“All of the dealers are almost sold out of corn seed. They’re short of corn seed, so that there’s no guessing, there’s going to be more corn planted. We already know that fact.”
Jason Wendler isn’t one of the farmers that will be contributing to the expected 25% increase in corn production.
“My own situation, I will not. I’ve noticed in the past whenever there’s something in front of you that if you can’t already lock it in and capitalize on it, it’ll normally be an empty air bag when it comes a year later when you’re to it. The time the money’s been made, it was planted and good strategy and so forth, but it didn’t happen because you planned it to happen, it’s just sort of like this year’s market.”
Wendler is quick to point out that profit margins in agriculture, when they exist, are very small.
“There’s very, very few farmers that were able to capitalize on the four dollar corn that we’re seeing today. Back when the harvest was, and even a lot of folks that held on to corn for two or three months weren’t really able to capitalize on the market, and haven’t in the past.”
The cost of inputs continue to rise.
“The crop that was put in this past year cost thirty per cent more to produce, i.e., the fuel, fertilizer, and equipment with steel costs that have occurred over the last two years.”
Farmers can lock in prices with forward contracts.
“We’re seeing over four dollar corn today, but if you want to forward contract your corn for next year, today it’s already somewhere a little above three dollars.”
But the big money is in the speculation market that involves more risk than most people are comfortable with.
“The only one that may see a big profit off this will be someone holding paper as a speculator, and if they were able to jump in when it was below three dollars and now it is almost four, they would be the one that profited the most.”
So corn farmers have no illusions about windfall profits, and producers raising other crops hope that a 25% shift to corn might help move the prices of their crops move up as well. I’m Joe Brown, looking at Brazos Valley agriculture, From the Ground Up.