2013 Row Crop Outlook
Don Shurley, Nathan Smith, Amanda Smith
Department of Agricultural and Applied Economics
University of Georgia– Tifton Campus
2013 Ag Forecast
Georgia Major Row Crops Acres Planted *
1,000 Acres
* Tobacco is acres harvested.
2013 Ag Forecast
2012 An Exceptional Year For Yields
2013 Ag Forecast
Prices Have Also Been Mostly Good
Corn
Cotton
Grain Sorghum
Peanuts
Soybeans
Wheat
2011 Crop
2012 Crop
$6.22
$6.80 - $8.00
$0.883
$0.66 - $0.71
$5.99
$6.70 - $7.90
$625
$385 - $700
$12.50 $13.50 - $15.00
$7.24
$7.65 - $8.15
2013 Crop
2013 Ag Forecast
Georgia Cotton Acreage and Yield
1800
1200
1700
1000
1500
1400
800
1300
1200
600
1100
1000
400
900
800
200
700
600
500
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Acres
Yield
Yield– Lbs/Acre
Thousand Acres Planted
1600
Georgia Peanut Acreage and Yield
800
5000
750
700
4000
650
600
3500
550
3000
500
2500
450
400
2000
2000
2001
2002
2003
2004
2005
2006
Acres
2007
Yield
2008
2009
2010
2011
2012
Yield– Lbs/Acre
Thousand Acres Planted
4500
Georgia Corn Acreage and Yield
600
200
550
500
160
450
400
140
350
120
300
100
250
200
80
2000
2001
2002
2003
2004
2005
2006
Acres
2007
Yield
2008
2009
2010
2011
2012
Yield– BU /Acre
Thousand Acres Planted
180
500
50
450
45
400
40
350
35
300
30
250
25
200
20
150
15
100
10
2000
2001
2002
2003
2004
2005
2006
Acres
2007
Yield
2008
2009
2010
2011
2012
Yield– BU /Acre
Thousand Acres Planted
Georgia Soybean Acreage and Yield
Georgia Wheat Acreage and Yield
500
60
55
400
350
50
300
45
250
200
40
150
100
35
2000
2001
2002
2003
2004
2005
2006
Acres
2007
2008
Yield
2009
2010
2011
2012
2013
Yield– Bu/Acre
Thousand Acres Planted
450
Cotton Situation
• Acreage and Production
• Demand
• World Stocks
2013 Ag Forecast
US Cotton Acres Planted and Harvested
16
14
Million Acres
12
10
8
6
4
2
0
2005
2006
2007
2008
Planted
2009
Harvested
2010
2011
2012
World Cotton Demand
140
Million Bales
120
100
80
60
40
20
0
2005
2006
2007
2008
2009
Crop Year
2010
2011
2012
Crop Year Carry-In Stocks
China, Rest of the World, and Total
90
80
Million Bales
70
60
50
40
30
20
10
0
2006
2007
2008
2009
China
2010
ROW
2011
2012
2013
2013 Cotton Price Outlook
•
US acreage will likely be down 15 to 20%.
•
US and World production will likely be down.
•
•
•
•
This will begin to bring supply and demand in closer balance. Demand is
showing signs of improvement but growth may be slow.
But, balance will be a slow process. Prices will not likely improve
significantly (above 85 cents) until stocks are drawn down and/or demand
improves. This could be 2014 or beyond.
How will China manage it’s large reserves?
Pessimistic outlook– 70 to 75 cents
Optimistic outlook– 85 cents or better
Most likely outlook– 75 to 85 cents
More risk on the downside than potential on the upside
Peanut Situation
•
WAREHOUSE BUSTER-- a tidal wave of peanuts due
to increased acreage and record yields and
increased acreage.
• US Planted Acreage 1,636,000 acres, up 44%.
•
• New Record US Yield of 4,192 lb/ac.
