Crop prices could leave farmers short-changed

As widely predicted, returns in the grain industry are tightening. Prices have softened and the money generated per acre is going to take a hit on most crops. 


Durum is a notable exception, where prices have strengthened creating a large gap in the expected returns for durum versus wheat. 


Prices of around $8 a bushel are available for new crop durum versus only about $5 for spring wheat.


Assuming average prairie yields of 45 bu. per acre for both, durum has a gross return of around $360 an acre versus wheat in the range of $225. That’s a huge difference for crops that have similar production costs.


Most analysts suggest an average canola yield in the 34 bu. per acre range, down a bit from last year, but well above the 10 year average. Assuming a price of $9.50 a bu., the gross per acre will be in the $325 range. That’s not a great return considering the relatively high production costs. 


Seed costs in particular keep rising, even though the fancy prices of $13 and $14 a bu. are long gone.


Field pea returns are going to be disappointing, at least for yellow peas. 


Assuming a yield of 40 bu. per acre and an FOB farm price of $6 a bu., the gross return will be in the $240 an acre range. 


Green peas, with new crop prices of around $8.50 a bushel will provide a much better return assuming you can meet the quality specifications.


Lentils prices are not scintillating, but returns could be solid for anyone able to produce a decent crop. Lentils did not handle the excess moisture very well in many regions. 


Assuming an average yield of 1500 pounds on harvested acres and a price of 23 cents per lb., the gross return approaches $350 an acre.


Feed barley and oats will not provide good returns unless you’re able to grow a tremendous volume. 


Assuming an average oat yield of 80 bu. an acre, prevailing new crop prices of around $2.50 a bu. generate a gross of just $200 an acre.


Feed barley prices of around $3.60 a bu. may be available in southern Alberta, but in most of the prairies, the price will be well under $3. Assuming an average barley yield of 60 bu. an acre, that’s a gross return of less than $180 an acre.


Some new crop malting barley prices in the $5 a bu. range have been reported, but, in recent years, that market seems limited.


Flax acreage is up dramatically and new crop prices, while lower, are still pretty good at around $12 a bu. If you’re able to grow 25 bu. per acre, the gross return is $300 an acre.


Quality concerns are likely to aggravate declining prices. 


The wet conditions in many regions could mean more disease issues such as fusarium in wheat. 


Wet harvest weather could generate all sorts of additional downgrading issues. 


Plus, where crops are late, frost remains a threat. 


This year, unlike 2013, there will be many areas that suffer from poor production.


With producers eager to farm more land, cash rental rates as high as $80 and even $100 an acre have been reported in recent years. 


It’s difficult to see how those rental rates are viable given the outlook for grain prices.


The years of big money in the grain business may be over for a while.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at [email protected]

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