Outlook 2019 with weather and price variables
By Dave Bau
The spring of 2019 will go down as one for the memory books. Wet, cool and late spring left many farmers cramming to get their crops planted. Many were unable to get all the crop planted on time and continued planting even after final planting dates lowering their level of insurance coverage. Many fields were not planted at all and many acres applied to prevented planting acres.
Last winter I prepared crop budgets for corn and soybeans to total $722 per acre for corn and $469 for soybeans with cash rents or return of investment plus property taxes estimated at $186 per acre. How do the economics look today? Cash corn for harvest of 2019 at Lamberton’s Meadowland Coop was $4.17 and soybean price was $8.30. The budget used yields of 190 bushels per acre for corn and 52 bushels per acre for corn. Though yield was projected for normal planting dates it did not take place for many Minnesota farmers.
Using a 10% yield loss due to later planting dates, the yields would lower to 171 bushels for corn and 47 bushels per acre for soybeans. Without accounting for a farm labor charge and no government payments the prices necessary to cover input cost were projected to be $3.80 for corn and $9.02 for soybeans. Now using lower projected yield the breakeven prices increase to $4.22 for corn and $9.98 for soybeans per bushel. The good news the cash corn prices are close to $4.22 but the bad news cash soybeans have not approached $9 for last years. This situation is opposite the past five years where corn lost money each year and soybeans made a profit after including the MFP payment for soybeans.
Some farmers were unable to get some of both crops planted in on a reasonable timeline and chose prevented planting. If a farmer had 75 percent coverage on 190 actual production history, the insurance payment would bed $313.50 at 80 percent coverage $334.40 and at 85 percent coverage $355.30. If a farmer had applied fertilizer at $120 per acre and rent @ $186 and $40 for weed control this totals $346 which mean a loss at 75 and 80 coverage levels, but a small profit at 85 percent insurance coverage level. If a farmer had not applied fertilizer yet all three scenarios would generate a profit.
For soybeans 75% coverage at 52 bushels, the insurance payment would be $223.24 and for 80% the payment would be $238.12 and for 85% insurance cover the payment would be $253. With rent costing $186 and weed control $40 per acre for a total of $226 all three insurance levels would be close to covering costs. Farmers could also chose to plant cover crops which would have tillage and seed cost and some weed control costs, not likely to total less than $40 per acre. My four marketing groups averaged over 15% of intended corn acres not planted and 5% of the soybean acres not planted.
On top of this, farmer have experienced wet weather pattern causing drown out areas in fields that were planted. Historically on average it takes the profits from 12 acres of good crop to make up for the loss of one drowned out acre. Many farmers have experienced these heavy rain events and loss planted acres due to standing water.
Both corn and soybean prices have significantly increased since the end of May and may still increase further after the Aug. 12 federal report. A price increase is still necessary for farmers to make a profit in the wet growing season of 2019.
Attend ‘Cover Crops: Setting up for Success’ Aug. 20
While cover crops have the potential to provide many benefits, they are planted on a limited number of acres in Minnesota each year. The program “Cover Crops: Setting up for Success,” Aug. 20, at the Southwest Research and Outreach Center, Lamberton, will highlight U of MN research that provides management tips and considerations to help farmers and ag professionals successfully incorporate cover crops into Minnesota cropping systems. Registration starts at 8:30 a.m., and the program will run 9 a.m.-2:30 p.m.
Attendees will learn about the latest U of MN cover crop research results and management considerations, evaluate the impact of cover crops in soil pits, and see a variety of key cover crops growing in the field. The program is for farmers, with or without cover crop experience, and for anyone who works with farmers and would like to learn more about cover crops.
The $25 registration fee includes lunch, refreshments and handouts. Registration is requested at least one week prior to the event at https://z.umn.edu/cover-crops-success or by calling 507-752-7372. The first 40 paid registrants will receive a free copy of the “Midwest Cover Crops Field Guide” 2nd Edition. 3.5 CEUs have been applied for (1.0 CM, 0.5 NM, 1.0 SW, 1.0 PM).
Topics & speakers include:
• Matching your cover crop to your goals — Axel Garcia y Garcia
• Can my cover crop supply my fertilizer needs — Paulo Pagliari
• Cover crops and insect pests: The good the bad and the bugly — Bob Koch
• What’s the dirt on soil structure — Jodi DeJong-Hughes
• Weed management tradeoffs with cover crops — Liz Stahl
• Penciling out cover crops — William (Bill) Lazarus
For further details and to register, go to https://z.umn.edu/cover-crops-success or call the SWROC in Lamberton 507-752-7372.