Farm Progress

Georgia's 2016 cotton acres could be higher and peanuts acres could be lower. But that depends. All other crop acreage might stay stable. And prices don’t promise to be anything you’d want to take home to meet mom and dad.

Brad Haire, Executive Editor

February 4, 2016

4 Min Read
<p>Foregoing any national or global crop failures in 2016, commodity prices, as farmers have heard too often by now, will not be pretty.</p>

University of Georgia economists have given their best “well-analyzed guess,” or WAG, on what the row crop acreage breakdown will be for Georgia in 2016. Cotton acres could be higher and peanuts acres could be lower. But that depends. All other crop acreage might stay stable.

“You know sometimes I’m asked why we do outlooks. Well, because we’re asked to,” said Don Shurley, UGA Extension cotton economist, joking with the attendees of the 2016 Georgia Ag Forecast seminar in Bainbridge, Ga., Jan. 25.

Joking aside, over the last decade the UGA forecast series, which presents at several locations across the state the first of each year, has become the initial best hint for gauging where the state’s No. 1 industry is headed each year.

But to answer where things are now and where they’ll likely go in 2016 is pretty simple: Foregoing any national or global crop failures in 2016, commodity prices, as farmers have heard too often by now, will not be pretty. Uglier prices and economic realities have been danced with over the decades, but prices in 2016 still don’t promise to be anything you’d want to take home to meet mom and dad.

Shurley’s ag forecast presentation was based on information pulled together by Shurley, Nathan Smith, former UGA Extension economist who recently moved to Clemson University, and Amanda Smith, UGA Extension economist.

They WAG for Georgia cotton acres in 2016 is 1.2 million with peanuts at 700,000 acres.

“I got cotton acreage going up but that’s dependent on one thing and one thing only, and that is if that peanut number comes down. If that peanut number stays up close to 800,000, and we plant the same amount of peanuts as we did last year, then all bets are off. The cotton number can’t be 1.2 million,” Shurley said.

The final cotton number will depend on how Georgia peanut and cotton farmers handled their peanut rotation this year. If peanut acres go higher than 725,000 acres or push 800,000 acres this year in Georgia, as they did last year, that will be an indication growers are willing to shorten their rotation window between peanut crops and sacrifice long-term yield and disease control benefits on their farms. Many will likely do just that because little else offers better cash flow or short-term financial stability.

“Again, the big decision is going to be whether you keep your peanut acreage bumped up like you did last year or are you going to go back to something resembling more of your normal rotation?” Shurley told the farmers in attendance.

Don't expect prices to flirt with you

Peanut yields, overall, for 2015 might not be as high as expected. Official production totals haven’t been released, but yields will remain strong. Regardless, the peanut industry is staring at slightly besting its record carryover stock going into the 2016 season. The current carryover record is 2012’s 1.385-million-ton carryover. There could be as much, and, hopefully not more than, 600,000 tons in storage when the 2016 peanut harvest starts, and this can easily create a shortage of storage for the 2016 crop in certified warehouses, particularly in the Southeast.

Georgia growers can expect runner peanut prices to stay below $400 per ton, likely in the $375 to $385 range for 2016 if and when contracts start being offered.

Cotton – Lower cotton acreage and production in 2015 helped an oversupply situation but the real threat is cotton’s lost market to man-made fibers, which has lessened demand for cotton in the last five years. A lot of cotton growers’ financial problems could be solved with 80-cent-or-better cotton in 2016, Shurley said, but that would smack down demand even more, making cotton even less competitive at the mills against man-made fibers.

Shurley figures an average cotton price in the Georgia Extension budget for 2016 at around 70 cents per pound, which includes loan deficiency payments or marketing loan gains and accounts for expected adjustments for fiber quality.

Expected prices for other commodities, and prices are based on 2016 harvest-time futures priced as of November 2015 and adjusted for expected basis:

Soybeans – Average price at $8.60 per bushel in Georgia with USDA pegging trading range of between $8.15 and $9.65 per bushel. Farmers in Southeast need to pay attention to pricing opportunities this winter and spring to take advantage of rallies. Once the crop is planted and production potential becomes clearer, soybeans prices will follow the seasonal pattern and decline into harvest.

Corn – Average price at $4.25 per bushel with a price range in Georgia similar to that of 2015, or between $3.75 and $4.50 per bushel.

Wheat – Wheat prices in Georgia, or anywhere in U.S. for that matter, will be lucky to have “$5” in front of them in 2016.

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