million bushels of beans — that’s too much. However, demand is still good for soybeans and the weak dollar continues to help keep soybean prices high.
“Wheat yields were good across most of the Southeast this year. In some areas quality was off because of heavy spring rains. Growers who can story high quality wheat will likely see a premium price for quality later this year,” he adds.
Woods says the U.S. will likely have a wheat carryover of nearly 750 million bushels from the 2009 crop. Though it’s been tough to move, wheat continues to find a home — a lot of it for livestock feed — but there is still a good market, he says.
“As we approach September, growers should be looking closely at wheat for next year. Nitrogen and other input costs are going to be down. Board prices are close to $6.00 a ton, which is shaping up for a good futures market,” Woods says.
Cotton is different from marketing grain in a lot of ways, the South Carolina marketing expert says. There is a steadily declining domestic market for the 11 million bales or so of cotton U.S. growers produce annually. There is great volatility in foreign cotton markets and new competitors seem to pop up daily, he adds.
Despite these challenges, Woods says it looks like U.S. cotton could move back to the 67-68 cent a pound range. If prices get that high, it would be a real good time to sell some cotton, he adds.
Overall, the future for Southeast crops looks good. The real danger is in how low grain prices can do during peak harvest times. Watch oil prices, he cautions, these will be a good tip off as to which way grain prices, especially corn, will go.
“With oil prices at $70 a barrel, efficient ethanol plants are making margins of 20 cents a gallon. For a 100 million gallon a year plant that would mean $20 million a year, which is enough to allow some of the current facilities to get back to full production and may be enough to encourage investment in new production,” Woods says.
“Corn growers are looking to place 3-4 billion bushels of corn with ethanol producers next year, so it’s important to keep an eye on the fuel industry,” he adds.