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Commodity Corner

by Glenn B. Smith

As the buds open on the tulip trees in the backyard, we know that planting season is right around the corner in Alabama. This also leads to many questions for the producers as to what commodity to plant in the current season. 

Though on June 1, 2004, September corn futures hit a contract high of $2.99 per bushel, over the last month the range on September has only been $2.17 to $2.28. As corn is the first grain to be planted, producers must decide quickly whether to buy seed corn for March or wait to plant cotton in April or soybeans in May.

In south Alabama, our sources tell us that we could see a decrease in corn acreage of up to 25%, where planting will begin around the first of March. With fertilizer prices up approximately 25-40% over a year ago and nitrogen high, many producers are expected to substantially increase their peanut acreage as they do not need the nitrogen requirements of corn. Soybean acreage this past year was the highest in 15 years, but sliding November futures prices should decrease acreage to more historical levels. Cotton acreage is expected to remain the same as this past year.

In central Alabama, we could see an increase in corn acreage of 25 to 50%. Last year good growing conditions provided for excellent yields and quality. This coupled with the uncertainty of the fear of Asian rust on soybeans should influence more producers to go with corn, which they will begin planting by the middle of March. It should also be noted that some producers do not have a choice as to which commodity to plant on a certain field as they must rotate crops in certain years to preserve their soil quality.

North Alabama by all accounts seems to be on track for acreage much the same as this past year. Corn acreage may be down slightly due to higher nitrogen prices and these acres are expected to be moved to cotton. Crop rotation seems to be a larger factor in north Alabama and, though fields are switched, total farm acreage will remain about the same. This past year yields and quality were overall excellent and we hope for the same this year. The early harvested beans were of good quality and would have remained so if not for heavy rainfall in November, which caused damage to the later harvest. This along with the Asian rust question and lower futures prices may slightly decrease soybean acreage.

Glenn B. Smith is the Merchandising Manager of AFC’s Grain Department.



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Date Last Updated January, 2006