Soybean yields are also reaching record highs at nearly 4.4 billion bushels, an 11 percent jump from a year ago, according to the USDA’s latest crop production report. Strong exports pushed soybean prices above $10 a bushel in 2015, Mickey said. Prices have since dropped but remain good at $9.20, he said. Again, high ending stocks are a concern, Mickey said. Ending stocks on soybeans increased 7 percentage points to 12 percent this year, he said.
“I don’t see a whole lot of upside potential, but I didn’t see a whole lot upside last year either,” Mickey said. “The downside risk is stronger with soybeans.”
U.S. producers compete globally with South American soybean growers, he said.
“Watch the South American crop. If it’s good, U.S. soybean prices will drop,” Mickey said.
Stiff global competition for cotton
U.S. cotton supplies have exceeded demand by nearly 30 percent.
South Carolina cotton yields were cut in half last year due to flooding, said Extension economist Nathan Smith. At the same time, yields jumped nationally and global competition stiffened amid concerns of economic slowdown, he said. China, a significant importer of U.S.-grown cotton, has reduced imports and started selling off some of its cotton inventory, Smith said.
“The cotton market is very dependent on the economy here in the U.S. and throughout the world,” Smith said.
Exports were strong this year, pushing total U.S. cotton usage from 12.6 million bales to 15.5 million, he said. Supply still exceeded demand by 29 percent and U.S. growers likely will increase cotton acreage next year as federal payments on peanuts and other crops from the U.S. Farm Bill are expected to decline, Smith said.
“Production will outpace use,” he said.
Cotton prices have improved the past year due to export demand for good quality cotton. Growers should look for marketing opportunities at 72 cents a pound in the cash market, Smith said.
Peanut usage could slow after record year
Peanut prices are expected to hold steady around $400-$425 per ton.
Peanut usage jumped 26 percent last year on strong demand for peanut butter and candy, according to USDA figures. Usage should drop around 5 percent this year, but record high exports of U.S. peanuts are expected to continue and U.S. supply should hold steady at around 4 million tons, Smith said. Prices are expected to remain steady at $400-$425 a ton. The quality of the 2016 crop is a concern in the Southeast, which could lead to some price improvement by the end of the marketing season. The continuation exports to Asia in addition to Europe and other destination will be key for 2017 prices, Smith said.
Agriculture and forestry make up South Carolina’s top industry with $41.7 billion in annual economic output. South Carolina growers produced more than $291 million in corn ($96.7 million), soybeans ($90.6 million), peanuts ($52.8 million) and cotton ($51.6 million) last year.
Those numbers were depressed as last year’s flood left many crops to rot. A year later, extensive drought is stressing crop yields this season.
While many South Carolina farmers survived last year’s flood, the once-in-a-lifetime event significantly dented the net wealth farmers use to mitigate risk year after year, Mickey said.
“You may only have one more roll of the dice,” he said.
Farmers can mitigate risk in different ways, through insurance, price hedging, crop diversity, irrigation and other means, for example, Mickey said. If farmers can’t manage as much risk due to losses in net wealth, they could consider purchasing additional crop insurance or purchase insurance coverage with revenue protection rather than yield protection, Mickey said.
“We just have to consider options,” he said. “Strategies that worked in 2014 might not work today.”
Seasonal marketing strategies could pay dividends, as well, Mickey said. Corn prices, for example, have been 19 cents per bushel higher in April than in September and October in eight of the past 10 years, he said. South Carolina growers produced more than 24 million bushels of corn in 2015.
“That $19 extra on a 100 bushels of corn really adds up,” Mickey said.
Source:clemson.edu