Kyle Dean, Host: Back here on a Monday morning. 9:44 and we’re ready to start our UGA Tifton Farm Chat: Market Monday with Nathan Smith. Nathan is going to be talking about peanuts and corn, soybeans. Good morning to you, Nathan. How are you?
Nathan Smith, UGA Tifton Peanut Economist: Morning, Kyle. Doing well.
Kyle Dean, Host: Good to have you here and, I’ll tell you, corn prices… we’ve been talking about how strong they’ve been, but they’ve slipped a little bit. But you still say that overall, it looks pretty good for corn.
Nathan Smith, UGA Tifton Peanut Economist: That’s right, Kyle. We’ve had a little bit of a slip in some prices for commodities. I guess kind of the old marketing slogan or saying is, “March comes in like a lamb and goes out like a lion” and we’ve seen a little bit of that at least talking about prices. There has been a little bit of a slippage in some prices, but overall still when you compare them to the historical prices, we’re still looking at a pretty good level.
Kyle Dean, Host: Now, how about acreage on corn? We talked about this the last time you were here about how corn’s not as big in the South as it is in the Midwest, obviously, but what do we look like in terms of acreage this year?
Nathan Smith, UGA Tifton Peanut Economist: Corn acres should go up in the US. About a week and a half ago, the USDA had their annual outlook forum in Washington, DC and the Chief Economist for the Secretary of Agriculture speaks at that and gives USDA’s outlook and that kind of the first outlook projection on acres.
They were showing a 2,000,000 acre increase which is pretty much in line with what market analysts were thinking. So that would be basically 94,000,000 acres, record acreage in corn in 2012. So, that acreage is probably coming from other areas besides soybeans because they left soybeans acres unchanged at 75,000,000 acres. We’re going to have more corn acres. Corn’s the tightest of the largest commodities program crops between soybeans, grain sorghum, wheat and corn. Expectation is we’ll have a bigger corn crop in 2012.
Kyle Dean, Host: You mentioned soybeans being unchanged. How about an update on some of the other smaller commodities here.
Nathan Smith, UGA Tifton Peanut Economist: Soybeans acres, it little bit surprised me that they didn’t lower the soybean acres for the US at 75,000,000. But that might actually be accurate for Georgia. We may just kind of stay the same in Georgia on soybean acres. We’re down below 200,000 which is getting to be pretty small.
You get concerned on infrastructure…keeping the soybean mills going. We have two soybean mills in Georgia. They bring the corn [soybeans] into Georgia and then send it out as feed as well as soybean oil. But then we have one mill that is right across the line up in Estill, South Carolina that was bought by ADM, I guess, a little over a year ago, but I wouldn’t be surprised if soybean acres did go down a little bit. We’ve got more soybeans in the pipeline or stocks level in soybeans than corn as far as relative to domestic use or total use. And, they planted more soybeans in South America, but right now the drought has impacted their production. [Dean: Certainly] So it’s actually been a little better for soybean prices. They’ve caught up with corn prices a little bit in the last two weeks as far as soybeans go.
Kyle Dean, Host: Of course, we talking with Nathan Smith here, Peanut Economist UGA Tifton. Let’s talk about peanuts, Nathan. Everybody I guess is kind of sitting on pins and needles wanting to know about contracts and also what the acreage is going to look like. Can you give us some definite answers on that?
Nathan Smith, UGA Tifton Peanut Economist: [laughter]. Well, I can definitely say I don’t know on contracts. That’s the question you get hit with coming in the door at producer meetings… you got any contracts or information on contracts. There are no contracts out there unless they’ve come out today that I know of.
I think the manufacturers are thinking that growers are going to plant a lot more peanuts acres. They’re going to bump up peanut acres significantly. And we will plant more peanuts that the 750 to 650 contracts got folks excited about planting peanuts, but that was on a limited basis. So, I think they’re going to wait for the planting intentions report as one signal.
I still believe that we’ll see some type of contract before planting and some of that might be related to seed sales that they need to shore up their seed sales for peanuts. But that’s one thing that growers need to think about and when they’re talking about contracts to see if they can lock in their seed price at that time to see if they can get a better seed price than may be what we’re looking at.
Kyle Dean, Host: Are producers going to generate and plant more peanuts without contacts?
Nathan Smith, UGA Tifton Peanut Economist: I think they’ll plant, but I don’t think they’ll plant as many as they would with a contract. [Dean: OK]. But if we do, there are some other states that are really looking to ramp up. Mississippi is talking double to …even I’ve had a call saying they could triple their acres in Mississippi. That would be 60,000 acres. South Carolina is probably going up. Florida is going to increase their acres again and be above 200,000 probably or push that figure. So, we could really ramp up acres and production and that will push prices down.
Kyle Dean, Host: And again, remind people of how many acres there are in Georgia…about 500,000 or so?
Nathan Smith, UGA Tifton Peanut Economist: Yes. We were below 500. We were at 475,000 last year, the lowest in years, three decades or more. And we would be better at the mid-500’s. We could go easily to 600,000 this year or above 600,000.
Kyle Dean, Host: And one thing that helps when it comes to producing and planting is rain. We’ve had some of that this past week, two times we’ve been hit. All total, I would guess probably 5+ inches between the two rains that we’ve had the past week. How does that impact directly what farmers are thinking in their heads?
Nathan Smith, UGA Tifton Peanut Economist: It’s certainly helping ease a little bit of the concern, but we’re still early in the game as far as having enough surface water irrigation is concerned. If we didn’t have the drought, I’d say we would definitely increase corn acres. With having the drought, that’s a concern for those folks whose water sources are from surface water, creeks and rivers. But the rain certainly helped that in filling up some of it. But we’re going to need that to continue because temperatures are going to start going up and it’s warmer than normal early. Trees are going to start pulling the water out of the ground. We definitely need the continuation of this with the rain. It certainly helps the short term outlook.
Kyle Dean, Host: Give us as kind of a wrap up here, Nathan, is what farmers should be thinking about now if they’ve got peanuts, corn, all the above, if they’ve got some on all their acres, what should they be thinking about right now?
Nathan Smith, UGA Tifton Peanut Economist: Mainly, it’s getting your crop mix. What you’re going to plant is what guys are trying to decide. Most of it I think is on the margin. I think this is a year to get yourself back into your rotation. Many got out of the rotation a little bit last year so, get yourself into the rotation and then be thinking about…I mean, the big thing is what are you going to do with peanuts if you don’t have a contract? That’s the two big things. The other thing is the deadline has passed on crop insurance, but as far as risk protection and revenue protection this year, if I don’t have a contract on peanuts am I better off planting corn or cotton because of the risk protection I have in those crops related to insurance.
Kyle Dean, Host: Nathan, once again, great information. We appreciate your dropping by on this Monday morning and we look forward to talking to you again in three weeks.
Nathan Smith, UGA Tifton Peanut Economist: Alright. Thank you, Kyle.
Kyle Dean, Host: We’ll be back after this on WTIF.