Overall S.C. ag outlook strong, but weather, trade affecting cotton and soybeans
WEST COLUMBIA – With a focus on economic development, the South Carolina agricultural industry is poised for positive productivity in 2019.
This was the message Clemson experts gave during the recent third annual Ag Outlook conference. Clemson agricultural economists Nathan Smith, Scott Mickey, Adam Kantrovich, Bernt Nelson and Steve Richards reported some of the more traditional crops – corn, cotton, peanuts and soybeans – are expected to remain major players in the state’s agricultural economy. South Carolina Commissioner of Agriculture Hugh Weathers said industrial hemp, oysters and greenhouse crops also could make a strong showing in the future.
“The United States had a large cotton crop in 2017, coming in at 20.92 million bales,” Smith said. “The demand remains strong, although growth is slowing.”
The slow growth is contributed to events such as an early season drought that is expected to lead to the abandonment of many acres of cotton in the Southwest. A report from the United States Department of Agriculture shows U.S. cotton production was down seven percent from October to November. The South Carolina yield is down due to hurricanes Florence and Michael, and the size of the crop is likely to get smaller with late and failed harvest.
Cotton prices for 2019 probably will remain around 75 to 79 cents per pound. Cotton acreage is expected to hold at around 14 million across the United States, with 300,000 acres in South Carolina.
Unlike cotton, where more acres were planted, fewer acres were planted in peanuts this year, Smith said. A total of 1.426 million acres were planted in peanuts across the U.S. in 2018, down 20 percent. South Carolina farmers planted 87,000 acres of peanuts in 2018, down from a record 122,000 acres planted in peanuts in 2017.
The yield for peanuts across the United States is expected to be better than average at 4,066 pounds per acre. The yield for South Carolina peanuts is estimated to be 3,500 pounds per acre, down about 10 percent due to the hurricanes and rain. Domestic use for peanuts is increasing, but the key will be exports. About half of the United States peanut exports go to Canada and Mexico.
China has become a big buyer, but currently is priced out of the market. Retaliatory tariffs from China could be a deal breaker for future United States exports to the country, Smith said. In a trade dispute, China and the United States have imposed new tariffs against goods imported from each country. Chinese tariffs on United States goods include soybeans. A total of 400,000 acres of soybeans were planted in South Carolina in 2017 for a value of almost $138 million. Because of tariffs, soybeans have not been moving, leading to an increase in supply.
“The soybean supply has been increasing while the demand has been flat,” Mickey said. “We need fewer acres of soybeans because with the current excess supply, it’s going to be difficult for South Carolina farmers to cash flow soybeans in 2019.”
Mickey said a positive impact on price can still be seen if the tariff situation can be worked out, adding some rally should be seen between now and May 2019. Kantrovich warned that if the tariff situation cannot be resolved, import duties eventually will be passed down to consumers and can create inflationary issues in some sectors.
Corn prices are showing an increase this year. South Carolina farmers planted 350,000 acres of corn valued at $188 million.
“The price spread is narrowing,” Mickey said. “But watch what happens with planting intentions.”
The outlook for livestock also depends on trade tariffs. Nelson said prices aren’t as good as last year and are seeing volatility. The demand for pork remains strong, but packer – livestock wholesale broker, dealer or distribution – margins are a bit tighter than last year. Nelson advised conference attendees to keep an eye on trade conflicts because U.S. pork and beef exports are substantial drivers in the current market situation.
The U.S. dairy market faces challenges, including too many cows producing too much milk, Kantrovich said.
As for the poultry industry, Kantrovich said broiler production is 3.3 percent higher than 2017. This increase primarily is because of higher average weights, he said. A 25 million-pound reduction is expected over the next few quarters, he said.
Goats and bees are emerging markets that could show promise for South Carolina farmers, Richards said. There is money to be made in goats, but marketing and processing are two hurdles state farmers face. Money also can be made in the honey market, if beekeepers can keep their bee colonies alive, he said.
Other topics discussed during the conference included an outlook on the southern timber market by Yanshu Li, a forest economist and taxation outreach specialist from the University of Georgia. Li said demand exists for timber products with recovery of the housing market, but a large inventory will continue to keep sawtimber prices down. Pulpwood prices are expected to remain strong but will feel downward pressure from increased lumber production.
On the issue of industrial hemp, Weathers said to make this market successful in South Carolina, industrial hemp grown in the state has to be of higher quality than that grown in other states. The South Carolina industrial hemp pilot program began in 2017-2018. For information about the South Carolina industrial hemp program, visit the South Carolina Department of Agriculture’s Hemp FAQ or Clemson Cooperative Extension Service’s South Carolina Industrial Hemp Program.
“I’m excited about the interest in growing industrial hemp in South Carolina,” Weathers said. “Industrial hemp is about crop diversity and new business for our farmers. As we continue developing this industry, we work towards a goal of expanding opportunities for our farmers so that South Carolina can truly compete on a national and an international level. Our goal for the industrial hemp market is to make the South Carolina market more different and better than all others.”
Weathers also spoke about controlled environment agriculture, or growing crops in greenhouses; using new technology to accelerate research capacity and the U.S. Stevia plant coming to Chesterfield County.
“Our focus is on economic development,” Weathers said. “Our goal is to position agriculture in an aggressive fashion so that the state as a whole will benefit from this valuable resource.”