The event? "At some time during the year, there's a good chance that the commodity prices of corn, wheat, soybeans and cotton will all start with '3,'" said economist George Shumaker. "That's never happened in the same year before."
Shumaker is an Extension Service agricultural economist with the University of Georgia College of Agricultural and Environmental Sciences.
Raises Some Eyebrows
The thought that prices for those four Georgia crops could all start with "3" this year raises some eyebrows in Georgia. For that to happen, corn and wheat prices would have to rise while soybean and cotton prices tumble.
The historic prices could happen, Shumaker said, because of the supply and demand for each commodity.
The most shocking part is to have cotton included in that group. Trading at the end of the year around 66 cents per pound, cotton has already dropped around 7 cents a pound.
Cotton Could Plummet
"We expect a large crop as a result of increased acreages planted and harvested and relatively weak demand," Shumaker said. "It's possible prices could drop (into the upper 30s per pound)."
Georgia farmers planted from 1.4 million to 1.5 million acres of cotton over the past six years. Economists say growers need around 65 cents per pound to make a profit.
Cotton is by far the biggest crop of the four in Shumaker's forecast. So the potential for extremely low cotton prices is by far the most traumatic news for Georgia farmers.
Soybean prices under $4 per bushel would be staggering, too. But with only about 200,000 acres of soybeans, bad prices there would be less damaging.
"Other Three" Crops
Shumaker's view of the three smaller crops:
- Soybeans are currently around $4.65 per bushel on the futures market, and an increase in acreage is expected. "If we have good yields, it could push prices under $4," he said. "That's not uncharted territory -- it happened last in 1999."
- Corn is now trading at around $2.47. "We would need reduced acreage and unfavorable weather to reach $3 a bushel," he said. "But that's not unreasonable to expect."
- Wheat is the closest to the "3" already, at around $2.89 per bushel, and the planted acreage is down. "The supply should be down," he said. "Wheat prices should go up."
Shumaker said he isn't predicting all these prices will definitely happen. "But the 'constellations are lined up,' so to speak, to make them all possible," he said.
The low cotton and soybean prices wouldn't be as devastating as they look, Shumaker said, because such low prices would trigger Producer Option Payments from the federal government.
"These government payments would help offset some of the growers' losses," he said.
High or low, the farm prices mean little to consumers. "Food and fiber retail prices don't directly correlate to farm prices," Shumaker said.
(Dan Rahn is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)