Grain markets all over the world are in turmoil and they are killing production margins here in the USA, as well as in Europe and elsewhere. For farmers here the basic mindset is that crop prices are too low and fertiliser is too expensive, especially phosphates such as MAP and DAP. Phosphate prices are currently the highest they have ever been in relation to the price of corn (maize).

Potash price is acceptable, but it is still too high relative to the value of our output. Anhydrous ammonia, or any nitrogen source, is also way too expensive, especially when compared to corn prices.

Response

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There are many different strategies being discussed here on how to survive or just break even, as compared to making losses. Only last week I agreed with my fertiliser supplier that I will apply the full amount of P and K only, based on each crop’s prescription/precision/removal, plus a little extra to help build soil fertility. There will be no sulphur, zinc or boron for the coming year.

I locked in my supply for next season last week; I get a good discount based on scale and timely purchase, so that helps.

However, this is the first time that I have ever reduced my overall fertiliser input because of costs. But I want to continue on the nutrient plan we have for P and K. This is not a perfect solution, but it is a business decision for now. Hopefully next year’s prices will be reasonable and I can catch up again on these other important nutrients. My intention is to apply the P and K to every acre, every year, so I should be able to catch up again. At least this option buys us another year.

Other farmers are cutting back even more, or just applying a maximum value of P and K only per acre. But many others have no plan at all yet.

Prices

On the input side the retail price for MAP (mono ammonium phosphate) is $950/ US tonne, which is 2,000 pounds. Potash (K) is $530/t, anhydrous nitrogen (82% N) is $870/t and UAN (28% N) is $425/t. These are translated to euro prices per metric tonne in Table 1.

As stated previously, the main problem with the fertiliser prices is the relatively low prices for grains. On 12 September the price for corn was $3.78/bushel (56 pounds), soybean price was $9.43/bushel (60 pounds), hard wheat in Kansas City (my closest market) was $4.70/bushel (60 pounds) and soft wheat at the same location was $4.55/bushel. These are converted to euro prices in Table 2.

I recently bought a tanker of diesel (27,630L) for the farm and it cost $0.69c/l (€0.59/l). I also bought another tanker of road diesel which cost $0.83c/l (€0.71/l) – the difference is road taxes. The problem is the farm tanker load is already half gone just filling up the machines and supply tanks for harvest.

Harvest and yield potential

Part of the reason for global price pressure currently is the anticipation of a huge corn crop in the US, according to USDA estimates. Well, we all feel that those estimates are too high. While there have only been a few fields of corn harvested to date, the general report is that those yields came in a little under expectations. No one has said “it yielded better than I thought it would”, so I think this will be the trend as people start into their corn.

We plan to start on 15 September with the full crew. Grain moisture levels are around 20-22% right now, so I will be running the dryers for a while.

We have concerns regarding diseases and stem strength as our summer was wetter than normal. Growers here are all talking about corn stalk strength and the general feeling is that we are “one wind storm away from a disaster”. It has been estimated that 30-60% of the stalks are weak, so once we start the plan is to keep cutting until this corn crop is in the bin. My goal this fall is to harvest 500,000 bushels (12,700 metric tonnes) in 13 days. We did it last year and we should be able to do it again this year. It will mean long hours, but once it is in the bin it is secure.

Mood is neutral

The mood of farmers around here is generally neutral. Older guys like me have been through tough times before. Younger guys like my sons, Matt and Nick, are in for an education. I had a group of college kids here last week for a visit and I told them they have one advantage that I no longer have – time.

I view the current tough times as being likely to provide excellent opportunities in the next five to 10 years. So I told them to be careful in spending, to build resources and credits, and to watch out for bargains in land and machinery in the years ahead to get their start.