Kyle Dean Host: We're back here on WTIF; 9:35 on this Monday morning. Market Monday time for our UGA Tifton Farm Chat with Don Shurley. Don, good morning to you.
Don Shurley, UGA Tifton Cotton Economist: Good morning, Kyle, how are you this morning?
Kyle Dean, Host: Doing great. Hope you had a great Easter.
Don Shurley, UGA Tifton Cotton Economist: I did, hope you did too.
Kyle Dean, Host: Thanks so much. Cotton, we are talking about that and the Georgia Acreage Intentions. That's something that we talked about on past shows but it shows more clear numbers I guess you could say. We are down as it relates to what the intentions are in planting cotton this year.
Don Shurley, UGA Tifton Cotton Economist: That's right. We've talked about this report, really, over the last month or two; kind of looking forward to it. And these numbers came out March 30th, a little over a week or so ago now; and pretty much along the lines of what we expected. Here in Georgia, we planted 1.6 million acres of cotton last year which for your listeners that don't know, that puts us number 2 in the country behind Texas. Of course, that's pretty far number 2 because Texas is about 5 or 6 million acres or 7 million acres. But, we are down to 1.4 million this year which is what we suspected. We are going to get some competition from peanuts, very strong peanut contracts. So we expected the acreage to be down and the acreage, here in Georgia as well as belt-wide throughout the U.S., is pretty much in line with what we thought.
Kyle Dean, Host: And, you see the total U.S. acreage change is about -10% close to 11% [Shurley: Yes.] at 10.7, are there any shocks? Let's talk about the southeast kind of our general region which is Alabama, Florida, of course Georgia, South Carolina, North Carolina, Virginia. Any shocking things? The only thing I see that jumps out is that South Carolina gained a little bit of acreage.
Don Shurley, UGA Tifton Cotton Economist: Yes, that's kind of surprising. South Carolina acreage was up. That was the only state in the southeast where cotton is expected to be up just a little bit, about 12%. But, the other surprise that I thought, Kyle and we've talked about this before and for your listeners let me tell you what this is. This is a survey of farmers, back in early March that asked them, “As of right now, what do you think you are going to plant? What do you intend to plant?” Now, what they actually plant is going to depend on the weather, depends on changes in cost of production, depends on what prices do here over the next month or so. So, what's actual going to be planted, we won't know that until the end of June. But, this is an early March survey that asked farmers, “What do you intend to plant?” And, if you look at the numbers here in Georgia we have thought, and I know that Nathan my co-worker has been on this program as well quite a bit and, we have thought that corn acreage would be up in the state of Georgia and this March Planting Intentions Report actually shows that corn acreage might be down just slightly 1-1.5%. That's a big surprise, it really is. It could be that the high cost of fertilizer maybe has scared some acreage off. Also, we know that almost the entirety of our corn acreage in Georgia is under irrigation. It's just too risky to grow corn without some irrigation. [Dean: Sure.] So it could be also that the higher price of diesel fuel now and the fact that you really have to irrigate corn quite a bit more than you do cotton or peanuts. So, maybe the higher irrigation cost compared to other crops may have also scared some of that corn acreage off. But, to be honest with you, I still think corn acreage will be up a little bit; I just don't think the USDA report shows that.
Kyle Dean, Host: And, one place we thought where some the cotton acreage might go was peanuts and you see that on this report where it's up an estimated 20%.
Don Shurley, UGA Tifton Cotton Economist: Yes, peanuts up 20% just under 100,000 acres and we expect...really it puts really cotton and peanuts back to about where they were 2 years ago back in 2010. We were expecting a big increase in peanut acreage based on our conversations with growers out there over the winter and county Extension agents, we kind of knew that was coming. So that's the tradeoff that we were looking for between cotton and peanuts.
Kyle Dean, Host: Well, of course, we are number 1 in peanuts grown here in the southeast, number 2 in the country. And as Don mentioned, in cotton acreage over the years, of course Texas growing over 6 million acres but we are at 1.4 million and we are number 2 by quite a margin.
Don Shurley, UGA Tifton Cotton Economist: That's right and cotton is really our, cotton and peanuts both, but cotton's our number 1 crop here in the state and peanuts would come in behind that.