• New Record GA Yield of 4,550 lb/ac
Use (demand) slowed by high prices last year.
h t t p : // f ar m p ro g re s s . c o m /s o u t h e r n - f ar m e r- s to r y - p e anu t - c ro p - s e t - b re ak - re c o rd s - 9 6 3 4 64
Peanut Production, Use, and Carryover
4000
3500
1,000 Tons
3000
2500
2000
1500
1000
500
0
Food Use
Exports
Crush
Seed, Shrink, Resid
Production
Carryover
2013 Ag Forecast
2013 Peanut Price Outlook
•
•
•
•
Shellers and manufacturers will try to find the price that
will drop acres to 1.2 million (1.636 in 2012, 1.141 in 2011).
Expect $400 or lower contracts at first. Prices may improve
by harvest and into 2014 if production down and demand
up. Likely range-- $355 to $500/ton.
Otherwise, will growers forfeit loan peanuts to the
government?
Consumption should increase due to lower prices.
• Increased exports with lower prices and lower dollar.
• Expect major users to begin ad campaigns?
• More Chinese purchases?
• Eat More Peanuts!
18
Corn
2013 Ag Forecast
U.S. Corn Supply and Demand
14,000
Mil bu
50%
12,000
10,000
8,000
6,000
19.8%
40%
3rd highest crop in 2011
Down in 2012, record acreage but low yield
Use trending down but still outpaces supply
Record low stocks
17.5%
13.9% 13.1%
11.6% 12.8%
4,000
30%
20%
8.6% 7.9%
2,000
5.3%
0
10%
0%
2004/05
2006/07
Ending Stocks
2008/09
Production
2010/11
Domestic Use and Exports
2012/13
Stocks:Use
Using Less Corn Since Record
High in 2010/11
Million bushels
14,000
1,316
10,000
8,000
6,000
1,370 1395
1,338
12,000
1,285 1,324
1,329 1,340 1,345
1,320 1,347
1,370
1,364
1,818
1,378 1,371
2,437
1,980 1835
1,849
2,134 2,125
1,421
1,543 1,367
950
1,900
1,941 1,905 1,588
3,049
4,591 5020
1,937
5,000
3,709
1,984
1,603 2,117
1,323
1,504
4,500
1,797
1,168
706
628
996
566
526
481
429
4,000
2,000
6,157 6,155 5,598 5,913
5,277 5,482 5,468 5,665 5,842 5,864 5,563 5,795
5,182 5,125 4803 4,562
4,450
Feed and Residual
Ethanol
Exports
Source: USDA WASDE Report, 1/11/2013
Food Seed and Other Industrial
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
0
2013 Corn Price Outlook
•
•
•
•
Soybean/Corn price ratio still favors corn in Midwest. Another record
planted US acreage likely, increasing by 1 to 2 million acres to between
98 and 99 million acres.
Ethanol production recovery with lower priced corn? A good sugar crop
in Brazil could negatively impact US ethanol exports.
Georgia growers have booked a lot of 2013 corn already. Increased corn
production in Georgia will tax grain handling capacity and likely lead to
a wide basis at harvest.
Pessimistic outlook– $4.80 to $5.35 per bushel
Optimistic outlook– $7.00 to $8.00 per bushel (drought yield)
Most likely outlook– $5.35 to $6.00 per bushel
Soybean Situation
Acreage response to higher prices in 2012, but
2 straight years of below trendline yields.
U.S. Soybean Supply and Demand
Both use and production trend down since 2009
Dates back to shortfall in 2007
Very low stocks
50%
Mil bu
4,000
3,500
3,000
2,500
3,361 3,280
3,155 3,070
2,986 2,873 3,073 3,054 3,047
3,359 3,329
3,188
3,124 3,063
3,094 3,015
2,967
2,676
2,000
15.6%
1,500
1,000
500
0
18.7%
8.6%
256
6.7%
449
574
Ending Stocks
206
4.5% 4.5%
138
Production
Source: USDA WASDE Reports, Oct 11, 2012
151
6.6% 5.4%
4.4%
215
169
Total Use
135
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Stocks:Use
•
•
•
•
•
2013 Soybean Price Outlook
US acreage could go either way in 2013 but likely increase up to a
million more due to increasing production in South.
