Are you willing to sacrifice yield for expense? A long time ago my father always told me that no matter how high the inputs are you have to shoot for the optimum yields that you are capable of. I still find that very true to this day.
With the cost of fertilizer rising almost daily, I think a person should look at locking in some prices and taking delivery if you have the storage available. At the top of my list is Monoammonium phosphate (MAP). Generally speaking, it is around $525 per ton and already facing severe shortages. That price has been steadily rising since last spring. Another fertilizer to keep an eye on is potash 0-0-60. Here, too, prices have gone through the roof as it currently stands at around $340 a ton. I’m hearing that this particular potash could be in very short supply come spring.
The one that surprises me the most has been pretty stable, and that is Urea. Urea is at around $350 per ton. That is not terribly different from last spring, and the way it sounds, they have plenty in supply. The product that has really skyrocketed is Anhydrous Ammonia, which is sitting at around $535 a ton. With only two real sources of nitrogen, I am afraid the stage is being set to put more pressure on Urea for a price increase.
The chemical game is a little different animal. It, too, will charge whatever the market will bear. However, there is a very competitive factor out there that will limit the prices from getting too high. That factor is the sheer number of different chemical companies looking for a piece of this pie. Therefore, if they all want a slice, they must keep the price as lean as possible. Relatively speaking, there hasn’t been a huge price increase except on some new specialty chemicals.
Seed prices are also seeing some very big changes. We have so many different seed companies with so many different seed traits that it is getting hard to keep tract of them all. I will put it like this: the older the gene trait, generally the cheaper it is. The more traits you stack, the higher the price is. But in the grand scheme of things, none of them are cheap.
Regarding the machinery markets, what we have been seeing is good used machinery is bringing big money. With the extreme prices for new equipment, the used market for low hour, well-maintained equipment is in high demand. When you can buy two or three combines for the price of one new one, it is hard not to take a good hard look.
Interest rates are around all-time historic lows. If you find yourself in a machinery bind, now would be a very good time to lock in some great rates. We are about 20 basis points off of the low. How can you go wrong with that? Be sure to factor this in.
Commodity prices have been on the rise with record buying from China. Can they keep up this pace? We sure hope so. Along with that we have been seeing some dry conditions in Brazil and Argentina. They are not alone, though. We have been hearing about dry conditions here in the U.S. in places like Kansas, Oklahoma and Nebraska. So, we are hoping those prices can stay strong to give us the boost we need to pay for our large input costs.
One other thing I would really like to stress is probably the most important factor in all of this: Be sure to sit down and go through where you sit when it comes to your breakeven. When you do, be very honest with yourself. After all, the only person you are hurting is yourself.
