Corn Market Over View. December corn futures on the Chicago Board of trade have assumed a sideways stance as planting gets underway in earnest in the Midwest. The dry soils have allowed for a rapid early season planting pace. Traders are scanning long range weather forecasts for indications of rain or drought. Use moves toward to double top at $2.64 as forward pricing opportunities and moves below $2.50 as downside protection. (George Shumaker)
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Soybean Market Situation. The trend in new crop soybeans continues to be upward although the strength of the up move has weakened in recent days. The recent top of $5.79 set in early April is a likely upside target while weak support around the $5.50 exists. Long term outlook still remains for lower prices under normal weather conditions. Use rallies over the next 60 days to advance forward pricing of the 2000 crop. (George Shumaker)
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Wheat Market Outlook. July wheat futures are stumbling toward the finish line. Large world supplies loom over any rally attempt and it appears the U.S. crop will be adequate to meet all expected demand. Wheat futures traders continue to press the market lower with a test of the contract low of $2.56 likely before expiration. Sell the crop and consider the purchase of a call option to capture a post harvest rally. (George Shumaker)
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Peanut Market Quiet But Outlook Is "Cautiously Optimistic". According to USDA's end of March Planting Intentions report, farmers intend to plant 4% less peanut acreage this year compared to 1999. Acreage in Georgia is expected to be down 4% and Texas 10%. This may set the stage for improving economic conditions. Actual plantings will not be known until the end of June.
The 2000 peanut quota is unchanged from last year. A reduction in acreage, if realized, could tighten supplies if weather is unfavorable. Quota is unchanged, acreage may be reduced, and peanut consumption is currently running 5.2% above last year's pace. This may eventually lead to better prices for quota and additional peanuts compared to last year but currently markets are quiet with no contract activity in the Southeast.
Excess quota peanuts from the 1999 crop were placed in CCC loan and will be crushed. This combined with improved demand should lower stocks as we move into the 2000-01 marketing year on August 1. It is important that growers and buyers not participate or over-do use of the buyback option on additional peanuts as this would likely act to again build supplies and reduce price for quota peanuts.
There is still no definitive word on a possible assessment on the 2000 crop to cover CCC quota pool losses in the Southeast from the '99 crop. That fee would be $46 per ton. Efforts have been underway to have the fee prorated over the remaining 3 years of the current farm bill rather than paying one lump some from the 2000 crop. This would certainly be more financially suitable from the growers standpoint. (Don Shurley)
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Higher Fuel Prices Affect Farm Profits. Georgia farmers spent nearly $125 million for petroleum fuel and oil in 1998. If they use near the same amounts of these fuels in the year 2000, current fuel prices could force the state's farm fuel costs toward $200 million.
Tobacco farmers will incur the highest costs on a per acre basis as most all of Georgia grown tobacco is irrigated and requires large amounts of fuel for curing. Current fuel prices indicate a five-cents-per-pound increase in tobacco production and curing costs. Peanut production costs will likely increase by $10 per ton.
Petroleum fuel-powered irrigation system costs will increase, up to $1.50 per acre-inch of water applied. Irrigation costs in a dry year can involve 6-8 acre-inches of water applied.
Higher fuel prices make it imperative that farmers look closely at all operations requiring fuel use. Higher farm commodity production costs cannot be passed through as can many non-farm items. (Bill Givan)
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