The Goalpost Keeps Moving
There’s some better news in the latest crop numbers, but higher prices don’t necessarily mean better margins.
September’s WASDE improved projected per-acre revenue for several crops, including rice, corn and soybeans. But cotton moved the other direction, with projected revenue falling compared with May estimates.
Then there’s the cost side of the equation.
American Farm Bureau analysis says fertilizer and diesel costs have surged since the Strait of Hormuz closure in early March. Diesel prices are up about 45 percent since spring, while fertilizer expenses are projected at a record $40 billion this year.
For rice, Farm Bureau estimates higher fertilizer and diesel costs are adding more than $70 per acre compared with pre-Hormuz projections. For cotton, it’s nearly $30 per acre.
That means even crops seeing improved revenue projections may not necessarily be gaining ground.
Farm Bureau’s analysis finds no major row crop is projected to cover total costs for this crop year, marking four consecutive years of returns below total costs.
For more, read https://www.fb.org/intel/markets/hormuz-price-shocks-outpace-higher-crop-prices
