Cotton and peanuts have traditionally been among crop royalty in the South. Historically, if cotton is to be called king, surely peanuts would be the crown prince, but both are likely to face severe challenges for acreage in the upcoming 2013 planting season.

Continued high prices for grain crops, enforced by companies willing to pay Southeast growers premium prices for grain grown for livestock rations and for oil, continues to pique interest of growers.

The 10-fold increase in sorghum acreage in North Carolina from 2011 to 2012 is indicative of the interest growers are looking at higher paying, more sustainable crops than the two traditional crop leaders in the Southeast.

Few expect corn acreage to fall as demand remains strong and prices at more than double what they were three to four years ago.

Wheat acreage will likely reach record levels in the Upper Southeast in 2013. The combined impact of high grain prices will no doubt have a serious effect on cotton and peanut acreage in 2013. How big an effect probably won’t be known until all spring crops are in the ground, but look for the king and prince to take a significant shot next spring.

Luray, S.C., grower Bud Bowers grows both crops. “This was the best crop of peanuts and cotton we’ve ever had on our farm,” he says. He had dryland cotton that produced three bales per acre and dryland peanuts that produced nearly three tons to the acre.

“I’m grateful for the crops we grew this year, but I’m very concerned about the future of both cotton and peanuts, because of the pricing situation. It looks like we will grow more corn next year, but peanuts and cotton — I just don’t know,” he says.

Bowers story is not much different from cotton and peanut growers from north Florida to south Virginia. Most have one thing in common about future plans for cotton and peanuts — uncertainty.

Cotton is coming off a year of large acreage reductions across most of the Southeast and this year seems to be another in which grower confidence in cotton prices will cause further acreage losses.

At a recent meeting of the North Carolina Crop Consultants Association, a poll of consultants from North and South Carolina and Virginia seems to validate industry predictions for lower acreage.

In North Carolina, the largest of the cotton-producing states in the Upper Southeast, several consultants indicated an additional 10-20 percent drop in acreage is likely.

Acreage cuts

Combined with big acreage cuts in 2012, some cotton producing areas of the state will likely have a 50 to 60 percent cut in acreage over the two-year period.

In Georgia, the largest of the Lower Southeast cotton-producing states, acreage is expected to tumble by another 20 percent or so, according to University of Georgia economists.

High yields, and in some areas record high yields, did little to impact cotton carryover, despite significant acreage reductions in 2012.

Worldwide, the news isn’t much brighter, though there remains a good demand for cotton, which will help keep prices somewhat stable, despite an over-supply of worldwide.

Darren Hudson, director of Texas Tech’s Cotton Economics Research Institute, says demand for cotton is expected to increase by about 1.9 percent per year for the next 10 years. Over that period of time textile mill use of cotton is expected to increase by about 31 million bales.

The big challenge is going to be what to do with all that cotton. For the first time in nearly 10 years stocks were higher than use in 2012. And, world cotton stocks are expected to jump another 11 million bales in 2013.

China is the biggest player in the cotton export market and the news is not good there. It’s apparent China does not intend to be caught short on cotton and be forced to pay $1 per pound, much less the $2 per pound they paid just a few years back.

China is expected to have a carryover in 2012 of about 30 million bales. This surplus is expected to increase by another 8 million bales in 2013.

Worldwide, the surplus is 69 million bales, expected to increase to 80 million bales in 2013.

Longer-term the outlook is a bit brighter, according to recent reports from the International Cotton Advisory Committee.

After three consecutive years of increase, global stocks could contract by 6 percent from the record level of 16.6 million tons (76.24 million bales) forecast in July 2013, to 15.6 million tons (71.65 million bales) in July 2014.

Most of this reduction in stocks is expected to take place outside of China, the report projects.

The pricing instability of King Cotton couldn’t have come at aworse time for Southeastern growers.

After years of struggling to over-come weed resistance, especially glyphosate-resistant Palmer amaranth, growers across the region seem to be catching up with weed problems and are rotating herbicide families and crops to minimize losses.