The other thing that I will mention is we can still see some changes in these numbers and I would expect that we will. We haven't talked much yet about the markets, but you know every time I come on, we kind of talk about where the markets at and we've pushed down below that $.90 level. We're back up a little this morning; we are around $.88 now. I think as far as Georgia is concerned, our first crop that goes in is corn and so for that reason – and matter of fact we are pretty far along on our corn planting right now – so I think the corn acreage is already set. But if cotton prices stay below that magical $0.90 level, I mentioned this a lot in recent months, I really feel like we can see our cotton acreage slip a little bit more. Maybe not so much here in Georgia, but you look in the mid-south, and by that I mean Arkansas, Mississippi, Louisiana, those areas; we could see our cotton acreage slip even a little bit more over there if prices keep trending the way they are.
Kyle Dean, Host: Of course, in that mid-south you got Arkansas and Mississippi both right around 600,000 acres so those are pretty big numbers as it relates to cotton acreage across the United States.
Don Shurley, UGA Tifton Cotton Economist: It is and the acreage over there has really taken a hit in recent years. Georgia and Mississippi used to battle for number 2 and now you can look at Mississippi, they're at less than 600,000 acres and Georgia and Mississippi used to battle for number 2 in acreage every year. So, their acres over there is roughly half of, let's say, of what it used to be. So they've really taken a hit over there. And, they've seen acreage shift more into corn and soybeans as those prices have become more competitive. So, I think it's real critical, here over the next month, what cotton prices do. I have said on this program numerous times that cotton needs to stay $0.90 or better in order to keep acreage up to bid acreage in but, to be honest with you, to be brutally honest, maybe the market doesn't care what acreage is right now [Dean: Right.] because it's sending a signal that it's not willing to fight with corn and soybeans for acreage. And, again I don't think that will have a tremendous impact on us here, we may lose a few more cotton acres into peanuts or again I mentioned corn. But in the mid-south, that really could be critical.
Kyle Dean, Host: And how important is it that, of course you mentioned climate is always a big thing and really a risk when you, of course farming’s a risk, but how important is it not to get these late planting decisions or these all the way into late June, early July when we start getting these things in the ground?
Don Shurley, UGA Tifton Cotton Economist: Well, we can plant. It's not unusual at all for us to plant cotton in June. That's not the optimal situation, but we have done it and we do it to some extent every year, and as long as our weather in the late summer early fall cooperates, really that's not a problem for us. But it is a problem in other parts of the country. And I think, for the most part, farmers have fairly well settled on their acreage but there's, I would say, there is still 10-20% of the acreage out there that could still be shifted to one crop or the other depending on how prices compare. Really, if you look just over the last 2 weeks, I meant to mention this earlier, this is what is I mean – cotton has got a little bit stronger on price, soybeans have gotten a little bit stronger on price, and cotton is down about a nickel from where we were just 2 or 3 weeks ago. So, that's how quickly things can change and farmers, believe me, keep an eye on stuff like that and as those relative prices shift, as we get on into mid-late April and certainly into May, that'll be the final determination and also soil moisture will depend on what we finally do in the way of planting.
Kyle Dean, Host: Don, I don't know if I've ever asked you this, I've had many times that I could probably ask you this but what makes Georgia such an attractive state for cotton? You know you look at Alabama, South Carolina, Tennessee they are all in the 400-600,000 acreage model. We’re twice that. What makes Georgia so attractive?
Don Shurley, UGA Tifton Cotton Economist: Great question, if you go back, I've been at UGA 21 years, if you go back 25 years ago, Kyle, that's when we started the boll weevil eradication program here in the southeast, back in the mid-80s. And that completely changed the comparative advantage of crops here in the southeast that really made for the comeback in cotton. Also, we can't just make the yield on corn and soybeans particularly dry land that some of these other states can. And so peanuts and cotton are suited to our soils, suited to our climate and, in terms of our yields and cost production, that’s where we have a comparative advantage. But the reason cotton has really come back as strong as it has in our neck of the woods is because of the success of that boll weevil eradication program and the increase in irrigation now has made it profitable. And also, we've got varieties now that are much better suited for our climate and growing conditions than they used to be.
Kyle Dean, Host: Great information. Don, we appreciate you once again.
Don Shurley, UGA Tifton Cotton Economist: Thank you Kyle. Always glad to be here.
Kyle Dean, Host: We'll be back after this on WTIF.