Recent commodity price tumbles for new crop means this year won’t deliver the solid financial returns of last year.
However, most prairie planting choices will still deliver black ink, as long as yields are average.
The late snow and cold temperatures mean yields are unlikely to be stellar because most crops perform to their peak when planted as close to May 1 as possible.
New crop prices will likely be down 20 to 25 percent for cereals and 10 percent for oilseeds.
A comparison of the major and a few minor crops that are in the mix for 2013 shows that Nexera canola will produce one the best returns from an average yield.
For example, in my area in the Regina Plains, hybrid canola should yield 38 bushels per acre on average, with inputs that would carry a 45 bu. crop so that there are some upside possibilities.
With a $480 per acre gross for Nexera and $235 in operating costs, a margin of $243 before fixed expenses is possible.
The margin is more like $208 for non-high oleic hybrids that yield the same as Nexera. If those hybrids yield more than the high oleic, then it would be a wash as to which is chosen, unless storage and handling of the identity preserved crop is an issue.
Either way, it makes canola king of the margin battles.
However, canola is also the highest risk crop, next to grain corn. It will run about $345 to grow an acre of canola this year, with all costs included.
The price of growing spring wheat is no bargain when fusarium control is added. It can cost as much as $300 per acre, with operations costing $190 or more, depending on disease issues.
A 40 bu. per acre crop should generate about $315, so the choice to grow it might be based on how much of those fixed costs are owned assets for which a producer is willing to accept $125 or less per acre.
A healthy winter wheat crop of 60 bu. per acre competes well against canola margins, but that decision needed to be made before Sept. 20.
Growers who pulled off that plan could see margins of $240 after operating expenses.
About $190 per acre could be yielded after operations are paid if a grower’s 60 bu. per acre barley crop goes malting.
Feed barley, at 70 bu., would deposit just $128 after expenses. Take out $85 for land and machinery and that leaves just $43, compared to malt’s $105.
A 110 bu. oat crop in 2012 was a good investment. High prices and moderate operating costs made it profitable. The same crop this year delivers about $150 in gross margin. After fixed costs, about $70 goes into the bank.
If a grower can yield 28 bu. per acre with flax, about $190 will be left over after operating costs, or about $110 per acre overall.
This makes flax a better than average crop for 2013-14.
Canaryseed that yields 1,200 pounds per acre might deliver $154 per acre ahead of fixed costs, so it’s probably worth the itching because yields and the 25 cent price have room to grow.
Peas produce a similar return with a 45 bu. crop: about $145 per acre in gross margins and a $60 per acre net margin.
The pulses cost a little more to grow because of the purchase of a flex header and the annual investment of several cases of plastic fingers, not to mention additional wear and tear on the sprayer, depending on the crop and the year.
Lentils at 21 cents per lb. and yields of 1,300 lb. per acre will settle out at $110 per acre ahead of fixed costs.
Unless it’s a much better crop, only $25 will be left over after a return to capital. It might not be a great choice if the land rental is higher than $50 per acre and big machinery payments are due in the fall.
Sunflowers as an oilseed crop can put $140 of gross margins into the bank, but can take their toll on the combine. After expenses, $55 per acre might be found in a 1,400 lb. crop.
Corn can put a good margin in the bank under the right conditions. A 95 bu. crop that costs $255 per acre to grow made a lot of sense at $7 per bu. in 2012.
However, at $5.10 this year, it might seem like a lot of risk for a gross margin of $180 per acre after operating costs, leaving about $80 or less per acre after the producer buys a used planter and corn header.
Soybeans can keep operating costs down to about $175 per acre, and growers could see potential margins, ahead of fixed costs, of $130 per acre should the fall price be in the $410 per tonne range. There is a big upside if November prices hold at $440 and yields work out to 32 bu.
Soybeans, like corn, need higher soil temperatures to get started and typically aren’t planted in the West until late May. As a result, the crop might deliver better than average margins with some upside yield potential.
Like corn, soybeans come with early fall frost risks and are new crops to most prairies producers.
As spring cereals go, corn should beat everything but malting barley in higher heat unit areas. As well, a yield of just 10 more bushels per acre would make the corn bet seem pretty tempting.
Corn is still a risky business for most of the Prairies, but it has a break-even of 60 bu. per acre with a fairly large upside potential up to 110 bu. or more.
It’s kind of like betting on 36 bu. flax. That yield is possible when seeded May 5 but generally not at the beginning of June, when corn is generally seeded on the Prairies.
This year it looks like the world demand for vegetable oil will in-crease farmers’ interest in canola and to a much lesser degree soybeans and flax.
Spring planted wheat will take just 25 bu. to break even, but it doesn’t offer a big upside until producers exceed yields of 45 bu. per acre.
Some of the latest spring wheat varieties are capable of high yields for those who are willing to put additional money into inputs and don’t mind increasing their risk. However, they are also susceptible to drought and frost damage.
Malting barley, if it can be achieved, has strong margins with lower risks than spring wheat.
I didn’t manage to get any winter wheat into the ground last year, so once again I’m keeping my day job, just in case the flax, canola, corn and soybeans don’t work out.
Maybe I’ll get the flax off early enough to plant a winter wheat crop in 2013. Hey, look at that, it’s next year already.