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Purdue University’s Chris Hurt and fellow agricultural economist Alan Miller said they anticipate farm production costs will be cheaper overall in 2014.
Farmers likely will see a 3 percent dip in the cost of growing soybeans and a 5 percent drop in corn costs, the two specialists said. That includes expenses such as fertilizer, seed, pesticides, fuel, machinery repairs and other miscellaneous items.
The cost of seed and pesticides are likely to rise the most, Hurt and Miller said, but fertilizer costs are projected to drop by 21 percent next year, providing farmers some relief.
Hurt said trimming production costs where possible will help farmers cope with what’s likely to be flat sales prices for corn and sharply lower prices for soybeans in the 2014 through 2016 seasons. He projects corn prices to average $4.95 per bushel next year and no more than $5 per bushel in 2015 and 2016.
Last fall, corn prices soared to $8.50 per bushel due the effects of drought on supply, but those prices aren’t about to
Average soybean prices will fall below $12 per bushel each of the next two years, and they’ll dip to $11.10 per bushel by 2016, Hurt said. Soybeans have sold lately between $13.40 and $14 per bushel.
“We’re entering a moderation period,” Hurt said. “We’re not falling over a cliff, but we’re coming down.”
The happier picture for fertilizer expense is due to the fact that potash and phosphate prices have dropped 15 percent to 17 percent since last spring, Miller said in a Purdue University news release.
Nitrogen prices have declined about 22 percent. Within two years, farmers should also benefit from increased investments that are boosting U.S. production of nitrogen fertilizers, driving prices down and stabilizing supplies, Miller
“We have been importing more than 50 percent of our nitrogen fertilizer, meaning supply disruptions could easily
impact prices. As we produce more of our own, we’ll import less,” he said.
Recent prices for nitrogen in anhydrous ammonia form have flirted with $700 per ton. But Miller said that eventually could fall to as low as $400 or $500 per ton if U.S. production capacity increases enough.
Miller said seed costs could rise 3 percent or more for the 2014 planting season. But Hurt said farmers likely will try to soften that blow by shopping around for occasional bargains. Hurt expects some seed companies to offer specials or promotions at times next year, “kind of buy four sacks and get a fifth sack of seed for free.”
Prices for fuels commonly used on farms also are expected to be lower in 2014, Miller said. Costs for both diesel, which powers most farm machinery, and propane, which farmers use to power grain dryers, could be down by about 4 percent.
Fuel prices, however, can be among the most volatile costs farmers face. Prices can vary wildly based on world tensions, the level of imports and severe weather-related factors. While an increase in domestic energy production has helped, there still are no guarantees, Miller said.
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