Businesslink

Six-dollar corn is expensive to grow.

The University of Illinois projects corn farmers' non-land costs will climb by $70 per acre next year, leaving a much thinner profit outlook than corn prices might suggest.

Joe Sinclair, president of national ag chemical wholesaler Quality Ag Service, recently told DTN's Elizabeth Williams that he advises farmers to check fertilizer prices before making cropping plans. "There will be some sticker shock for producers. Nitrogen and potassium prices are almost double year-ago prices. Phosphorus doubled last year, so the increase is not as much compared to last year," he says.

For high-productivity corn ground in central Illinois, the University of Illinois crop budgets project farmers making $24 per acre profit in 2022 after paying for inputs and land costs using an average corn price of $4.50 per bushel. That's down from projected profits of $280 per acre this year.

Soybeans could pencil out a profit of $150 per acre next year, substantially more than corn, with an average price of $12.35 per bushel. The big difference: Farmers who grow corn will spend three times as much on fertilizer this season.

Sinclair says the last time fertilizer prices spiked like this was in 2008, but prices fell back the following year.

"Will we see a similar reality check for corn and fertilizer prices in 2022? I think it might take until 2023 before prices come back down," Sinclair says. "World ending stocks are so low, it may take another year to build up a safety net of grain stocks."

Kansas City Federal Reserve ag economist Nathan Kauffman says input costs are often quick to catch up to higher commodity prices but slow to come back down.

"On a number of fronts, it's possible that some of those cost pressures do start to squeeze margins" by driving up farmers' break-even costs, Kauffman says. "We might not think about $4 corn in the way that we would have thought about it five years ago if the cost structure is different."

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