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National markets impact local crops
MISSISSIPPI STATE -- Most crop prices have been declining all year, causing Mississippi farmers to make tough decisions on which crops to plant.
"Major commodities have been in a free fall since Jan. 1," said Charlie Forrest, Extension agricultural economist with Mississippi State University. "When you look at futures charts, most of our crops are showing steep, sustained declines. Prices are below the cost of production, causing many decisions about planting to be made based on farm programs."
May cotton futures started the year at 63 cents a pound, and now are below 48 cents. Last year's average price for cotton was 45 cents. Soybeans started 2001 at $5.12 a bushel before falling to below $4.40. Their 2000 average price was $4.63. May corn futures have taken a similar drop, starting the year at $2.35 and now selling for $2.10, compared to an average of $1.82 in 2000.
Forrest said the nation's overall economy may have a big influence this year. Consumer spending and how they redirect their purchases during hard times impacts commodity prices.
"The health of our economy also affects our trading partners and other areas of the world," Forrest said.
Nationally, the U.S. Department of Agriculture estimates farmers will plant 76.7 million acres each of corn and soybeans. Anticipated corn acreage is low, but this is record high soybean acreage.
"A couple of things that led to the decline in corn acreage are high nitrogen prices and a favorable soybean loan rate," Forrest said. "This gave us a little less corn and more soybeans."
Cotton producers are expected to plant 15.6 million acres nationally, a 0.5 percent increase from 2000. Increased cotton acreage will likely contribute to a carryover of about 1 million bales more than carried over the last two years. This carryover will keep downward pressure on cotton prices.
Because different crops are planted at different times during the spring, actual acreage information will not be known until at least June.
"Overall, it will be up to the weather during the planting season as to what the final planted acres will be," Forrest said.
Another issue that could affect U.S. and Mississippi prices are foot-and-mouth disease problems overseas. Forrest said trade restrictions placed on livestock and meat have been extended to grain crops and other products as officials try to remove any risk of disease transmission.
"As long as the United States stays disease-free, it could help us in certain areas of the world and in certain commodities through increased demand and increased prices," Forrest said.