What is in this article?:
• This coming year may not be as good as this past year, but corn prices still should be pretty good.”
• There’s an opportunity, at 120 bushels, to see a little profit on corn.”
Turning to the ag machinery forecast for 2011, combines will be up about 7 percent, cotton pickers up 9 percent and 150-horsepower tractors will be up about 8 percent, he says. Starting in 2012, there will be new emissions requirements, so those prices might increase even more.
Oil was about $70 per barrel about a year ago, and now we’re in the $100-per barrel range, says Runge. It seems to be somewhat steady, but volatility will remain in the oil market, he says.
Crop insurance should be down some this year, he says, but land rent probably will be up. ‘
“If you’re looking at expanding, you probably need to run the numbers and do a lot of ‘what ifs.’ There are pros and cons to long-term contracts. In Huntsville, the airport owns about 3,000 acres of row-crop land. They put it out for sealed bids, in a 10-year contract. They’ve got new contracts coming out this spring, and the rent on that land — for dryland acreage — amounted to just over $200 per acre. That’s a lot of money for dryland acres. But a lot can happen in 10 years. In seven or eight years, land rent could be $250. So do due diligence on land rent.”
The U.S. dollar is the highest it has been in 11 months, but that’s hurting our exports, say Runge, and the European debt crisis continues to weigh heavy on the U.S. economy.
“Looking at marketing strategies, you can go with one-third, one-third and one-third, before or at planting, during the growing season, and at harvest. Another strategy is not to plant anything you haven’t priced, so price it early and then plant to that. The easiest thing to do is to price it at harvest as you unload it from the truck.”
This past year, marketing on corn was flat throughout harvest, so it didn’t really matter when you marketed, he says. By September 2011, it was on a steady increase.
“You would have been in pretty good shape if you have sold some at planting, some during the growing season, and some at harvest. I don’t think prices this year will get much lower than where they are now.”
At 120-bushel corn, the break-even cost is about $4 per bushel, on irrigated cropland, says Runge. “There’s an opportunity, at 120 bushels, to see a little profit on corn.”
Crop rotation is very important, he says, and it is even more important now.
“There’s isn’t a big problem yet with herbicide-resistant weeds in parts of Alabama, but it’s coming. The Tennessee Valley has it, southeast Alabama has it, and it’ll be moving in. Rotation will help, so you can change the chemistries with the crops you’re planting.”
It’s important, says Runge, to manage fertility, especially considering the high nitrogen prices. “If you can price some inputs early, I wouldn’t hesitate to do so. But I wouldn’t be in a big hurry to price crops because I think they’ll be some opportunities later on.”
If you’re a farmer and you had a good year, it may be an ideal time to invest back into the farm, he says.
“This could include technology for your farm; water, whether it’s with an irrigation system or new water sources; or you could pay down some of your higher interest debts.”
Other recent articles on the corn market can be found at http://southeastfarmpress.com/soybeans/south-american-weather-boosting-corn-soybean-markets, http://southeastfarmpress.com/grains/increased-pork-demand-supporting-corn-market and http://southeastfarmpress.com/markets/us-corn-mission-sees-market-potential-vietnam.