He says corn and soybean prices are poised to either climb or fall or any bit of speculative news, of which there is no shortage. And he says the news is not quite as bullish for prices, “Just before the 2012 harvest, the futures markets pointed to 2013/14 corn prices in the $6.25 per bushel range. 2013/14 soybeans were pricing over $13 per bushel. Those prices have declined, based on the questions about demand. But we ended the year with futures indicating 2013/14 corn prices around $5.65 per bushel and soybean prices around $12.40 per bushel.”
Hart asks if those prices are above your cost of production, and if so, you should have a profitable 2013. However, there are some management requirements. Those include close budgeting for input costs and locking in profits while still possible. He says, “Margins are tightening both prices fall and input costs increase. Farming is still a competitive industry. The profits over the last five years have induced more acreage into production and created more demand for cropland and crop inputs. Eventually, the crop sector will work its way back to breakeven profitability or losses. But thus far, 2013 does not look to be that year.”
While the economy has had considerable volatility, corn and soybean prices have been some of the more volatile. Both have lost nearly their entire drought premium, but ended 2012 higher than they began. Current prices for 2013 are considerably lower, but still remain in the level of farm profitability. Nevertheless, farmers should conduct some strategic budgeting and lock in profits while they exist. A large crop in South America, followed by a large US crop could erode prices substantially.
Source: FarmGate blog