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Growers should expect budget squeeze in 2010

admin — Tue, 06 Oct 2009 04:51:13 +0000

WEST LAFAYETTE, Ind. — Farmers should see some relief on input costs next year, but profit margins are still likely to be squeezed.

While fertilizer prices have already come down, Erickson said overall costs remain relatively high and have not come down as much as commodity prices. Today's grain prices are placing downward pressure on the seed and crop protection companies.

Bruce Erickson, a Purdue University agricultural economist, said growers would likely see the most savings on fertilizer costs in the 2010 planting season.

“Some farmers were spending as much as $200 per acre to fertilize the 2009 corn crop, more than rent in some cases, when you consider nitrogen, P and K replacement, and any liming requirements,” Erickson said. “Next year it will be about one-third less — in our projections about $100 to $130 per acre — depending on soils and crop rotation.”

Erickson and his colleagues’ estimates are available in the “2010 Purdue Crop Cost & Return Guide,” now available online. The guide gives estimates of input costs and expected returns for the coming planting season.

At the time these estimates were prepared, Chicago Mercantile Exchange Group futures indicated that fall 2010 cash prices were near $3.30 per bushel for corn and $8.40 for soybeans. These prices are lower than what was used in the 2009 budget estimates by 70 cents for corn and 30 cents for soybeans.

It’s fairly certain that these costs and returns will change before anything is planted, but the estimates provide a starting point for thinking about 2010, Erickson said.

“The guide provides a general barometer for people who do their own budgets,” he said.

While fertilizer prices have already come down, Erickson said overall costs remain relatively high and have not come down as much as commodity prices. Today’s grain prices are placing downward pressure on the seed and crop protection companies.

“Some technology fees have increased, and we know list prices of some of the newest hybrids have gone up, but we’re also hearing of significant discounting as well,” Erickson said.

Also, some input suppliers have already announced substantially lower glyphosate prices.

“For the second year in a row, farmers’ margins will be less than they were in 2007 and 2008,” Erickson said.

One cost-saving area could be machinery. Erickson said industry reports show sales of new large farm machinery to be down, which could keep a lid on the cost of those purchases. On the other hand, interest in buying used equipment is on the rise.

“There could be some bargains on new equipment out there,” he said.

To download a copy of the 2010 Purdue Crop Cost & Return Guide, go to http://www.agecon.purdue.edu/extension/pubs/index.asp

Surplus U.S. crop means lower prices; need to stimulate use

admin — Thu, 10 Sep 2009 20:09:38 +0000

WEST LAFAYETTE, Ind. — This year could be another record-setting year for U.S. corn production, said Purdue University’s Chris Hurt, who believes those numbers will be reflected in the U.S. Department of Agriculture’s Sept. 12 Crop Production report.

This year could be another record-setting year for U.S. corn production, said Purdue Extension agriculture economist, Chris Hurt.

USDA’s August estimate for corn was 159.5 bushels per acre for the average yield — 3 bushels per acre above trend — which was bold at that time, according to the Purdue Extension agriculture economist. As the crop progressed in August, Hurt questioned: “Is that number high enough? Is it fairly accurate? Has the crop improved, in terms of yield potential, since early August?”

“I think we’ll see the September estimate for corn at about 161.5 bushels per acre.”

He is aware some might not agree with the estimate, given the less than ideal crop year. Spring was extremely wet, preventing many farmers from getting into their fields on time.

However, Hurt believes the sufficient moisture and moderate weather conditions have given the crop an opportunity to increase the grain count for corn and the pod count for soybeans, as well as grain fill or the weight of the seed.

“We’ll see record yields on corn,” Hurt said. “Could this year end up being that mammoth of a yield like we had in 2004?”

He compares this year’s crop to then.

“A year much like this one, in terms of moderate weather during the growing season, 2004 ended with record yields at 160.4 bushels per acre,” Hurt said. “I think we’ll take that out in the September estimate at about 161.5.

“In looking back, the USDA weekly crop ratings track about like they did in 2004. It’s the best crop we’ve seen, and I think corn may end up slightly better this year, because in 2004 we saw declines in late August and on into September.”

Unless there is a frost, Hurt expects the crop to continue to look good and even improve a little.

Hurt also noted that in 2004, yields were about 10 percent above trend. If that were to happen again, that would put yields in the upper 160-bushel-per-acre range — close to 170 bushels per acre, he said.

“It’s too early to talk about yields that good, but we could certainly begin to think that there’s potential for yields to be in the mid-160s,” Hurt said. “I don’t think the market is thinking a number quite that high at this point. We would make new contract low prices on corn if it would move on up into the mid-160-bushel-per-acre range, and this means vulnerability on the downside of prices.”

For soybeans, the crop rating is the highest rating in recent years, Hurt pointed out.

In early August, USDA had soybean estimates at 41.7 bushels per acre, which was below trend, said Hurt, who believes they were right in their estimate.

“The beans had a long way to go, but they’ve come a long way since early August and from what can be seen on the weather forecast, weather is not going to be a threatening factor in September,” Hurt said. “I think we can be above trend this year. The previous record is 43 bushels per acre, and I’m looking for the USDA’s September number to push us on up — eventually going above that 43-bushel-per-acre record yield range going into October.”

This means there is going to be a lot of corn and soybeans, and prices are going to decrease to get end users to come in and buy more of this crop, Hurt explained.

