“I locked in all my 2011 fertilizer needs in August,” says Jerry Gulke of the Gulke Group, who farms in Illinois and North Dakota. “The cost has risen about $32/acre since then. Meanwhile, given the corn price boost means promised revenue is up $160/acre. I could easily see record revenue next year. I’ll take a 4-to-1 increase like that any time.
“However, producers?myself included?will be challenged to lock in profits; we have no idea how high prices might go, leading to high cash-flow risk on hedges,” he adds. “What if we have to meet $2/bu. margin calls? For some growers that’s $400/acre. Not all banks can carry producers for that much.”