What are the risks for the 2022 crop? Weather, of course, is always a factor, but what about the markets? What if we can compared the risks of the market declining, to the possibility of input prices further rising? Margins could be a heck of a lot tighter next year, unless commodity prices make moves higher.
On the latest Farmer Rapid Fire, RealAg Radio host Shaun Haney asked the question: For the 2022 crop, are you more concerned about commodity prices coming down, or input prices going up?
Terry Phillips, of New Liskeard, Ont., said that crops in his area look good for this year, but rotational issues in his area might crop up for next year. Phillips is more worried about cost of production going up for next year — pricing out his fertilizer needs has him concerned, at rates almost doubled the previous year, and he doesn’t foresee returns doubling.
Binbrook, Ont., farmer Drew Spoelstra is also worried about cost of production rising — saying that commodity prices will inevitably come back down, and inputs tend to be a lot slower to follow suit. “The cost of production and the cost of inputs is certainly a high stress level for producers, and it’s something that we’re going to have to keep a close eye on going forward,” says Spoelstra.
“I guess it’s pretty much sure that input prices are going to rise. The double-whammy would be if commodity prices soften, fairly rapidly, which I haven’t seen a lot of yet,” says Fred Greig, of Reston, Man., in line with what Spoelstra said about the situation. Added costs, or any interruptions in the fuel or fertilizer supply chain could also throw a wrench in 2022 plans.
Josh Linville has done excellent research on fertilizer pricing and forecasting:
Quick recap: they all suck
However, do not take that to mean that fertilizer values will drop. Still fundamentally firm for the foreseeable future… pic.twitter.com/N4L4txHMV2
— Josh Linville (@JLinvilleFert) September 17, 2021
Although yields were 50 per cent less than usual for Mike Beckie, of Davidson, Sask., high commodity prices (and timing of contracting) has given him a leg up in a sense. In his area, he foresees experience and stage of farming career to be a major deciding factor for marketing decisions. “If we start getting some moisture, and it’s looking like an average crop, well we know what the price is going to end up doing,” he says, but he’s concerned about both of those things happening next year.
Greg Sears, of Sexsmith, Alta. rounds out the general consensus of concerns over increased input prices. “It’d be one thing if we had an average to bumper crop, but most of Western Canada didn’t, so that’s going to be a tough thing to swallow, I think,” says Sears.