NASHVILLE, Tenn. (RFD News) — Producers are already planning for the next crop year as commodity markets change, but many of the expenses they face remain high.
Market analyst Jim McCormick said increasing production or lowering input costs remains difficult as prices for fertilizer, seed and machinery stay elevated.
“You got to get to production or sell more product with bigger yields, or you got to get the cost of inputs down right now. That is incredibly hard to do. It seems like once these companies raise rates, raise prices on fertilizers, seed, you name it, the machinery, they’re very leery to lower those prices. I’m not sure how we get out of this. It’s going to get very, excluding maybe a weather issue, which is a situation that maybe that’s what bails out the Ag industry.”
McCormick said weather could change the outlook. While he expects a good U.S. crop, production problems in other growing regions could affect global supplies and commodity prices.
Brady Huck with EmpowerAg Trading said several factors could influence prices in the months ahead, including weather, global demand and international buying.
“There’s a lot of ifs in the market going forward. If we have continued stress in the West. Can we reach trend yields going forward if we don’t reach trend yields? What does that do to our balance sheet? I think it certainly tightens supply, which in turn is going to ration demand and price. They do have to do some work to ration that demand. The other ifs out there, two big ifs. Is China going to come to the table, and how is El Nino going to impact Southern Hemisphere production as we go into the fall?”
Huck said if wheat prices move closer to $8 a bushel, some producers may consider planting additional acres while balancing crop rotations and soil health.
