Sharpen those pencils and get ready for 2014.
This winter planning period could affect profitability more than any production decisions. Market analysts expect corn prices to average well below $5/bushel in 2014. Input purchases and marketing decisions will determine profitability for the coming season.
University of Illinois ag economist Gary Schnitkey predicts an average of $4.60 for corn and $11 for soybeans in 2014.
At $4 per bushel, Bryce Knorr, Farm Futures senior editor, is more bearish on corn prices. But, he's more bullish on soybeans.
"The 2013 soybean crop is looking smaller than original estimates indicated," Knorr adds.
He expects 2014 futures could rally to $13. Of course, Brazil's soybean crop is the wildcard.
Find the deals
The rubber meets the road when farmers start booking inputs and signing cash rent leases.
Using $300 cash rent and $581 for non-land (input) costs, Schnitkey says the break-even price on a 195-bushel corn crop is $4.52. On soybeans, the break-even is $11.46 per bushel, with a 57-bushel average and $353 in non-land costs (plus the same $300/acre cash rent).
Knorr says the biggest place farmers can save money in 2014 is on their fertilizer budget. At press time, anhydrous ammonia had dropped $250/ton – a serious savings for the fall-applied crowd.
But, the potash market is looking even better with the recent breakup of the Russian cartel, Knorr adds.
"If you're going to hold off on anything, I'd wait on potash," he says.
Knorr also recommends some serious comparison shopping when booking fertilizer for the 2014 crop. He says deals are out there; farmers need to be willing to put in the legwork to find them.
"It's like this: why pay $5 for a gallon of gas when you can drive to a different gas station and buy it for $3.50," Knorr adds.