2020 Sunflower County Ag OutlookBy ALEX DEASON,
The 2019 season was defined by many as a nightmare.
Even though most seasons come with their fair share of struggles, this season proved to throw hard hitting punches regularly.
With the 2018 fall being wet it delayed most of the field work to the following spring. However, mother nature would not allow that to be a simple task.
Over the first couple months above average rainfall fell across the entire MS Delta.
As a result, much of the South Delta was inundated with water up into late summer and early fall.
Even though the central Delta fared much better we still had the struggles of getting the 2019 crop planted between rains.
This meant that crop mix that was planned was constantly being reevaluated. In return, one of the biggest planned corn crops since 2010 slowly returned towards an average crop size due to early wet conditions.
However, this did help boost a slow increase in cotton acres last year. Throughout the year all eyes were set on international trade negotiations and national markets.
Although collectively most markets did remain lateral, many were blaming false crop reports and the lack of international marketing for the overall lack of commodity price increase.
When harvest began yields were all over the board, from sub-optimal results to well above average considering the growing conditions. With these average yields and exports slowing through the year the edge of 2019 crop was placed on quality and that is something that Mother Nature did not hurt last year.
Looking towards 2020, there are some big questions yet to be answered. Where will all the speculation land our commodity prices regarding some of the new trade deals with China?
It has been reported that China has agreed to buy $200 billion worth of American goods over the next two years. How will this help the agricultural industry as a whole? Since the sanctions have been in place, there is no doubt that the agricultural community has been hit the hardest.
This deal could be huge for all parties involved but the question remains of how much, what product, and where will they go?
Since China has reduced imports over the past couple years countries like Brazil, Argentina, and others have filled the void causing the American farmer to hope to find a new market outside of the United States. The last question that is asked is what happens after two years? Will the Market Facilitation Program continue after the 3rd tranche is issued?
Will American goods be able to find a home in Asia as in years past or will they be back at square one? The only thing for certain is that this is a good step toward resolving our trade crisis and we must continue to back those including the Secretary of Agriculture as they continue to mend relationships and find new avenues for all American goods.
With most of the crop planned today we will likely not see any huge swings across our region as nothing looks any different on paper as it did any other year. Cotton seems to continue to slowly rise, soybean acres will slowly decline, rice will remain at its average and corn has a chance to increase.
Since the increase of preventive planting last year for corn and soybeans where will those acres go for the 2020 crop? About 10 years ago we started to see the benefit of the Ethanol demand for corn as prices soared and acreage increased.
Now we have seen that trend plateau as almost half of the crop goes to ethanol and the other half goes to feed and byproducts. Consequently, that means that a price spike short term is highly unlikely without more help from the Ethanol market.
Long term, if yields remain constant and grow exponentially prices would return because of our growing exports and consumption of livestock products such as beef, poultry, and pork. Soybeans on the other hand might have gotten the most help for a price increase but speculation will continue to seek out how the trade agreements pan out.
At the end of 2018 the ending stocks of soybeans were over 4.4 billion bushels. With the loss of exports to Asia coupled with limited acres and lower average yields the soybean supply at the end of 2019 was tightened. However, trade negotiations kept the prices in check. The biggest questions with cotton remain on infrastructure.
Since the decline of cotton many of the gins were closed and parted out leaving them unable to return to service quickly. So, what happens if cotton comes back full swing? Where will the crop go? Many of the operational gins are reaching max intake as crews will work day and night to get through the crop as efficiently as possible.
In summary, this year is not starting off any different than the rest.
Trade agreements and crop conditions such as the South American crop will dictate where the market will lean and if some of the surplus stocks will tighten some more. Also, producers will be making decisions regarding the new farm bill that will help mitigate some of the risk on the farm before the spring deadline.
Those in ag and ag advocates will also be looking at all the regulations that will go into effect in 2020 and see how that will impact the industry.
Just remember that wherever you stand in agriculture, chemical rep, banker, commodity trader, producer, researcher or consultant, we are all tasked with feeding a growing population, with the safest food supply, on limited production space.