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Spring 2023 is upon us

Remember these two things as we move into a new growing season.

Matt Bennett, Commodity analyst

March 20, 2023

5 Min Read
John Deere planter in field
Getty Images

Here we are in the middle of March already. While some planting has been done in the south, most producers in the Corn Belt anxiously await a chance to get in the field. I’d like to talk about what challenges and opportunities we might expect this year and how I think we should handle them. With La Nina officially declared over recently, weather isn’t likely to be similar to the last few years. After three years of some level of impact, the environment has switched with a neutral ENSO, which is likely to move into an El Nino by the time the 2023 crop gets harvested.

How has the weather already changed? For one thing, it appears the upper Midwest is a long way from fieldwork. I was in Minnesota this past week speaking, and plenty of snow was on the ground in the Mankato to Redwood Falls area. There’s no doubt those producers will need patience as they prepare to put this crop in the ground.

In my area of central Illinois, we’re quite wet at the time I write this. With several rain events in the last two weeks, most tiles in my area are running.

Now to the matter at hand. Given the fact these last few years La Nina has impacted some areas in the Corn Belt, a switch to El Nino could give us a shot at a trend-line yield. With a carry-out currently at 1.342 billion bushels, big acreage in ’23 could result in a much different carry IF we see yields above 180 bushels per acre. The trend is currently at 181.5 bpa.

Lock in profit

What should a producer do to protect themselves in the event a big crop occurs in ’23? One thing is for certain – this corn crop will be the most expensive one most of us have put in the ground. Given that, margins are much tighter than we’ve seen the last couple of years. Producers must consider locking in a worst-case scenario in the event prices drift lower than we’ve already seen.

I realize it’s hard to lock in prices after such a big sell-off, but at the same time, there’s no guarantee prices won’t continue lower yet.

It's imperative to lock in profit margins when they exist. With the tools we now have to manage price risk, a person can lock in a level of profit and still participate in the event a rally unfolds.

Seek input opportunities

The second thing a producer needs to do is look for opportunities on unpriced inputs. Diesel fuel made a 1+ year low this past week, providing a great opportunity to lock in cheaper fuel that most all of us used in 2022. While there’s no guarantee fuel prices won’t drift lower yet, New York Harbor Oil, which many use to hedge diesel fuel is still trading close to 2.65, not far from the year+ low seen earlier in the week.

The other input expense we should monitor closely is fertilizer. While many have those needs locked in, some are buying dry fertilizer for half of what it was bringing in the fall. To be clear, these folks are picking it up at the river. Anhydrous on the spot market is just over $800, which compares to $1,200-1,400 for many who applied their nitrogen in the fall.

I believe last fall the weather was good enough most acres were locked in. However, given movement in fertilizer, producers must understand some acres could get switched over simply due to economics. Whether hedging grain or looking for ways to grow it more affordably, we’d be glad to help producers get a plan in place to lock in a profitable year in 2023.

I hope you all have a great planting season. Feel free to reach out to me or anyone on the AgMarket team. We’d love to hear from you.

Reach Matt Bennett at 815-665-0462 or [email protected].

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About the Author(s)

Matt Bennett

Commodity analyst, AgMarket.Net

Matt is a Windsor, Ill., farmer and former grain elevator owner. He is Channel Seed’s grain marketing consultant and holds a Series 3 brokerage license doing business through AgMarket.Net, Farm Division of JSA. He specializes in formulating risk-management strategies for corn, soybean farmers and livestock producers. A graduate of University of Illinois, Matt and his wife Tiffany live on the family’s centennial farm where they raise their five children.

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