The USDA’s National Agricultural Statistics Service released this year’s first set of crop projections as part of the August Crop Production report. Here are some key highlights:
- Alabama cotton and peanut production are expected to be higher than last year. This is due to higher yields and projected harvested acreage for both crops.
- Corn and soybean yields are expected to decline in Alabama.
- Projected nationwide production of soybeans is expected to reach a new record high. Production of corn, cotton, and peanuts are expected to decline.
- Cotton prices remain volatile and are back on an upward swing.
Alabama peanut production is projected at 374 thousand tons, a 20.2% increase over 2021. This is due to the high yield projection of 4,000 lb. per acre, which would equal the record set in 2012. If realized, this would be a sizable increase from the yields seen since 2012, which have ranged from 3,150 to 3,650 lb. per acre. However, note that record or record-tying yields have been projected in the August forecast for four of the past five years, so some caution should be exercised.
The peanut crop across the U.S. looks mixed. Georgia – the leading peanut producer – is expected to yield 4,500 lb. per acre. This would be its highest value since 2012. However, Texas is expected to yield just 2,100 lb. per acre, which would be its lowest mark since 1995. Overall, U.S. peanuts are expected to yield 4,129 lb. per acre, which would approximately equal the value from 2021, but production would fall by 3% to 3.1 million tons due to the lower planted acreage.
Alabama cotton production is also projected to increase to 745 thousand bales, a 55-thousand-bale increase from last year. This is due to the higher expected harvested acreage combined with a higher expected yield. The projected yield of 851 lb. per acre would mark a 3% increase over last year.
However, the U.S. as a whole is expected to see a significant decline in cotton production due to a much higher projected abandonment rate. This comes despite a slightly higher predicted yield than last year at 846 lb. per acre. The projected harvested acreage is just 7.13 million acres, which would be 3 million acres less than what was harvested in 2021. This would mean 43% of planted acreage this year went unharvested, with the abandoned acres largely coming out of Texas. Texas cotton production is forecast at 3 million bales, which would be the lowest since 1986, while U.S. production projects at 12.6 million bales, which would be the lowest value since 2009.
In Alabama, corn yields are expected to fall to 134 bushels per acre, an 18% decline from 2021. This would mark the lowest yield since 2016, which reached only 120 bushels per acre. Combined with the lower expected harvested acreage of 290 thousand acres (55 thousand acres less than 2021), production is expected to hit just 38.6 million bushels. This would mark a 31% drop from last year, in which Alabama saw its third highest corn production on record and highest since 1955.
Other neighboring states have seen similar prospects, with Tennessee and Kentucky looking at their lowest yields since 2012. All states in the region are expected to have lower corn production this year. Nationwide, corn yields are expected to drop to 175.4 bushels per acre from the 177 bushels per acre observed last year. Crop conditions are worse than last year at this point, with moisture shortages arising throughout the corn belt. Overall, the below trendline yield combined with decreased acreage are expected to lead to a production of 14.4 billion bushels, a 5.3% decline from 2021.
Soybeans are facing a similar fate in Alabama and are expected to see a yields of 42 bushels per acre, a 4 bushel per acre drop from last year. However, production is expected to increase despite the lower yield, driven by the higher expected harvested acreage. The 14.5 million expected bushels would represent a 3.3% increase over 2021.
Overall, the U.S. is looking at a record 4.5 billion bushels of soybeans, which would mark the second straight year of record production. This would be driven by the one-million increase in acreage (to 87.2 million acres) along with the expected 0.5 bushel per acre increase in expected yield. The 51.9 bushels per acre projected yield would equal the record set in 2016.
What Does this Mean for Prices?
Peanuts have traded around $500 per ton, elevated as the market faced competition from other crops. Cotton prices for the 2022/2023 marketing year are projected at 97 cents per pound, on average, up 2 cents from July’s report. This is also higher than the 2021/2022 estimated price of 92 cents per pound. Markets have continued to be bullish on cotton, following the selloff that started mid-June and continued throughout July. The December 2022 futures contract is back up to $1.14 per pound, following a dip to 83 cents last month.
Corn and Soybean prices have not seen the same rebound as cotton following the decline in late June. Corn futures prices for the September 2022 contract have been in the high $5 to low $6 per bushel range, almost $2 less than they were during the spring and early summer. Similarly, the November 2022 soybean contract has bounced around $14 per bushel. However, prices for both crops remain the highest they have been in recent years.
Past and Projected Prices: Corn, Soybeans, and Cotton
*USDA World Agricultural Supply and Demand Estimates, June 2022
Note: Futures prices from Chicago Mercantile Exchange and Intercontinental Exchange (cotton)
Note that the USDA yield and price projections stated are all based on the conditions as of August 1st and may change throughout the rest of the growing season. This year’s actual yields and prices may be different, so please keep that in mind when using this information.Source : aces.edu