SANTEE — A stressed crop market could further pinch South Carolina farmers already reeling from last year’s drought and historic flood.
Clemson Cooperative Extension economist Nathan Smith is optimistic corn can rebound some in 2016, but global supply-and-demand pressures continue to depress cotton, peanut and soybean prices, Smith said at an Extension finance workshop in Santee.
While prices have dipped, production costs have not, leading to lower net income for South Carolina farmers, he said.
“Costs are going to have to adjust pretty soon for margins to improve,” Smith said.
Clemson works closely with growers to help reduce input costs. An expanded precision-agriculture program, for example, teaches growers to use various sensor-based technologies to reduce water and pesticide usage, and educational workshops on soil health and cover-cropping are helping growers minimize nutrient leaching, optimize water usage and reduce the need for fertilizers and irrigation.
Additionally, Clemson plant-breeding; and weed-, insect- and disease-management programs; can help growers maximize yield. The university has requested $2.5 million in state funding to enhance agricultural programs that help boost the profits of South Carolina farmers.
Increasing the corn yield just 1 percent would pocket farmers nearly $1.3 million, based on recent production data. South Carolina growers planted 278,000 acres of corn in 2014 at a production value of $127.8 million, according to U.S. Department of Agriculture data. That puts corn just below soybeans ($160.2 million) and cotton ($157 million plus another $30.6 million from cottonseed) as South Carolina’s No. 3 cash crop.
Strong demand for ethanol and livestock feed are likely to support corn futures, Smith said, though prices could dip if production spikes next year, he said. Corn prices have ranged between $3.35 and $3.95 per bushel.
“I’m probably more bullish on corn than any crop right now, but it’s going to depend on what farmers plant, not in South Carolina but throughout the U.S.,” he said. “I’d say look for pricing opportunities when futures get above $4 in the near term.”
The peanut market, meanwhile, remains pressured by abundant supplies. Planted peanut acreage was up 20 percent nationally this year, federal data shows.
Many farmers in the Southeast grew more peanuts instead of corn and cotton because of low prices and higher expected peanut payments from the newly enacted Farm Bill, Smith said. Peanut production already had spiked nationally to 3.38 million tons in 2012 as inventory shortages pushed prices to $700 to $800 per acre, according to U.S. Department of Agriculture statistics.
The 2015 crop is expected to dip to 3 million tons, but warehouses are crowded now and peanut prices are down to around $400 a ton or less, depending on the variety.
“My concern is that at harvest time in 2016, you may not have as much warehouse space available as you did in 2015, though South Carolina may be the exception given the disaster last year,” Smith said.
South Carolina growers produced 410 million pounds of peanuts in 2014 at an estimated value of $91.1 million, according to the USDA.
The cotton market has suffered from reduced demand and yield, as well as crop quality, Smith said. Cotton exports to China have declined as the country has reduced use.
Soybean yields, meanwhile, have reached record highs nationally, but demand is down, Smith said. Additionally, U.S. soybeans face more international competition in China, the top market for U.S. soybean exports, he said. Soybeans are priced at around $8.70 per bushel, according to market reports.
“Soybeans are still looking for a bottom in the market,” Smith said.
Growers, meanwhile, continue to evaluate the value of this year’s crop, which was heavily damaged by summer drought and then October flood. The flood alone caused an estimated $300 million in crop losses, a figure that likely will rise as final damage figures are calculated.
This story courtesy of Clemson University.