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Fertilizer cost concerns support corn prices

Fertilizer cost concerns support corn prices

Grain elevator with ghosted money

Corn market trends were higher as October came to a close, with traders keeping their eyes trained on the 2022 season.

Brian Doherty of Total Farm Marketing said the market is preparing for the potential of fewer corn acres with fertilizer prices rising on the potential for shortages this spring. Higher prices may encourage farmers not to switch over too many acres to soybeans.

With less fertilizer to help the crop, weather will play an even more important role in crop development, setting the stage for a volatile 2022.

“Skyrocketing inputs and the need for big crops suggest there’s little room for crop production error in either the Southern or Northern Hemisphere,” Doherty said. “The old saying is, ‘as weather goes, so do the markets.’ Meaning that weather is the most dominant factor affecting production.”

Doherty said with the fluctuations in futures contracts, it can be a “disappointment” if someone forward sells next year’s crop in October only to see the prices jump after issues in that season. However, with the expected high costs of inputs, getting potential profit now beats any losses later.

“You know the sales were good, yet you probably just can’t get away from the nagging feeling of regret,” Doherty said. “However, (waiting to sell) has often backfired. Increases in production reliability and capability at some point pressure prices.”

Doherty said it can be tempting to wait for a late weather rally in July or August, but banking on that could very well have the opposite effect. Getting a head start on establishing a breakeven price and locking in some profits will be key to navigating the potentially volatile 2022 growing season.

“One of the major concerns producers face is chasing input values higher,” Doherty said. “What if, a year from now, commodity prices are much lower? Weather rallies were few and far between. When they did occur, they generally disappeared even faster.”

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