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Cropping options look good for Southeast

It’s been a long time since farmers in the Southeast have had so many good cropping options — at least price-wise.

In the Southeast, as in most other parts of the U.S., crops compete for acreage. Last year corn won the prize because of 10-year high prices pushed by demand for more ethanol. Unfortunately, Mother Nature, poor planting choices and a plethora of other problems kept total corn yield in the Southeast slightly lower than in 2006 — despite a huge increase in acreage.

In the fall of 2007, growers in the Southeast planted what might be a record wheat crop. Again, unfortunately too much of this wheat crop was planted late — a good recipe for low quality and low yields — not to mention freeze damage. And, too much wheat was likely planted on land not well suited to to the crop.

Regardless of the consequences, wheat appears to be the big winner in the acreage ‘up and down’ in the Southeast. Though exact acreage is a slippery slope to figure, consensus appears to be a 25 percent increase in wheat acreage in the upper Southeast.

The big increase in wheat acreage makes it a good bet that soybean acreage will go up as growers try to reduce risk and maximize profit by planting two crops, both selling for 10-year high prices. However, a few growers will likely try to get wheat out early and plant cotton to take advantage of high cotton prices that pushed into the mid-80 cent range in early March.

Though certainly not a trend, nor a big acreage swing, South Carolina Peanut Specialist Jay Chapin says a few of his growers will plant peanuts behind wheat. “We have the time to do it, a few growers have done it, and I expect a few more of our growers will try growing peanuts behind wheat,” Chapin says.

Wheat at $12 a bushel and Virginia-type peanuts for $600 a ton could be a sweet combination, if the weather cooperates, and if the grower has already sold his wheat. As of March 1, wheat selling for $9.33 a bushel had nowhere to go in the U.S. market place.

Jim King, president of J&J Commodities in Greenville, N.C., a long-time grain dealer and farm manager, says there simply is nowhere to go with wheat. “We could buy it and store and hope someone would come by and offer us $10 a bushel for it, but we can’t and don’t do business that way,” he says jokingly. King added, more matter-of-factly that the high wheat prices are a real problem for U.S. grain dealers and could become a big problem for growers who have wheat planted, but not sold.

Before turning the crown over to wheat, take a look at corn. Corn knocked cotton acreage down in the Southeast by 25-30 percent in 2007. Despite dire forecasts, corn prices remain over $5 ($5.56 as of March 3). Though many farmers found out the hard way that poorly drained soil, drought and dryland corn are a good recipe for disaster, the $5 lure is strong. Most analysts forecast a nationwide corn crop again pushing 90 million acres.

In the Southeast, corn acreage will likely be down, simply because the options are much better this year. Peanut prices are good, cotton prices are good and getting better and soybean prices remain good.

Good weather, a good seed supply, and a year of growing corn under their belt could produce better corn results in 2008, and weather permitting, corn could be a good choice for growers in the area.

Despite a big acreage boost in 2007, corn prices have risen an additional 20 percent in the early months of 2008. The 2007 rush by farmers to plant cash-producing corn has squeezed wheat acreage, forcing supplies down and prices up.

Soybean prices benefited from corn’s continued torrid price pace, helping push bean prices up by 25 percent in 2008.

King Cotton, the staple crop in the Southeast during the 1990s and into the new millennium took a big hit in 2007. Prices were down, production costs were varied and expensive, and there was corn — cheap to produce, high in value. Or so many cotton growers thought. Some percentage of cotton land turned into corn land in 2007 will undoubtedly return to cotton land in 2008. How much is an open question.

Demand for cotton finished products worldwide continues to grow faster than the worldwide increase in cotton fiber production. Though U.S. cotton is not always the chosen grade for Asian mills, it is high quality and the supply chain is reliable — two factors likely to keep U.S.-grown cotton in high demand for quite a while.

As of early March cotton prices had crept back into the mid-80-cent per pound range. Despite the drought in 2007, cotton seemed to weather the storm much better than grain crops. As a result cotton seed is both plentiful and of high quality, which is not the case for some grain crops in some varieties.

In the Southeast farm land continues to decrease, especially in North Carolina and Georgia — the two highest volume producing states in the region.

North Carolina, in particular leads the way in farm acres lost among all states. Georgia is the third fastest growing state in population, trailing only Texas and California. Loss of acreage and so many good, profitable options for crops begs the question: Where are all these grain, cotton and peanut acres coming from?

Clearly, the major crops: Cotton, corn, soybeans, wheat and peanuts are expecting at least some acreage increase. Even the old whipping boy, tobacco, looks like acreage may be up. As one analyst quipped, the emergence of China has added over a hundred million new smokers in China’s burgeoning middle class, and a new market for U.S.-grown tobacco.

With options so varied and so seemingly promising, it looks like growers in the Southeast can’t miss having a good year in 2008 — weather permitting.


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