Energy prices were a key talking point at the Barnett Hall conference last week.

President of AgResource Company Dan Basse described the rising cost of diesel as “traumatic” for US farmers.

He thinks diesel will hit $7/gallon in the near future. This means diesel would be adding $49 to $54/ac to production costs.

At these levels, farmers are seriously thinking about not planting crops at all or changing from a crop such as corn to wheat, which may require less diesel to produce.

He explained that the world has lost about 5m barrels of oil per day because of conflicts and added that US diesel supplies are near record low levels and are likely to keep falling on heating oil demand.

Long haul

Basse commented that even if the war were to end today, he thinks energy prices will remain high for another one to two years.

It is no coincidence that with a rise in energy costs, more and more corn and oilseeds are being moved to energy production.

Basse explained that the US farm bill contains a requirement for America to move to E15 fuel from E10. If passed, this would require 15% ethanol in the mix instead of 10% and would require 2.6 billion bushels of corn.

There would be an investment needed in processing, but more demand will be created over time.

Corn exports out of Brazil were also reported down by the economist due to strong domestic demand as ethanol demand expands.