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2013 Outlook for Inputs

November 19, 2012
By: Rhonda Brooks, Farm Journal Seeds & Production Editor
p10 Outlook for Inputs 1
One sure way to evaluate input needs is to test soils. Don’t play a guessing game, advises Nebraska farmer Larry Mussack.  

Crunch the numbers to build a budget for 2013

Up, up and away probably brings Superman to mind, but it also describes input prices during the past decade. Fortunately, some input costs are leveling out while others are trending upward in small increments. As you pencil out your farm’s 2013 budget, take a few minutes to evaluate your input costs per acre. Knowing that information will help you better determine those all-important
profit margins.

Whether input prices go up or down in 2013, Larry Mussack says he is prepared. He buys inputs throughout the year and evaluates his input prices through what he describes as a large window of opportunity.

"This year I purchased half of my anticipated 2013 nitrogen in July and decided to wait until later in the year to buy the rest of my nitrogen and other fertilizer," says Mussack, who grows corn and soybeans near Decatur, Neb. "Right now, that looks like a good move," he adds.

Farmers who  aren’t as proactive as Mussack about pricing inputs might luck out. Economists expect land, seed, fuel and crop protection product prices to increase only slightly this coming year, says Steve  Johnson, Iowa State University Extension farm management specialist.

On average, Pro Farmer estimates variable input costs will total $456 per acre for corn and $280 for soybeans.

Fertilizer. After a 30.2% jump in fertilizer prices in 2011, farmers should be thrilled to hear that prices for 2013 might decrease, says Gary Schnitkey, University of Illinois Extension farm management specialist.

Harry Vroomen, vice president of economic services for The Fertilizer Institute, says fertilizer prices are tricky to forecast because they are affected by numerous supply and demand factors. Supply factors include energy and raw material costs, transportation costs and the value of the
U.S. dollar. Demand factors, particularly globally, have a significant impact because 88% of  nutrient demand is outside the U.S.

Vroomen expects U.S. farm demand for nitrogen to be flat to down 1% and phosphate and potash demand to remain stable or even drop as much as 4% during the next year.

"Demand is more difficult to forecast this year than in previous years because of the drought and how it will affect the carryover of nutrients," he says. "Record-high corn and soybean prices should raise nutrient application rates, but that may be partially or even completely offset by the  carryover nutrients remaining in the soil."

According to Pro Farmer, per-acre costs for fertilizer are likely to run $85 for ammonia, $63 for  diammonium phosphate, $31 for potassium and $78 for potassium oxide. Lime will cost $8 per acre for corn and $10 for soybeans.

Mussack plans to dial down corn input costs with best management practices, especially those related to fertility.

"Soil test, don’t guess," advises Mussack, who also serves as the natural resources committee chairman for the Nebraska Corn Growers Association.

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FEATURED IN: Farm Journal - Mid-November 2012

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