MEMPHIS, Tenn. — Crop news last week from both the United States and South America indicates corn production may be headed south.

In the southern U.S., projected the National Cotton Council (NCC), cotton acreage will decline by 26.8 percent as producers switch plantings to corn and soybeans. In Brazil, the USDA projected a good crop will combine with drought-addled U.S. yields to make Brazil the world’s largest corn exporter this year.

The switch from cotton to corn in the United States will be most pronounced, by percentage of 2012 acres, in the Mid-South region. The NCC projects 1 million fewer cotton acres across Tennessee, Arkansas, Mississippi, Missouri and Louisiana. Tennessee’s upland cotton farmers are projected to plant 181,000 fewer cotton acres than last year, a 48 percent drop from 2012 acreage.

The cotton cutback favors corn. More than half of the decrease in Mid-South cotton acres, according to the NCC, will be planted in corn. Crop prices are driving the switch.

“When we look at today’s prices and average Tennessee yields, the potential profits are clearly better from corn and double-crop wheat/soybeans than from cotton,” said Chuck Danehower, University of Tennessee extension area specialist for farm management.

UT’s estimated crop returns for 2013 show conventional corn returning $263 to land, management and risk, assuming 120-bushel corn priced at $5.50. Double-crop wheat/soybeans would return $326, assuming 60-bushel wheat at $8 and 30-bushel beans at $12.65 per bushel.

Estimated Tennessee cotton returns to land, management and risk are much lower: $59 for conventional and $85 for no-till, assuming 850 pounds per acre at 78 cents per pound of lint. Even the most bullish of cotton price forecasts, in the 90-cent range, is not likely to change many producers’ minds.

“We will see a significant drop in Tennessee’s cotton acres. There continues to be good indications our cotton growers are really going to cut back,” said Danehower.

Still, if recent cotton price increases continue, it could cause actual cotton plantings to exceed NCC projections. In January, cotton for March delivery was trading in the 75-cent level. The same contracts were trading between 80-82 cents last week.

According to Danehower, two price factors could still influence actual Tennessee cotton plantings: “If cotton prices rise to 85 cents or better and/or grain prices decrease by planting time, the drop in acreage will not be as severe.”

Today’s cotton prices are driven by Chinese imports. At current price levels, China can import high-quality U.S. cotton for about the same cost as it can use its lower-quality domestic stocks. But China could shift to using its own cotton stocks, large enough to supply its own industry for several years.

“Cotton price is all going to be a function of what China does with those stocks,” said Danehower.

Despite the brighter outlook for corn over cotton, Tennessee’s corn and bean producers still need to weigh this year’s unique risks. “We didn’t have the drought hanging over us last year like we do this year,” he said. “Still, if we get the timely rains this year and produce a big (U.S.) crop, corn and bean prices could be significantly lower at harvest.”

According to the NCC outlook, cotton farmers in Arkansas and Mississippi will combine to plant 550,000 fewer cotton acres this year. Missouri’s cotton acreage will drop from 350,000 to 239,000, and Louisiana will plant 86,000 fewer cotton acres.

Texas, the largest cotton-producing state by area, is projected to plant 25 percent fewer upland acres, 6.55 million in 2013.

In Tennessee, many of the producers switching from cotton tend to be those not fully committed to raising cotton. “My best guess is that our largest (cotton growers) will not be cutting their cotton acreage in half this year,” said Danehower.

From even further south than the Cotton Belt came news with implications for global corn and soybean supply.

“In trade year 2012-13 Brazil is projected to export more corn (24.5 million tons) than the United States (24 million),” reported USDA economists in their Feb. 12 Feed Outlook.

The trade year runs from October 2012-September 2013. The USDA cited good weather and improving transportation infrastructure in Brazil as reasons for higher corn exports. Brazil is also exporting more grain because of lower demand from its domestic broiler industry.

Brazil’s corn export levels are a “dramatic change from the historical norm for the last century” wrote USDA Economic Research Service economists Tom Capehart, Edward Allen and Jennifer Bond. The U.S. share of world corn trade was more than 80 percent in 1979-80, and often exceeded two-thirds in later years.

The U.S. share of global corn exports is forecast to fall to 24.6 percent for the 2012-13 trade year, while Brazil exports will increase to 25.1 percent. Brazil has now eclipsed Argentina as the world’s largest alternative source to the United States for corn.