Harvest is just a few short weeks away, and yet the conversations are already beginning regarding how many acres of grain will be planted in the United States in the spring of 2022. As of this writing, ending stocks are tight in nine agricultural commodities with a USDA report update just one week away.

As you are gearing up for harvest, make time to start thinking about your cost of production for next spring. New crop 2022 prices are attractive, with some producers opting to begin locking in a few cash sales.

Yet other producers are unsure of what they will plant as inputs costs begin to soar. Higher energy prices, higher fertilizer prices, higher bills to have machinery repaired and even higher land rents are coming into play. Some producers are suggesting that with fertilizer prices at nine year highs, they may opt to plant more soybeans or wheat instead of corn.

How can you get ahead of the curve? It starts with truly knowing your cost of production. By taking the time to take a detailed and honest look at the numbers, it allows confidence in grain marketing. Confidence because by knowing your true cost of production, it mentally and emotionally makes it easier to pull the trigger on cash sales “when you know you ought to,” and helps to eliminate indecision and hesitation that is heard when producers say, “well, let’s just give it one more day and see if the price comes back up.”

If you are new to creating a spreadsheet regarding cost of production, I recommend the excellent online guidance that both Iowa State University and Kansas State University offer. Your local extension agent would be a wonderful resource, as well. On these spreadsheets, the details and guidelines of what you need to include in cost of production are laid out for you. Specifically, the details regarding expenses; fertilizers, herbicides, seed costs, machinery repairs, property tax and upkeep, term debt payments, fuel costs, miscellaneous crop costs, crop insurance, labor, custom field operations, interest, cash rent and don’t forget family living expenses.

This is the most important step that you can take for your farm this in the short term in regards to marketing your crop. Due to the high risk and slim profit margins of farm businesses in the past few years, it is particularly important that producers understand the costs and potential revenue each marketing year might provide. And while you farm because of your love of the land, love of livestock, getting to work with your hands or the enjoyment of being your own boss, you are a business. And businesses are in business to be profitable.

Reach Naomi Blohm: 800-334-9779, Twitter: @naomiblohm and [email protected]

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.