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Strong prices influence planting decisions

MISSISSIPPI STATE, Miss. — Soybean prices are the highest they’ve been in years, rice and corn are looking good, and cotton has improved, giving Mississippi farmers much to consider as they decide what to plant this year.

Charlie Forrest, professor of agricultural economics with Mississippi State University’s Extension Service, said nationwide soybean production was down last year while demand stayed strong.

“We will come out of this year with only 125 million bushels of soybeans, which is extremely low. We’ll be basically running out of soybeans by the time we go to harvest,” Forrest said.

Forward contracts were $7.60 a bushel in late March and cash price was more than $10 a bushel. The U.S. Department of Agriculture estimates a marketing-year price of $7.15 to $7.55 for the growing season.

Mississippi had a record yield of 39 bushels an acre last year on 1.44 million acres planted. Despite the yield, Mississippi does not produce enough beans to influence price.

“Our crop was good last year while the crop in the Midwest was poor,” Forrest said. “We had the best of both worlds — high prices and high yields.”

Soybean prices have regained 1996 levels, which averaged $7.34 a bushel. Prices slid in 1997 to $7 a bushel, and averaged less than $5 a bushel since then.

Soybean acreage had been declining from a recent high of 2.1 million acres in 1997, and Forrest expects acreage to increase this year. Soybeans will be competing with corn and rice, whose prices are up considerably, and cotton, which has more favorable prices than in the recent past.

Corn contracts are at $3 a bushel for the first time since 1996. Forrest said prices for the last five years have hovered between $2 and $2.15 a bushel for this grain.

Steve Martin, Extension agricultural economist at the Delta Research and Extension Center in Stoneville, Miss., said cotton prices have been increasing since fall, but grew weaker in March.

“With soybean prices as high as they are, we’re anticipating some of our cotton acreage going into soybeans,” Martin said. “If that happens, it will likely strengthen prices some, but since cotton is a global product, it likely won’t shift it much.”

December futures prices were 67 cents a pound in late March, with cash prices between 60 and 62 cents a pound for cotton.

“We’re not sure where cotton prices are going, but they are better than they have been,” Martin said. “We’ve been at or below the loan rate of 52 cents a pound for four years. If we have another year of good prices and yield, producers will have some money to spend.”

Rice is another row crop looking good in Mississippi. Prices increased significantly last fall and have continued a slow, steady increase. Martin said the expected acreage shift to soybeans could help rice prices even more.

“All commodity prices are demand-driven to some extent, but rice is more so,” Martin said. “The economies of the countries that buy a lot of rice are improving, so they can afford to buy more rice and maybe build supplies that were a bit short.”

Bonnie Coblentz writes for Mississippi State University Ag Communications.

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