What are the risks for the 2022 harvest? The weather, of course, is always a factor, but what about the markets? What if we could compare the downside risks of the market to the possibility of a further rise in input prices? Margins could be much tighter next year, unless commodity prices rise.
In the latest Farmer Rapid Fire, RealAg Radio host Shaun Haney posed the question: For harvest 2022, are you more concerned about falling commodity prices or rising input prices?
Terry Philips, of New Liskeard, Ont., Said crops in his area look good for this year, but rotation issues in his area could arise next year. Philips is more worried about rising production costs next year – it is concerned about pricing its fertilizer needs, at rates nearly doubled the year before, and it does not plan to double yields.
Binbrook, Ont. Farmer Drew Spoelstra is also worried about rising costs of production, saying commodity prices will inevitably come down and inputs tend to be much slower to keep up. “The cost of production and the cost of inputs are definitely a high level of stress for producers, and this is something we will need to watch closely in the future,” says Spoelstra.
“I guess it’s pretty much certain that input prices will go up. The double blow would be for commodity prices to drop pretty quickly, which I haven’t seen much yet, ”says Fred Greig, of Reston, Man., As Spoelstra has said about the situation. Additional costs or any disruption in the fuel or fertilizer supply chain could also upend 2022 plans.
Josh Linville has done some excellent fertilizer pricing and forecasting research:
Small recap: they are all zero
However, do not take this to mean that the fertilizer values will go down. Still fundamentally firm for the foreseeable future … pic.twitter.com/N4L4txHMV2
– Josh Linville (@JLinvilleFert) September 17, 2021
Although yields were 50% below normal for Mike Beckie of Davidson, Sask., High commodity prices (and timing of contracting) gave him a head start in a sense. In his region, he predicts that experience and stage of agricultural career will be a decisive factor in marketing decisions. “If we start to get a bit of moisture and it looks like an average harvest, we know what the price will end up doing,” he says, but he’s concerned about those two things happening next year. .
Greg Sears, of Sexsmith, Alta. complements the general consensus on concerns about rising input prices. “It would be one thing if we had an average to bumper crop, but that’s not the case in most parts of Western Canada, so it will be a tough thing to swallow, I think,” Sears says.