Soybean carryover may increase from extremely tight supplies of 110 million bushels in early September, according to Hurt, who expects to see that triple and move up to 300 million bushels by the end of the 2009-2010 marketing year.

“Again, there are some price depressing forces on soybeans, but the worst might not come until we see the size of the South American crop as we go into January, February and March of 2010,” he said.

From a strategy standpoint, Hurt said this year has a different look.

“We’re likely to see good returns for corn storage — depressed prices at harvest time and above normal price appreciation going into next spring and summer,” he said. “With soybeans, we have the threat of a return to normal yields in South America and that alone would add about 800 billion bushels more world production.

“The fear then is that our exports really drop off for soybeans in the spring and summer of 2010 and we actually end up seeing lower prices. If soybean prices are around $9 out of the field this fall, we could see soybeans under $9 next spring and summer.”

However, he said a lot will depend on world demand, the value of the dollar and the ultimate size of the U.S. and South American crops.

“We’re really in a different situation now than we’ve been in,” Hurt said. “The last three years, we’ve tended to see shortages in the world market and prices had to be high to get end users to cut back.

“Now we are on the other side. Big crops in the United States could mean that we have to depress prices to get more end users to come into the market and, for now, it looks like we’ve tilted a little bit back to the old days of surplus production and lower prices to stimulate use.

Crop yield estimates to highlight annual state fair report

admin — Thu, 30 Jul 2009 21:17:31 +0000

WEST LAFAYETTE, Ind. — A slow start to spring planting led to a mad dash by farmers to finish in June, followed by cool and wet weather that hampered crop development. Those wild fluctuations in the 2009 crop season will provide the backdrop for fall crop yield projections that will be presented Aug. 12 at the Indiana State Fair in Indianapolis.

The annual crop report takes place at 9:30 a.m. in the Pioneer Our Land Pavilion and is open to the public. Speakers include Chris Hurt, Purdue University agricultural economist; Greg Preston, Indiana director of the National Agricultural Statistics Service; and Anne Hazlett, director of the Indiana State Department of Agriculture. Jay Akridge, Purdue’s Glenn W. Sample Dean of Agriculture, will moderate the panel discussion.

Crop report panelists will analyze that morning’s U.S. Department of Agriculture crop production numbers and what that data means for Indiana.

“The August crop report is one of the most anticipated in years,” Hurt said. “It will provide an evaluation of the actual acres that finally got planted this spring and what the cool summer means to yield potential.

“Just one year ago, the world was fearfully short of basic foodstuffs. This year, much better world harvest and improved prospects for U.S. production appear to have reduced the fear of supply shortages. Large crops will help reduce food price inflation, which has been a concern over the past year.”

Preston said spring planting started late across much of Indiana.

“On June 1, the amount of corn planted was 17 days behind the average five-year pace,” he said. “For soybeans, on June 1 we were 14 days behind for the five-year average.”

Lower-than-average temperatures after planting extended corn and soybean crop development, Preston said.

“By the end of July, crop development was still behind last year’s pace and about half as far along as where we would be for the five-year average,” he said.

The crop report starts 30 minutes before the Pioneer Our Land Pavilion officially opens. Those attending the meeting should enter at the main entrance on the building’s south side.

Those with Internet access also can follow the report on Twitter, the social networking Web site. Regular “tweets” will be posted throughout the meeting on the Purdue Extension Twitter feed. To receive the Twitter posts, visit http://twitter.com/PurdueExtension and request to “follow” the feed. Users must already have set up a free Twitter account.

USDA report: 9 percent of Indiana corn, soybean crops flooded

admin — Wed, 18 Jun 2008 16:59:15 +0000

WEST LAFAYETTE, Ind. — Recent heavy rains have flooded 9 percent of the corn acreage, 9 percent of the soybean acreage and 5 percent of the winter wheat crop, according to the U.S. Department of Agriculture’s crop report released June 16.

The southwest district of the state, which includes Evansville, Freelandville, Shoals, Stendal and Vincennes, received the most crop damage with 16 percent of the areas corn acreage flooded, as well as the soybean acreage. Six percent of the wheat acreage was reported as flooded in the southwest district.

The southwest district was followed closely by the southcentral district, in terms of crop acreage flooded — 13 percent for both corn and soybeans and 9 percent for flooded wheat acreage. The southcentral district includes the areas surrounding Leavenworth, Oolitic and Tell City.

These numbers come from questions added to the USDA’s weekly crop progress survey in Indiana.

“We added the flood numbers to the weekly crop progress report because everyone wanted to know how the floods were affecting Indiana,” said Greg Matli, deputy director of the Indiana office for USDA’s National Agriculture Statistics Service located at Purdue University. “Calls were coming in from the governor’s office, Farm Service Agency offices, Chicago Board of Trade and newspapers wanting information.

“There was obviously a demand and we already had the system in place to get that information, so we decided to add a few questions to our weekly survey and now people know what’s going on.”

Indiana has 97 percent of its corn planted with 93 percent emerged and only 55 percent of it is rated in good to excellent condition. Hoosier soybean growers have 80 percent of their crop planted with 70 percent emerged and 52 percent considered in good to excellent condition.

Lafayette Online » indiana crops

Growers should expect budget squeeze in 2010

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