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Most Crops Project Some Profit in 2010

Crop prices are down from the highs of 2007 and 2008 but are still strong when viewed in a longer historical perspective.

Producers in every region of the state have crop alternatives that project some return for their labor and management for 2010, according to Andy Swenson, North Dakota State University farm management specialist.

Crop prices are down from the highs of 2007 and 2008 but are still strong when viewed in a longer historical perspective. Unfortunately there was about a 70 percent run up in costs that varied by crop and region from 2002 to 2008.

“There is some relief from production costs,” Swenson says. “Fertilizer prices are expected to be one-third lower than those used in last year’s budgets and the price of glyphosate herbicide has declined by more than half. However, most other costs have increased, with fuel costs projected about 20 percent higher.”

Prices for spring wheat, durum and barley are projected to average $5.45, $6.20 and $3.50, respectively. Production costs for these crops should decrease about $15 per acre compared with last year’s budgets. Although most cost items will increase, an important one, fertilizer, is down substantially and seed and crop insurance for small grains also should be lower.

Spring wheat returns are expected to be positive in seven of nine regions. Projections range from minus $13 in the southwest to $28 in the southeastern region. Durum and barley profits are down from last year’s projections. Durum profits, excluding the southern Red River Valley region, typically will range from $10 to $20 per acre. Malting barley shows a loss in the Red River Valley counties, but a profit of around $15 per acre for the rest of the state. A loss will occur if feed-quality barley is grown.

The corn price is similar to last year’s projection, averaging $3.45 per bushel. Lower fertilizer prices should bring the total cost of raising corn down $20 to $25 per acre, compared with last year’s projection. This is despite an expected increase in expenditures of about 9 percent for corn seed and 20 percent for fuel. Corn is expected to show a profit in every region of the state, led by the traditional corn areas of the southern Red River Valley and the southeast, at $33 and $42 per acre, respectively.

“Soybeans have been the most consistent profit provider for several years in the eastern half of the state,” Swenson says. An average soybean price of $8.70 per bushel projected for 2010 should provide good returns to labor and management. Production costs should increase slightly because of higher seed costs (up 6 percent), machinery-related costs and other cost items, which are mostly offset by savings in glyphosate and fertilizer. A profit is expected in all regions that grow soybeans and is strongest, $50 to $75 per acre, in the Red River Valley regions and the southeastern and east-central regions.”

In the eastern half the state, dry edible beans are expected to provide the highest returns to labor and management at approximately $90 per acre. Further west and in the north-central region, lentils are expected to provide an even greater return.

Again, because of lower fertilizer prices, total costs per acre were down about $10 to $15 per acre for sunflowers and $15 to $20 for canola. Due to differences in crop prices, confection sunflowers projected a profit averaging about $45 per acre statewide, compared with an average loss of $5 for oil sunflowers. Expected returns for growing canola are mostly positive and range from minus $17 in the southeastern region to nearly $30 in the northeast. Flax returns are expected to be slightly negative, similar to those for oil sunflowers.

Returns for growing field peas, assuming food-grade quality, are expected to be about $15 per acre. For minor crops, yellow mustard shows a profit of around $50 to $60 per acre. This is substantially down from 2009 projections due to lower prices. Buckwheat returns are expected to be $20 to $30 per acre. Large losses are expected from growing oats or millet.

“The budget projections are a snapshot in time and only intended to be used as a guide,” Swenson says. “Producers are encouraged to develop their own budgets. Prices and yields are difficult to predict. It also is important to evaluate your crop insurance and consider the financial downside risk, as well as the upside potential, of different potential yields and prices.”

It is important to note, when considering crop selection, that these budgets do not provide a pure apples-to-apples comparison among crops. Differences in operator labor and management requirements, and in production and marketing risk, are not considered. Also, rotational advantages, such as nitrogen credits for soybeans and pulse crops, and rotational disadvantages, such as the potential some crops have for disease buildup, are not considered.

The budgets are available on the Web at http://www.ext.nodak.edu/extpubs/ecguides.htm and county NDSU Extension Service offices.


NDSU Agriculture Communication

Source:Andy Swenson, (701) 231-7379, andrew.swenson@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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