It’s Planting Time

4/20/2013 7:00 AM

T he year 2012 was certainly a year for the record books for grain producers. Drought in the corn belt resulted in short supplies and high prices for most every crop. A good thing if you got rain and for the most part, Pennsylvania got rain, resulting in excellent net incomes for producers.

But it is 2013, and 2012 is history. So what are the experts saying about 2013?

As I write this, USDA is accumulating planting intentions, and it is snowing in the corn belt. Snow in late March is not all that unusual; but following a severe drought, it is very important for rebuilding moisture levels in the soil. USDA reports that high grain prices and abundant snowfall this winter are combining and will result in near record or record acreage being planted this spring.

So producers plan on planting every acre they can. But as everyone learned last year, large acreage is not enough. Crops need to be planted on time, and, the growing season must have adequate moisture and temperatures.

The next several weeks will determine if crops can be planted on time. Weather cannot be controlled; therefore, producers must have their plans together, their inputs on hand and their equipment ready to go. Budgets should have been worked out weeks ago. Once the weather breaks, everything and everyone must be ready to go.

In the end, prices in 2013 will be controlled by the final national average yield. This is always the case, but coming off of a severe drought year makes the 2013 yield more important than usual. In fact, the word critical comes to mind. Given the acreage being planted, usage expectations, southern hemisphere expected harvests and more, below are some projected prices based on the latest reports I have seen:

Yield/acre Expected Corn Price

140 bu. $5.50

150 bu. $5.00

160 bu. $4.50

The key point for Pennsylvania producers is that they must look at their budgets and make sure they can be profitable at these prices. It is easy to become complacent and expect $7 corn to last forever, something that will not happen.

While the expected prices I have listed above would help purchasers with their budgets, everyone needs to understand that another severe drought would result in much higher prices.

Editor’s Note: Michael Evanish is the manager of MSC Business Services, a member service of the Pennsylvania Farm Bureau. MSC Business Services provides Business Analysis, Consulting, Income Tax and Tax Planning, and Payroll Services to businesses throughout Pennsylvania and Maryland. For more information call 717-731- 3517.

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