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Planning For A Year Of Low Prices

Home» The Field Report » Planning For A Year Of Low Prices

The Field Report

Federal Shutdown Muddies Ag Markets

January 21, 2019

With the central Illinois prairie covered with snow, Trent sat down in his warm office to look back and ahead. 2018 “was a decent year, but not a record-breaker. We had good weather and good production, but the markets were not friendly.” Trent continued by observing that the federal government shutdown has stopped USDA crop reports so the markets have no current information about final yield figures, export sales, status of various inventories, and similar information which ordinarily moves the market. Without the current reports, the markets are in a holding pattern, unsure of direction.

Trent Brandenburg does not foresee any big corn and soybean market moves upward in 2018. He believes careful management to maximize yields will provide enough cash flow to maintain most farm businesses. A combination of low yields and lower prices will be challenging for operators paying very high cash rents.

Trent plans to keep his 50-50 corn and soybean rotation. “There’s more money in beans right now,” he mused, but he’s sticking with the equal split because of cultural advantages. Since he has no control over prices, he will use offsets to protect himself. He will not cut back on fertilizer because he needs the highest possible yield due to the low prices. He will be very careful with crop protection chemical use, applying only if his field scouting shows enough economic damage to justify the expense.

Trent views crop insurance as a not very good safety net, because of the low market prices making the available insurance coverage lower. He sees it as providing some limited help in a major crop damage event.

21st Century Farming with Traditional Values
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