“Everyone says they're going to plant more corn this year, but having watched producers contend with two serious bouts of aflatoxin in recent years, I'm somewhat skeptical of what I'm hearing,” Richard Bell said at the Mid-South Farm & Gin Show at Memphis, Tenn.
“If weather conditions are perfect, it can be a great crop; if weather conditions get off course, it can be a debacle,” he said at the show's Ag Update seminar.
Nonetheless, he says he's expecting Arkansas acreage to be up 40 percent to 380,000 acres and Mississippi up 30 percent to 710,000 acres.
“That's about a million acres in those two states alone. But to put it in perspective, Illinois and Iowa combined will have 22 million acres — so there's no danger of us scaring them in terms of competition.
“I see the increases coming mostly out of cotton acres.”
Although corn prices are now about 30 cents to 40 cents higher because of the production shortfall last year, Bell says he expects they will fall 15 cents to 20 cents this crop year.
“I expect demand to continue, but I think we could see prices around the $1.98 loan level during the corn belt harvest period. If you're going to grow corn in the Mid-South, I think our real advantage is to get it off early, get the premium for basis, and hope we don't run into disease or other problems.”
There was a smaller soybean crop than expected in 2002, which led to higher prices, spurred by drought problems in Ohio, Indiana, and elsewhere.
“But it was still the fourth largest crop on record, but with the lower supply because of reduced carryover, prices did go up. It looks like a carryout of between 150 million and 175 million bushels, with an average price of $5.35 on a national basis. Riceland's average price has been around $5.60, the first time in four years we've actually settled above $5. Very few people got LDP, but got it out of the cash market, which is good. I would caution, if you have anything left to sell, February-March is not generally a good time to sell.
“I'm still looking for $6 in terms of the 2002 crop, because something likely will happen to the Brazilian crop.”
Export markets continue be good, Bell says. “China is tremendous, and Japan, Mexico, Taiwan, Indonesia, Korea are all doing very, very well. But harvest is under way in South America, with another record crop — Brazil and Argentina together will produce a 3.03 billion bushel crop, which means for first time in history it will exceed the U.S. in soybean production and will dominate the market for the next six months.
“I feel Arkansas will be up 7 percent and Mississippi up 1 percent. China will be key. Carryout will be down, but not as much as we'd like. I can see lower prices, but think will have chance to stay within the $5 bushel range. I think there's good potential for soybean oil sales as long as cotton oil's in the 50-cent range.”
Wheat experience significantly higher prices in 2002/03 due to drought in Canada, the U.S., and Australia — all major exporters.
“But we saw some new exporters, Russia and Ukraine, which turned out to be big sellers. We paid $2.85 at Riceland this past summer, with no LDP. That's not bad. Our seasonal pool has already advanced $3.25, and I think we've got a chance for $3.50.
“Wheat's a good crop in the Mid-South. I'm disappointed we're not going to have that much in this spring because adverse weather last fall caused abandonment of a lot of wheat plans.
“We've been able to establish ourselves as quality wheat producer. At Riceland, we're shipping unit trains from Stuttgart into Mexico about every two weeks. They like our soft red winter wheat.
“Our breeders have done a good job with the crop and, longer term, I think it has good possibilities Mid-South growers.”.