View from the Cab: How high?
By: Kent Casson
We are definitely experiencing some interesting times for agricultural input prices.
It is no secret that the costs involved with raising corn and soybeans have been sharply increasing in recent months. Some market experts suggest protecting the downside using various marketing tools.
Sherman Newlin, a commodity broker with Risk Management Commodities, admits many are looking ahead to next year with uncertainty. Ammonia, DAP and potash are all high priced and many growers aren’t sure whether they should book fertilizer at these prices.
“Many co-ops aren’t even giving a price they are going to stick with through next spring,” Newlin said.
If you haven’t purchased products just yet, Newlin encourages you to take a wait-and-see approach. If you have bought fertilizer and have no new crop sales on the books for next year, you may want to consider forward selling at these decent corn and soybean prices.
“You can go through the cash market or use put options,” Newlin suggests.
December corn prices haven’t been bad compared to other years and November soybean prices are giving growers good profit potential going forward.
“I wouldn’t want to be buying fertilizer without getting some (crop) prices locked in,” added Newlin.
It is anyone’s guess as to how high these fertilizer and input prices could go. Ammonia is often based on what natural gas prices do and Newlin has heard ammonia prices could move higher than $1,800. Much of this will be determined by what the corn price does. Should crop prices drop, Newlin feels fertilizer prices would come down also.
This all makes one wonder how the acreage split will be between corn and soybeans in 2022. Will farmers around here and the rest of the country plant more corn because it is more profitable? Or will some be scared away from the high nitrogen costs it takes to raise a corn crop and switch to soybeans? I have heard rumors of some wanting to plant beans after beans.
Soybeans staying above $12 could be an incentive for more people to plant the same crop in a field the following season. Time will tell what farmers – and prices – will do.