Cautious optimism prevailing in Alabama for 2012 crop year

Cautious optimism prevailing in Alabama for 2012 crop year

• Generally speaking, Max Runge, an Alabama Cooperative Extension System economist, expresses optimism, albeit cautious optimism, as he tracks the economic and the long-term weather outlook.

Max Runge often wishes that planting decisions were made on the basis of crop rotation considerations and not just on commodity prices — but then again, as experience teaches, wishing doesn’t make it so.

Generally speaking, though, the Alabama Cooperative Extension System economist expresses optimism, albeit cautious optimism, as he tracks the economic and the long-term weather outlook.

“Planting intentions came out two weeks ago, and in terms of planting intentions, there really aren’t a whole lot of surprises,” Runge says.

The only surprise, for now, is that peanut plantings are up in Alabama by 24 percent, though Runge suspects that may trend down in the absence of contracts.

“Currently, no contracts are being offered and few producers are willing to step out and plant peanuts without an idea of what they’ll be paid at harvest,” he says.

Meanwhile, soybeans, which may ultimately tempt some producers with expressed peanut planting intentions, are holding steady at between $13 and $14 a bushel.

“I’m not quite sure where we’ll be in the next few weeks, but it’s possible that a lot of peanut acreage may end up in soybeans,” he says.

Corn planting remains a little ahead of schedule and is faring well under the prevailing warm, rainy conditions throughout Alabama.

Wheat, while dealing with a few insect problems in some parts of the state, is doing well too.

As he pours over the data, Runge doesn’t foresee many surprises and volatility this year — not in terms of major weather events, such as floods that occurred last spring — although long-term weather forecasts favor a carryover of drought conditions in southeast Alabama.

However, he says markets have taken that into consideration.

Likewise, barring any surprises, he doesn’t foresee any major volatility in crop market prices and advises produces to watch for any variations and upticks in price at that point.

Reasonably uneventful years as this one is projected to be often turn out to be the best years for upgrading technology, Runge says.

Perhaps partly because of drought conditions, Runge perceives more interest in irrigation, particularly in southeast Alabama. Interest in precision farming adoption also appears to be increasing.

“It really is one of the things producers are considering and adopting,” he says. “It may not be something you look at after a year and see returns, but over a 3- or 4-year stretch, you’re likely going to reap some long-term benefits from upgrading with precision ag.”

Fuels costs remain a major concern. In this global economy, they always are, Runge says. The bad news for producers is that diesel and energy prices are higher than a year ago, though by only a quarter a gallon.

However, considering that diesel almost invariably goes up during harvest, Runge says this time of year is a good time to lock in fuel costs before it gets any worse.

The same advice applies to another fuel-related farm input, fertilizer, the cost of which has risen between $20 and $30 a ton within the past few weeks.

As a matter of fact, fuel costs may turn out to be one of the wild cards of the 2012 growing season, though this applies to every crop year in light of several global factors — politics and economics, not to mention the growing fuel demands in China, India and other rapidly expanding developing countries.

 “Fuel costs are pretty much of an unknown factor, but one thing is virtually certain — they’re not going to get any cheaper,” Runge stresses.

(Things looked good in Alabama as planting season got under way. For that story, see optimism).

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