Rumors Point to Higher Seed Cost Next Year

Companies begin looking at '09 season pricing.

Published on: Jul 10, 2008

Cornplanters are still parked in the barnyard, ready to go, if not still at the edge of the field. Not all soybeans are in the ground yet, and sales reps are still picking up leftover seed from customers. In otherwords, the '08 planting season is just winding down, but mercifully so. Enough is enough! Meanwhile, word on the street is that seed corn prices will likely go up again next year.

Most companies raised prices a significant amount for the '08 planting season, especially for top-of-the-line hybrids with multiple genetically modified traits. Seed corn listing at $200 per bag, at 80,000 kernels, or even at a slightly higher price, wasn't uncommon.

An unidentified source says $30 to $40 per bag increases for '09 shouldn't surprise anyone. Explanation being provided is that the cost of business is going up for everyone, not just farmers. Costs to seed companies to produce seed is also being influenced by higher fuel prices, and higher fertilizer costs.

Plus, it's been reported that the winter production season in some parts of the southern Hemisphere didn't yield as much seed as usual. That increased costs, in some cases apparently by a significant amount. And it was some of the hottest, most advanced germplasm companies were counting on getting back from there this spring. While companies did receive some seed, low production in Chile and other places means they didn't get as much seed as they intended. As a result, with the cost of production fixed and the price for the seed coming back already locked in to the customer, they paid more than expected for each bag they brought back, since there were significantly fewer bags coming to the U.S. in many instances.

Whether this rumor is true or just a rumor will become apparent in the next few weeks. Some companies gear up for '09 sales by mid-to-late August. Most that do have some idea of price because some actually want to make sales to customers. In fact, at least for a few companies, the bulk of their sales are made during company selling events in mid-to-late August.

Watch for 'deals' from companies. Check with your local sales rep before you buy and lock in your supply. A year ago some companies offered a free bag of refuge corn for every four bags of traited corn you bought. It was a unique way of offering a discount, much like some car companies are now offering $2.99 gas for three years. A cash rebate would do the same thing for the purchaser's pocketbook, but since it isn't as flashy, it might not be noticed or remembered as quickly. Don't be bashful to inquire what deals your company of choice might be prepared to offer. Prices may be headed up, but it's still expected to be a very competitive market out there for seed sales.

At least one other company offered premier customers a chance to buy seed at last year's price. In this case, that would mean locking in '09 seed at '08 selling price. To do so, however, the company may require payment in full, or at least in part, upfront. Getting the money early allows the company to generate cash, hold down interest costs, and thus gain a portion of the increased price they must charge others. It also locks in a sale so that they can figure out how many bags they need and how many they have once fall production comes in this fall.