Very low stocks and export pace has been good. Increased export
demand from China and successive droughts in South America and US
have been supportive to prices.
South America expected to make quick recovery in production as Brazil
is projected to exceed US production for first time ever.
China needs to import soybeans for its increased crushing capacity and
growing economy. When will it switch to SA origin?
Pessimistic outlook– $10 to $11 per bushel
Optimistic outlook– $13-$14 per bushel
Most likely outlook– $11.50 to $12.50 per bushel
2013 Wheat Price Outlook
•
•
•
•
•
US winter wheat seedings up 0.5%, Georgia up 41% to 410,000 acres.
Increase in double crop acres very likely.
Condition of winter wheat in Southern Plains fair to very poor for more
than half the crop with continued drought conditions. Northern Plains
experiencing a lack of snow cover on wheat.
Spring wheat projected to increase acres also even with corn and
soybeans looking to increase.
Georgia wheat basis weaker due to mills expecting plenty of wheat and
early bookings. Also, elevators will want to get rid of wheat quickly to
make room for corn.
Pessimistic outlook– $6.25 to $7 per bushel
Optimistic outlook– $8-$9 per bushel
Most likely outlook– $7 to $8 per bushel
2013 Net Returns Comparison,
Non-Irrigated
2013 Ag Forecast
2013 Net Returns Comparison,
Irrigated
2013 Ag Forecast
BreakEven Equivalent Prices of Peanuts and Cotton
550
Peanut Price
500
Irrigated
450
Non-Irrigated
400
350
300
60
70
80
Cotton Price
90
100
2013 Ag Forecast
BreakEven Equivalent Prices of Corn and Cotton
7.00
6.50
Corn Price
6.00
Irrigated
5.50
Non-Irrigated
5.00
4.50
4.00
60
70
80
Cotton Price
90
100
2013 Ag Forecast
Georgia Major Row Crops Acres Planted *
1,000 Acres
* Tobacco is acres harvested. 2013 are authors projections except wheat.
2013 Ag Forecast
Farm Bill Status
Commodity Title
Why the Farm Bill Safety Net Must Change
• High commodity prices make it hard to defend Direct Payments
• The political will to support continuing DCP just is not there
• Budget considerations and the need to cut spending
• The WTO cotton case
2013 Ag Forecast
Farm Bill Status
Commodity Title
•
•
•
•
•
The Senate passed it’s version of the Farm Bill on 6/21/2012.
The House Ag Committee completed its version on 7/11/2012. The full
House, however, never took up the Committee report.
Now have a new Congress with some newly elected members and
new Committee membership and leadership.
The 2008 farm bill was extended on January 2 through September 30,
2013. Must now get a new 5-year bill done effective for 2014.
January 22- Senator Reid introduces 2012 passed Senate version
Concerns
• Will Direct Payments be made on 2013 crops even with extension?
• Because new farm bill was not passed earlier, it now faces more
budget uncertainty and likely larger cuts.
• New legislators and committee members may not fully support
previous House and Senate versions.
•
Crop insurance has become an increasing target for major cuts
and overhaul.
2013 Ag Forecast
How Will The Safety Net Likely
Change in the New Farm Bill?
•
Loan Program will continue but with modifications for cotton
•
DCP and ACRE eliminated, replaced with revenue loss payments
•
House bill does contain a “Price Loss Payment” similar to CCP.
•
A separate revenue loss program (STAX) begun for cotton
•
Funding for conservation programs reduced
•
Funding for Organic programs may change
Bottom Line
THERE WILL BE LESS MONEY!
BOTH PRODUCERS AND LANDOWNERS WILL HAVE
TO ADJUST THEIR EXPECTATIONS!
2013 Ag Forecast
Thank You
2013 Ag Forecast