CAES: Row crop forecast presents mixed bag
2/7/2021
MACON, Ga. — UGA Public Service Associate Amanda R. Smith gave an outlook for the 2021 peanut, corn and soybean crops during the annual UGA Georgia Ag Forecast. Smith said farmers can expect to see increases in the cost of land rent, machinery/equipment and labor. Good news is: interest rates are expected to decrease or remain low and fertilizers and fuel prices are expected to decrease. The cost of seed and chemicals is expected to be mixed.
Smith encouraged Georgia farmers to use the UGA Row Crop Comparison Tool to crunch their individual farm numbers to determine which crops will profit their farms.
“I really want to stress farmers use the UGA Row Crop Comparison Tool because we’re in a plateau phase in ag which means prices tend to cycle around the cost of production” Smith said. “Make sure you have a marketing plan and know your cost of production.”
Farmers may access the row crop comparison tool at https://agecon.uga.edu/extension/budgets.html.
Smith encouraged farmers to control production costs by efficiently using crop rotation, tillage, precision application of chemicals, fertilizer and irrigation.
Key take-aways for peanuts: The 2020 U.S. peanut crop is projected to have the third largest production at an estimated 3.07 million tons from 1.62 million harvested acres nationwide, up 16% over 2019. The COVID-19 pandemic changed consumer food purchases to favor peanut products as more consumers stayed home and bought more peanut butter.
Key take-aways for soybeans: The 2020 U.S. soybean crop production is estimated to be 4.14 billion bushels, up 16.4 % from 2019. The COVID-19 pandemic caused a decrease in demand and prices but at the end of last year, the sector saw a big increase in exports and prices as China increased its soybean imports to rebuild its swine herd. The global supply of soybeans is the lowest since 2013/14. Season average prices for Georgia soybeans in 2021 could average $10.85/bushel.
Key take-aways for corn: The 2020 U.S. corn crop production, projected at 14.2 billion bushels, is an estimated 4.1% increase over 2019. The COVID-19 pandemic decreased demand and prices (primarily due to less corn used for ethanol, but like soybeans, the end of 2020 saw an increase in exports, which combined with a lower global supply sent prices up. Season average prices for Georgia soybeans could average $4.85/bushel in 2021.
Dr. Yangxuan “Serinna” Liu presented the outlook for the 2021 cotton crop during the Georgia Ag Forecast. Her key take-aways were: 1) Cotton prices could range from 70-85 cents/lb. throughout the year but expect 75 cents for planning purposes; 2) Global economic recovery indicates recovery for cotton demand; 3) High uncertainty is expected for cotton acreage in the U.S. & Georgia this crop year.
Liu said the four factors causing the surge in row crop prices are: 1) projected economic growth in the U.S. and globally; 2) Depreciation of the U.S. dollar, which makes U.S. crops more affordable to other countries; 3) COVID-19 stimulus relief packages Congress has already passed and is considering; 4) China’s increased ag purchases to fulfill its side of the Phase 1 trade agreement.
Another thing helping the U.S. economy and agriculture is the relative stability of U.S. inflation in 2020. The U.S. inflation rate for all items last year was 1.4%. The inflation rate for energy was -7% which counterbalanced the 3.9% inflation rate rise for food last year.
Source: Georgia Farm Bureau