Home / Crops / Fertilizers / Fertilizer seen leading production costs lower for 2010 crop

Fertilizer seen leading production costs lower for 2010 crop

Agriculture.com Staff 03/01/2010 @ 7:23am

Your corn crop might cost you around $100 per acre less this year to get from the bag to the bin.

Estimates for non-land costs to raise the 2010 corn crop in the central Corn Belt are seen at $452 per acre, down $114 per acre from a year ago, according to University of Illinois Extension economist Gary Schnitkey. Soybean per-acre costs are seen around $300, down from $327 per acre last year.

Fertilizer prices are the main driver behind the decline, Schnitkey says. But, some of those prices aren't headed south -- the last 3 months of 2009 saw some prices rebound. And, natural gas prices could push prices higher as winter hangs on. Then there's the residual effect of last fall's weather-delayed harvest that delayed a lot of fall fertilizer applications.

"While still below winter 2009 levels, anhydrous ammonia and DAP prices have increased since October. Anhydrous ammonia price increased from $430 per ton in October 2009 to its current $519 per ton level. From October to January, DAP prices increased from $379 to $436," Schnitkey says. "During the same time period, potash prices declined from $575 per ton to $511 per ton.

"Further increases in fertilizer prices will increase 2010 production costs above those projected here. Recent cold weather has increased natural gas use, potentially leading to higher natural gas prices, a major cost in producing nitrogen fertilizers," Schnitkey adds. "There also may be fertilizer production bottlenecks this spring due to relatively little fall application of nitrogen. Higher energy prices and bottlenecks could further increase fertilizer prices."

One other bright spot, expense-wise, could be for grain drying. After some drying costs that exceeded $100 per acre for the 2009 crop, those should be closer to $50 per acre, Schnitkey says.

It all adds up to a break-even price of the mid $3.00-per-bushel range for corn and the mid-$9.00s for soybeans.

"Given current commodity prices near break-even levels, return margins will be tight for crops grown in Illinois," Schnitkey adds.

Your corn crop might cost you around $100 per acre less this year to get from the bag to the bin.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Cool Tools Christmas Edition: Part 2