LITTLE ROCK — The value of Arkansas’ principal crops rose 5 percent to $3.6 billion in 2010, driven by soybeans, cotton and corn.
The value of Arkansas’ cotton crop jumped 54 percent in 2010, with a larger harvest that sold for higher prices, according to report released Friday by the U.S. Department of Agriculture.
Cotton garnered an average price of just under 70 cents per pound last year, up from 63 cents in 2009, bringing the total value of production to more than $395 million.
The state’s rice crop was the most valuable, at $1.33 billion. Though Arkansas had a record production of rice, falling prices and lower milling yields brought the value of the crop down 0.75 percent from $1.34 billion in 2009.
Soybeans and cotton were the second- and third most-valuable crops in the state. At $1.25 billion, the value of Arkansas’ soybeans rose 5 percent from 2009. Arkansas’ corn production was valued at $267.9 million, up 16 percent from the 2009 crop’s value.
The increase in crop value this year might just be the beginning, said Bobby Coats, an extension economist and professor in the University of Arkansas Division of Agriculture. Coats said worldwide demand and inflationary monetary policy around the world could push commodity prices in global markets back to the high levels seen in 2008.
“When you have a world with a population that is expanding and expending money for food and fuel, and if you have the inflationary pressure coupled with that, then all at once you’re talking about corn prices close to their 2008 high. You’re talking about the same thing with soybeans,” Coats said.
Though Arkansas cotton farmers received higher prices last year, on average, many did not receive the full benefits of record-breaking cotton prices.
“It was on into the fall before prices really started going up,” Tom Barber, a cotton specialist with the extension service said. “By that time, farmers had already booked their crop.”
Cotton futures passed the $1 mark this fall on the Intercontinental Exchange in New York, and they have continued their upward trajectory. The contract for March delivery of cotton rose above $2 per pound this week for the first time.
Steven Scott, president of Little Rock-based commodity marketing firm Scott & Associates, said speculation in the market, coupled with factors such as low supplies have created an unprecedented situation in the cotton market.
“It’s beyond anything the market has ever seen,” he said.
But it’s the middlemen, not farmers, buying and selling cotton at these prices.
“No farmer has any cotton left to sell,” Barber said. And though cotton to be delivered in December is selling for $1.26 per pound on the Intercontinental Exchange, some Arkansas farmers have again already priced their 2011 crop at lower prices.
Nationwide, farmers received 83 cents per pound for cotton. Barber said Arkansas cotton farmers might lock in prices for their crop earlier in the season than farmers in other states because more of the cotton here is irrigated, so the size of the crop is more certain.
Soybean farmers also saw prices continue to rise in the later part of the growing season, after their prices were already set, said Jeremy Ross, an extension soybean specialist. Arkansas soybeans sold for an average of $11.30 per bushel in 2010, up from $9.66 in 2009 - enough to offset a 10 percent decrease in the size of the crop.
Prices increased in large part because of demand from China, Ross said.
Ross said that despite lower average yields, many soybean farmers did well in 2010.
“Even though we were a bushel or two off, there were still several farmers in the state that did fairly well yield-wise and price-wise,” Ross said.
Business, Pages 27 on 02/19/2011