University of Minnesota Extension
www.extension.umn.edu
612-624-1222
Menu Menu

Extension > Agricultural Business Management News > Outlook 2017 for Corn and Soybean Crops

Tuesday, May 9, 2017

Outlook 2017 for Corn and Soybean Crops

by David Bau, Extension Educator

Farmers are just getting started planting their 2017 crops with hopes of good yields and good prices. There has been plenty of spring moisture and now the cropping season will take off in full swing when the soil dries out. Farmers have been blessed with two years in a row of record crops, will 2017 bring a third? The good yields have helped many farmers survive the low prices and small profits the past couple of years. In Southern Minnesota corn farmers in the Adult Farm Management programs have averaged losses on corn production since 2014, while they were able to generate small profits on soybean during this time.

Crop prices for 2017 corn are at $3.40 and soybean prices are $8.90 depending on your local basis. Farmers in my marketing groups have worked on their 2017 budgets and determined breakeven prices at $3.80 or above for corn and $10.10 or above for soybeans. The high futures price in December 2017 corn occurred on June 8, 2016 at $4.22 and for November 2017 soybean high was $10.42 on November 28, 2016. Using a 60 cent corn basis and a 70 cent soybean basis, which are wider than normal due to the large crop inventory, the high prices would have been $3.62 for corn and $9.72 for soybeans. With both current and the high prices offered for 2017 corn and soybeans below 2017 breakeven prices farmer will again be facing a small or no profit year.

Farmers will be examining their farm expenses to determine ways to lower costs. Rents are the largest expense accounting for 40% of soybean crop expenses and 33% of corn expenses. The next largest is fertilizer, followed by seed, chemicals and repairs and hired labor. The challenge is to lower input costs without sacrificing yield.

Farmers need to be alert for opportunities if the markets rally close to the prices necessary to lock in profits. Farmer need to develop a marketing plan with target prices beginning close to their individual breakeven prices and stair step their way up to higher price targets. Decision dates should be added to determine if prices are high enough to lock in prices available at the time. The high in corn prices usually occur in May, with historically higher than average prices for both corn and soybeans from April through June.  This time period would be a good time to set decision dates.

If the target prices are not met and on decision dates have passed with too low of price to market any grain, farmers need to add default dates to force sales, especially for those bushels that the farmer will not have on farm storage space for at harvest time. Hopefully 2017 will be another year with good yields which also help lower the breakeven prices. Without better yields or prices or both, 2017 will be another with little to no profits for Minnesota corn and soybean farmers.

No comments:

Post a Comment

  • © Regents of the University of Minnesota. All rights reserved.
  • The University of Minnesota is an equal opportunity educator and employer. Privacy