Input Prices Trend Higher: Plan Now

October 30, 2018 04:00 AM
 
Pencil out your production needs now to capture potential deals .

Pencil out your production needs now to capture potential deals

The brief reprieve you’ve seen in input prices will likely vanish in 2019. Some input categories are forecast to remain stable into next year, but other categories are expected to drift higher.

“The bad news for farmers is we’re in a generally rising cost environment across the board,” says Will Secor, a grain and farm supply economist with CoBank.

Combine increasing prices with the uncertainty around U.S. and China trade agreements and it equals tough decisions for 2019. As a result, Secor expects farmers will delay upcoming input decisions. But, that delay might cause farmers to miss good price opportunities.

“For now, the biggest thing farmers can do is to work closely with their local ag retailer to get a good understanding of what their perspective is, as local markets might trend slightly different,” Secor says.

Seed and crop protection products will likely remain comparable to 2018 prices. For example, per-acre seed costs for high-productivity farms in central Illinois should be $114 for corn and $73 for soybeans in 2019, projects Gary Schnitkey, ag economist at the University of Illinois. That’s even with a year ago. Pesticides are expected to average $75 per acre for corn and $45 for soybeans—only slightly above 2018 costs.

Visit with your seed and chemical providers now, Secor says, to capture prepay, bulk or cash discounts.

Fertilizer will likely show the biggest price jump, says Davis Michaelsen, Pro Farmer Inputs Monitor editor. “For five years, fertilizer prices have generally declined,” he says. “But it appears we are setting a price floor.”

This is due to price increases for fertilizer ingredients. Michaelsen says wholesale sulfur and ammonia prices are significantly higher compared to recent years.

However, this fall’s wet weather should provide some price relief. “If harvest continues to be delayed, that will leave some retailers holding more fertilizer than they want over the winter,” he says. “That may lead to some significant opportunities coming after the first of the year.”

Between Christmas and the new year is also a smart time to book farm diesel. Prices in 2018 have remained well above average for farm diesel and seem to be set in a new, higher range, Secor says.

With likely compressed profits in 2019, be creative with buying inputs, Michaelsen suggests. Consider buying in bulk with other farmers or book inputs two or three different times throughout the season. Call several input providers for quotes.

“We always see a wide range of prices,” Michaelsen says. “While it may be more comfortable to book through the same retailer year after year—the smart money shops around.”

Anhydrous Ammonia

UAN32%

Farm Diesel

Source: Pro Farmer Inputs Monitor

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Be Financially Fit in 2019

Financial fitness—just like physical fitness—requires desire, willpower and consistency. To slim your spending and pad your wallet, you need to crunch your current numbers and set realistic targets for future costs and profits. Projections for 2019 show continued financial strain for farmers. Instead of playing defense, use the next few months to create an offensive strategy to push you in the profit zone. 

Budget Basics: Forecast realistic costs and expenses to increase financial performance 

To Buy Or Not To Buy? Weigh purchasing new equipment or continuing to repair older equipment

Talk It Out: Ask your lender these questions before the end of the year

 

 

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Comments

 
Spell Check

steve
hendrum, MN
10/31/2018 08:37 PM
 

  Maybe this will solve our problem of low commodity prices. Crop inputs become so costly, it doesn't make sense on $3 corn and $7 soybeans. If you don't spend freely on the inputs, crop production is likely to suffer

 
 

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