February 27, 2017
By Maggie Lawrence
For Alabama’s row crop farmers, 2016 was both good and bad, according to Max Runge, an Alabama Extension economist. While drought conditions held corn and soybean yields below the five-year average, 2016 may post record-high cotton yields.
“If estimates hold, this will be a record yield of 987 pounds per acre,” Runge said. He added other crops did not fare as well.
“How you weathered the year depended on where you were,” he said. “Corn growers in northern areas of the state really suffered from drought, but in parts of south Alabama, some growers had reasonable yields.”
The U.S. Department of Agriculture’s (USDA) Crop Production 2016 Summary estimated Alabama corn production is up 5 percent, thanks to increased acreage. Drought conditions reduced corn yields to an average 120 bushels per acre, down from 147 in 2015. Runge noted corn prices were weak because of large U.S. and world grain stocks.
While soybean prices were stronger than anticipated, drought reduced yields in many areas.
“According to USDA, Alabama soybean production was down 35 percent from 2015,” Runge said.
However, he also said reduced fuel and fertilizer costs in 2016 helped balance increased costs in seeds and other inputs.
Looking at 2017
Runge said 2017 doesn’t look bright for farmers. One issue to consider is reduced fall cover crops.
“Most farmers plant fall cover crops, whether to reduce erosion, add organic matter or double crop small grains,” he said.
Drought prevented many farmers from planting these crops, and while other farmers planted, drought affected germination and stand development.
“It probably means less small grains harvested this year,” Runge said.
Farmers can expect inputs, particularly fertilizer and fuel, to rise slightly, he said. Recent rate increases by the Federal Reserve will likely result in higher interest rates for farmers.
Midwest soybean acreage is expected to increase in 2017, which could push prices lower, making soybeans less desirable for Alabama farmers to plant, Runge said.
Alabama farmers could plant as much as 20 percent more cotton in 2017, which would drive cotton plantings to more than 410,000 acres, he added. About 345,000 acres of cotton were planted in 2016.
“Cotton prices are stronger than anticipated, so it’s understandable that acreage predictions are up,” Runge said. “Prices for other major row crops will be low, especially corn.
“I think there are opportunities for some lesser crops, such as grain sorghum, sesame and canola. But farmers face risks of lower prices for these crops as well — combined with the increased efforts of marketing and selling these crops.”
Runge provided a list to help farmers improve profitability:
- Take care of basics such as soil tests, know production costs and make sure money spent offers a return on investment.
- If commodity prices reach levels where farmers can lock in a profit, they should commit and negotiate contracts.
- When considering capital investments, farmers should evaluate their financial situation, especially equity and cash flow.
- Keep in touch with USDA agencies and crop insurance providers for any changes to federal programs, including insurance and other risk management programs.