December 25, 2009

Crops project some profit margin in 2010

Crops project some profit margin in 2010
Producers in every region of the state have crop alternatives that project some
return for their labor and management for 2010, according to Andy Swenson, North
Dakota State University farm management specialist.
Crop prices are down from the highs of 2007 and 2008 but are still strong when
viewed in a longer historical perspective. Unfortunately there was about a 70
percent run up in costs that varied by crop and region from 2002 to 2008.
“There is some relief from production costs,” Swenson says. “Fertilizer prices
are expected to be one-third lower than those used in last year’s budgets and
the price of glyphosate herbicide has declined by more than half. However, most
other costs have increased, with fuel costs projected about 20 percent higher.”
Prices for spring wheat, durum and barley are projected to average $5.45, $6.20
and $3.50, respectively. Production costs for these crops should decrease about
$15 per acre compared with last year’s budgets. Although most cost items will
increase, an important one, fertilizer, is down substantially and seed and crop
insurance for small grains also should be lower.
Spring wheat returns are expected to be positive in seven of nine regions.
Projections range from minus $13 in the southwest to $28 in the southeastern
region. Durum and barley profits are down from last year’s projections. Durum
profits, excluding the southern Red River Valley region, typically will range
from $10 to $20 per acre. Malting barley shows a loss in the Red River Valley
counties, but a profit of around $15 per acre for the rest of the state. A loss
will occur if feed-quality barley is grown.
The corn price is similar to last year’s projection, averaging $3.45 per bushel.
Lower fertilizer prices should bring the total cost of raising corn down $20 to
$25 per acre, compared with last year’s projection. This is despite an expected
increase in expenditures of about 9 percent for corn seed and 20 percent for
fuel. Corn is expected to show a profit in every region of the state, led by the
traditional corn areas of the southern Red River Valley and the southeast, at
$33 and $42 per acre, respectively.

The Weather Network