BY Julie Speed
Contributing Writer, Delta Business Journal
Because of decreased government payments and rising fuel prices
that push up production
costs, the USDA is forecasting farm income in general to be down in
2000, with field crop
prices expected to remain relatively low compared to production costs.
COTTON
Cotton production expectations are estimated at approximately
19 million bales and, if all
goes as expected, production in 2000 would rise by about two million
bales. U.S. stocks will
begin with about 4.3 million bales, with production expected to exceed
demand, and cotton
stocks are expected to rise next season. Mill usage is only expected
to increase slightly
while U.S. exports are projected higher because of increased
supplies and reduced
competition from China.
“Projected stocks at the end of the year were 4.2 million and
are expected to rise at the end
of next year to over five million,” says Woods Eastland of Staplcotn.
“What’s going on is
that world stocks are becoming more concentrated in the U.S. over what
we have faced in the
last five years. This would mean our price quotes would have to be
lower relative to the rest
of the world than they have been in the prior three years. We think
mill usage will probably
be unchanged, about 10.1 million bales.”
China has managed its extremely large stocks very responsibly,
Eastland says.
“As long as the world crop comes in as expected, those stocks
will sit there,” he says. “But
if production somewhere is poor, they will try to move as much as they
can. China’s stocks
will cap how high prices can go.”
O.A. Cleveland, MSU cotton specialist and agriculture economist,
said China has announced a
plan to purchase 450,000 bales and is not expected to dump excess cotton.
“We have ample U.S. and world stocks,” he says. “However, this
year, we are experiencing a
record world cotton demand and the forecast suggests another record
world demand for
2000/2001. We expect world stocks to drop and that sets up a higher
price.”
This year’s favorable insurance program for cotton growers has
attributed to more plantings,
said Bud Tate, manager of Bunge Corp. in Gunnison.
“In west Texas, which is the biggest block of cotton, they’ve
had problems because it is so
very dry,” Tate says. “We have a potential for a poor crop in west
Texas while everyone else
is off to a good start. It probably will mean that the higher price
will hang around longer.
If it turns into the kind of drought that the NOAA is talking about,
prices will probably go
even higher.”
SOYBEANS
A warmer than usual in winter with drier conditions has resulted
earlier plantings of
soybeans around the country. By the first week of May, farmers
had planted 34% of the crop
compared to an average of 8%.
Prices are slightly better due to dry conditions west of the
Mississippi River. The domestic
demand for soybean products is expected to be slightly better in the
coming year and should
exceed gains in export demand. Because of large beginning stocks
of about 300 million
bushels and the potential of a record production year, supplies
are expected to surge by as
much as 9%. This could result in the second largest inventory
on record. With such a large
supply, prices will be soft, with an estimated average of $4 to $5
per bushel.
RICE
Because of lower plantings, the 2000/2001 rice crop in the United
States is expected to be
down between 5% and 8% from a year ago, but remains the second-largest
row crop.
“The world stocks on rice are so high that I really don’t anticipate
a whole lot of an
increase in price,” Tate says. “The U.S. has a lot of carryout but
the quality of what’s left
over is not the best. What will happen is that a lot of the old rice
will have to be exported
and the new crop hopefully will be better quality and hide some of
the old.”
Because exports are not expected to increase much, prices are
projected at $4.75 to $5.75
per cwt, down from this year’s $6.05 to $6.15 prices. Long grain
supplies are projected at a
record 179.5 million cwt, up because of a hefty carryover and an increase
in imports. In the
Delta, long grain prices are currently just below $5 cwt in the Delta,
with the medium grain
reported at a little more than $6 per cwt in the south. Marketing
has been light since mid
February.
“Generally, I think mills will be willing to pay about $3.25
a bushel, with a break even for
new rice of around $3.50 to $3.60 a bushel,” Tate says. “Old established
rice farmers can
probably break even at about $3.25.”
CORN
Because of higher yields and larger plantings, corn production
projections are estimated at
9,740 million bushels, up 3% from last year. This year’s average yield
is expected to be
approximately 137 bushels per acre, compared to Mississippi producers’
yields of 117 bushels
last year.
According to the state agricultural statistics service, 100%
of Mississippi’s corn crops are
planted and 98% has emerged. Stocks are running high but exports
– and world demand - are
up.
“If everybody can make 125 bushels or better, with the price
of corn being better than it has
been, if they’ve locked in some of the better price and yield a little
more than 125 bushels,
they can easily break even,” Tate says. “Demand has been brisk.”
WHEAT
As the largest handler for Bunge in the district, Tate said
wheat is “probably the saddest
scenario of them all.”
“Wheat is at about a 25 year low because there is not much demand,”
he says. “We raise three
billion bushels a year in the U.S. and when we get ready to harvest
this crop, we’ll have
almost a billion bushels left over from last year. World stocks are
way down at a 40-year
low. If there is a problem with supply anywhere in the U.S., we could
see our wheat prices
double in six months. Any little glitch in production and we could
see absolute lows going to
absolute highs. Unfortunately, it’s so difficult to move excess stocks
overseas because of
the European Union’s subsidies to farmers. They can almost always undercut
prices. If a
farmer sells this year’s wheat and takes his loan deficiency payment
the same day, he’ll get
about $2.80 per bushel. With 50 bushels or more, he might break even.”