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Outlook 2018 for Corn and Soybean Crops

By David Bau, Extension Educator

With heavy April snowfall farmers are just getting started planting their 2018 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 three years in a row of above average crops. Will 2018 continue the trend?  The good yields 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 from 2014 through 2016 turning to a loss in 2017.

Cash crop prices for 2018 corn are at $3.70 and soybean prices are $9.60 depending on local basis. These prices are 30ȼ better than a year ago for corn and 70ȼ higher for soybeans. December corn futures rallied 25ȼ from the April low price and soybeans futures have increased 60ȼ. Farmers in my marketing groups have worked on their 2018 budgets and determined their average breakeven prices of $3.85 for corn and $10.60 for soybeans. With current prices offered for 2018 corn and soybeans below 2018 breakeven prices farmer will again be facing a smaller profit year unless prices continue to rise.

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. Yield may also be lowered by a later planting date this year.

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 occurs 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 marketing decision dates. With the prices improving, farmers should look at marketing part of their 2018 crop.

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 at harvest time. Hopefully 2018 will be another year with good yields which also help lower the breakeven prices. With prices currently below the breakeven prices necessary, 2018 will be another with smaller profits for Minnesota corn and soybean farmers.

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