Stu Ellis: Input Costs, Threat to Ukraine Figure Into Planting Decisions

By Stu Ellis

Decatur, IL — Normally, in this part of the Corn Belt, 2022 corn planting is going to be a half-and-half rotation.

Bean fields last year will be corn fields this year, and vice versa, and the total acreage is split equally within a handful of acres.

2024 may be the same for most farmers, but not everyone.

And there are several dynamics that are at play.

The first is the cost of fertilizer, which is upwards of a third the cost of corn production, and way out of bounds compared last year, thanks to many issues that would totally fill up a daily newspaper.

The second is the availability of crop protection products that control weeds, insects, and fungal issues, all of which tend to diminish yield to the point of farming with red ink.

Supply chains have broken down to get active ingredients, primarily from China.

In addition to those simple issues, there is great uncertainty about market prices at the end of the year when harvest rolls around.

Farmers who are adept at marketing have likely booked most of their expected corn and soybean production at the profitable prices being offered on the futures market as well as the cash market at local elevators and processors.

But there is so much at play in the international market that today’s prices for corn and soybeans could look quite different at harvest time.

Farmers have had good pricing opportunities in the past couple of years, even to sell over the scales during harvest season.

And that flies in the face of the supply and demand lessons learned in Ag Econ 101 at college.

But the international grain market is in a major chapter of unpredictability compared to typical times, if there are ever typical times.

Our main competitors in supplying corn and beans to the world are Argentina and Brazil.

Argentina and southern Brazil have suffered from a La Niña-driven drought that has diminished yields.

And those estimates are declining weekly.

Central and northern Brazil has had sufficient rain for a good soybean crop, but their second crop of corn is being planted as La Niña is bearing down.

Of course, China has been the major global buyer of corn and soybeans from the Western Hemisphere for the past two years.

Then there is the Ukraine.

A country that may be in the middle of an international war at any hour was the primary supplier of corn to China in December and was expected to continue that trend in January and February.

Maybe.

China direly needs Ukrainian corn, which is closer and cheaper than U.S, corn or South American corn.

And if you want to win at a bet, bet on the fact that Chinese corn buyers are furiously trying to find out from Russia if they can get corn supplied from Ukrainian grain warehouses before any fighting starts.

That will be a new dynamic for U.S. farmers to consider in their acreage decisions.

The White House may want to monitor Ukrainian corn exports to find out what Putin is up to.