Now is the time to lock in input prices. “When it comes to finding savings, look first at who you work with,” says David Widmar, economist at Ag Economic Insights, as suppliers are partners who can clue you in on deals.
Fertilizer prices are down compared to recent years. “Anhydrous is well below the five-year average, so we have room to the upside,” says Davis Michaelsen, Pro Farmer Inputs Monitor editor. “I’m telling guys to lock in half of their spring nitrogen needs simply because it lets us take advantage of low prices and gives us a little buffer against risk if prices take off.”
Storage fees could be cost prohibitive for locking in large amounts of anhydrous early. Michaelsen expects prices to rise to $550 per ton by April 1.
Also plan to lock in diammonium phosphate (DAP). Michaelsen again recommends 50% of your needs, however the annual low is typically in late January to early February. Look for DAP at $475 per short ton or lower.
With the propane shortages this fall, many farmers are watching prices closely. “I don’t know if propane will get as bad as it did in January 2014 when it climbed to $4 per gallon — we’re at $1.22 in mid-November,” Michaelsen says. “There is potential though if cold weather keeps occurring and because in mid-November we had nearly 30 million acres of corn still in fields.”
There’s not much farmers can control right now when it comes to propane — especially if you have grain left to harvest. So at least manage your farm diesel purchases.
“Take inventory of your diesel first, maybe you don’t need to buy any or don’t need to buy much,” Widmar says. “In addition — what storage capacity do you have, or what can you contract?”