Comparing the Economics of Western Nebraska Cropping Options
February 11, 2009
Where's the Money This Year?
This is one of a series of articles on Meeting the Challenge: Farming in Uncertain Times by specialists at UNL's Panhandle Research and Development Center.
February Ag Economy Meetings
For more information on economic prospects for the 2009 crop, attend one of five events being held throughout Nebraska this month. More.
Clearly, this is a good year to sharpen your pencil and examine the economics as you make planting decisions.
Corn. For the past couple of years, area farmers could look at the corn market at this time of year and feel confident that they would bring in a profitable crop. That may be changing for 2009. The corn price has dropped from record high levels last summer to settle in the $3.50 to $4.00 range. With projected break-even prices near $3.75 per bushel, the outlook for corn producers is not nearly as positive as it has been.
Sugar Beet. However, for western Nebraska farmers not all the news is quite so disheartening this spring. The price of sugar is up significantly from last year, and it looks like we can begin to pencil in some $45- to $50-per-ton prices as we look forward to planting the 2009 sugar beet crop. With production costs of approximately $900 per acre, the break-even price for sugarbeet producers will be $35-$40 per ton. This should provide a profit of $100-$300 per acre on the 2009 crop.
Dry Bean. The dry bean market has placed many area farmers in a difficult position this fall and winter. As planning begins for the 2009 crop, the lack of a Great Northern bean market weighs heavily on many producers. It will be a tough decision to plan to produce more of what should have been the most profitable 2008 crop. If the markets come back on the board by spring and the price is in the mid $20s, I would expect to see farmers plant significant acres. With projected break-even prices in the $18-$20 per hundredweight range, prices in the upper $20s to lower $30s would return profits of more than $100 per acre. Remember, there are some restrictions in terms of base acres if you want to increase bean acres.
Alfalfa and Wheat. The continued drought has assured us that hay prices will remain strong. As grazing resources are limited, the need for hay has remained high. Alfalfa hay prices have remained over $100 per ton through the winter, with higher quality product priced much higher. For producers with adequate water supplies and the necessary equipment, now is a great time to have alfalfa in the system. Irrigated winter wheat is already in the field, but if prices do not recover soon, we could see a significant amount of wheat replaced by more profitable crops in the spring. The break-even price for irrigated wheat looks to be in the $5.75 per bushel range, well above present price levels.
Input Costs. Opportunities to lower input costs will be more important than ever. Fertilizer and fuel prices have dropped some from last summer and fall, but appear to be strengthening again. Forward pricing some of these high-cost inputs may be a good idea today. Price volatility on the input side does not appear to be ending any time soon.
Marketing. Over the past few months there have been several opportunities to lock in profitable prices for wheat and corn. We anticipate that some of these opportunities will return over the next several months. I am not expecting to see prices as high as last summer, but I do believe that profitable opportunities will present themselves.
Ag Economist, Panhandle REC