Everyone should be watching the markets for signs on making an appropriate pricing decision — I see corn and soybeans now offer a slight carry.
It is not very exciting, but we can now lock-in a modest return to storage if we choose to put 2011 gains in the bin with an established price for future delivery.
Unfortunately, this modest carry does not cover the cost of any borrowed money we may have in the crop. So, for my uncommitted bushels I am still looking to sell off the combine to meet my credit, cash flow and family needs with a few bushels stored un-priced as being appropriate strategies (for now).
At today’s market, it feels a little better that the Revenue Protection crop insurance Projected Price is $6.01 for covered bushels.
We’ll see what the RP crop insurance Harvest Price turns out to be. Our next USDA Crop Production report is 8:00 a.m., October 12th.
My attention is starting to focus more heavily on what plans might be for 2012 production. The 2012 December corn contract has traded in the range of $4.03 to $6.63 and is now at $5.68. The 2012 November soybean contract has traded in the range of $9.15 to $13.85 and is now at $11.97.
As I try to figure a breakeven point for the next season, understanding a primary cost center — soil fertility — is on my mind.
Bob Taylor, an ag economist at Auburn University, said there’s an increasing lack of market competition in the fertilizer segment, due to mergers. Also of concern, the U.S. is increasingly reliant on foreign suppliers, heightening the risk of hostile governments and political instability.
Roughly 60 percent of nitrogen is imported from outside the U.S., along with 87 percent of potash, Taylor said. At one time, the price of nitrogen fertilizer was tied to its main feedstock, natural gas. Now Taylor said it is hitched to commodity prices instead, which are at elevated levels.”
“It’s a supply issue, it truly is, especially on the phosphate side of the business,” said Tim Ridnour agronomy division manager, Stratton Equity Cooperative, which operates five locations in central and northeastern Colorado. “We in the U.S. think we’re the kings of agriculture, but we’re third or fourth in the food chain to get products a lot of times. India and China double our use, and Brazil is coming on more and more.”