New varieties

New cotton varieties with especially high yield and quality potential are available. Even non-transgenic varieties with high yield potential are available.

In terms of high quality varietal selections, 2013 will likely go down in history as offering cotton growers the overall highest quality cotton varieties in history, almost certain within the past decade or so.

Seed companies and chemical companies have invested huge amounts of money bringing new varieties and new technology for crop protection to the market place.

In some cases the market for which they developed these products in the U.S. will be less than half the size it was a scant two years ago.

If cotton has been on a wild ride the past few years, peanuts have been on the front seat of the roller coaster, with prices going up and down seemingly every year.

Speaking at a recent Georgia Farm Bureau meeting, George Lovatt, of Lovatt and Rush Peanut Brokerage described the 2013 peanut market aptly, “ugly, ugly, ugly — not many happy thoughts.”

Finding a way to cut back on acreage is not the peanut grower’s only future problem. The industry recently received a stern warning from the FDA to find ways to reduce the risk of salmonella poisoning from peanut products.

Jenny Scott, senior advisor to the director of the Office of Food Safety at the Food and Drug Administration told National Peanut Council members the FDA has a high level of concern about continuing problems with peanut butter Salmonella contamination.

She reported that the FDA is making more frequent inspections of peanut processing facilities by both state and federal food regulatory agencies.

Scott says, the agency is making greater use of environmental sampling and FDA officials are experiencing a greater willingness to use the full range of agency enforcement powers including warning letters, injunctions, suspension of registration and criminal prosecution.

When it comes to peanuts, Georgia drives the bus. If the outlook is bleak there, the rest of the peanut belt will be hard pressed to find any good news for the 2013 crop.

Like cotton, the timing of poor prices and oversupply for peanuts is bad.

Researchers across the region have made significant strides in peanut production and companies that in reality do consider peanuts to be ‘peanuts’ compared to other larger markets, have made significant progress in getting new products and new varieties into the marketplace.

Clearly, peanut growers are in a position to grow more acres of higher quality peanuts than at any time in history. The holdup is finding a place to sell their crop.

With limitations in crop insurance and major questions on government support, the risk for growing peanuts in 2013 will likely reach an all-time high.

Peanut marketing guru Tyron Spearman says peanut growers should plan to produce enough peanuts for a 5-6 month market.

Lovatt says the carryout is expected to be about 1.5 million tons, which is about 240 days worth of peanuts, which would take the market eight to nine months into the next marketing year.

Whether they need to produce half a crop or one-third of a crop will depend on a lot of things, but the bottom line is expect low prices as long as supply far exceeds demand.

The two peanut marketing specialists agree that growers should pay special attention to what shellers and buying points are saying. Cutting acreage is the easy answer, but not always a practical one for growers.

Cotton and peanuts are among the top rotational crops grown in many Southeastern states.

The pest spectrum above and below the soil is generally different, and historically cotton behind peanuts or vice-versa has produced some of the highest yields and highest quality crops of both.

Cutting back on peanut acreage and cotton acreage in the same season, for most growers means finding some other crop that will fit into the rotation — not usually an easy task.

With self-propelled peanut diggers pushing $300,000 and a new on-board, module building cotton picker twice that much, leaving equipment idle or under-used is another losing proposition for most growers.

Other grower options for getting peanut supply and demand back in order are not much easier, if any, than cutting acreage. Lovatt suggests reducing imports, which should be a no-brainer, but politically isn’t so easy.

The best options for growers is for domestic demand to increase along with exports, both of which are being pushed to the max by state and national grower organizations.

Lovatt also suggests increasing crushing and limiting seed supply for the 2013 season.

If there is a bright side to the cotton and peanut outlook for 2013, it’s that the U.S. has the most efficient infrastructure in the world for growing, processing and marketing both crops.

The level of technical expertise among growers has never been higher and demand for both crops remains good well into the future.