Planting season is rapidly approaching, and production costs are one of the primary concerns for corn farmers. With high input costs and a decline in new crop futures prices, maintaining a positive outlook could be difficult in 2023.
“It’s going to be a challenge, and I’m normally an optimist,” said Al Kluis, founder of Kluis Commodity Advisors. “But we are seeing input costs go up and a lot of competition from overseas. We are seeing a lot of things on the horizon that caused me concern. We’ve had two good years of high corn prices and high profitability, and it’s rare we’ll get a third in a row.”
He advises selling a “good chunk” of the corn crop ahead of the year as prices may see continued declines toward the fall, particularly if weather stays favorable. Despite that advice, he said not to sell too much at once, but be prepared to make sales if and when a rally occurs.
“We are down 40-50 cents the last few weeks, so don’t get too silly,” Kluis said.
“I would be prepared if we rally back to $5.90 or $6 to get 20% or 30% of the crop hedged. I think right now could prove to be an intermediate-term low.”
While the harvest season outlook for new crop corn prices is more bearish, soybeans may not be as vulnerable, Kluis said. Much will be made of the prospective planting acreage report at the end of March, but don’t avoid making some hedges now to protect some profit.
“Certainly for most farmers, $14 new crop beans is where we hedged a bunch of the crop and that should be a pretty good profit level,” he said. “If we get back up to that level, we might even do some more.”
Kluis said after multiple years of high prices, farmers shouldn’t expect them to stick around. While crop prices may not dip to levels seen during the late 2010s, it will still require good marketing and sales to snag profits.
“The futures market is saying we are going to have lower corn prices over the next couple of years,” Kluis said. “A lot can change, from weather and other things we have to live through, but we are seeing a slowdown in livestock consuming units, and it’s a concern moving forward.”