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Farmers talk tight margins, planting intentions at Dakota Farm Show

VERMILLION, S.D.—Farmers are looking at tight margins again for 2019 and are trending toward planting more corn and less soybeans in 2019. That was the talk among those attending the 36th annual Dakota Farm Show on January 3-5 in Vermillion.

Exhibitors like 'N-Rich Plant Food, Inc. of Humboldt, S.D., which sells starter fertilizer, already is seeing the acreage shift to more corn in its early sales. Owner and President Dave Schwans says, "We've got about 30 percent or 40 percent of our customer base that has already raised their corn acres going into 2019."

To save money, farmers also are looking at split fertilizer applications and that involves using a starter fertilizer, so they also are seeing an increase in sales for that reason. He says the fact that their prices have stayed stable compared to urea and other fertilizer products has been a benefit for them. Nitrogen, which is used in urea, is up $20 to $40 per acre due to higher natural gas prices.

"The product that we make has to be a dissolvable product," Schwan says. "So all of our products, our raw material that we buy is all tech grade or food grade. So we're not tied to the ag market like ag grade urea, potash, etc. which fluctuate with the fuel market and the oil market."

Seed company representatives, who are talking to farmers planning for 2019, also are hearing they'll plant less soybeans.

Keith Mockler is an agronomist for DEKALB/Asgrow. "Right now I think we'll probably go down that 5 to 6 percent," Mockler says. "We planted a huge amount of beans last year just because the input costs, the cash flow was a lot better on soybeans last year."

In fact, farmers in the United States and in South Dakota planted record soybean acreage in 2018. However, this year, the corn to soybean price ratio is currently more profitable for corn at right around the 2.3 to 1 ratio.

"Right now, it is a lot easier to cash flow a corn crop than it is a soybean crop, but it does take a lot more of your operating loan or operating cash to put a corn crop in," Mockler says. He thinks corn acreage in the state could be up 6 percent to 7 percent depending on what Mother Nature does this spring and also how much spring wheat gets planted.

Iowa State University climatologist Elwynn Taylor spoke at the show and provided the outlook for the upcoming planting and crop season. He says it may be too early to know if the weather will be too wet in the spring to plant additional corn acres. However, he admits much of the region went into winter with adequate to excessive soil moisture, which can hinder corn planting. As far as the outlook for the growing season, Taylor says there is some uncertainty tied to El Nino as no clear-cut trend has developed.

"If the El Nino that we've been playing with for some months happened to win out and be here, that gives us a 70 percent chance of a good yield, above trendline yield," Taylor says.

However, he says if the trend should shift to a La Nina, there is a 70 percent chance of below trendline yield. Yet he is still optimistic about production. "That's the way I think the odds shake out with a slight advantage to being slightly above the trend for yields again this year," he says.

John Riles with Midwest Shows, which runs the Dakota Farm Show, says farmers showed some tentative buying trends at their other shows at the end of 2018. He thinks that was tied to the uncertainty in the industry with the trade war and lower soybean prices. However, he saw a more positive mood among farmers at the Dakota Farm Show. "I think people are concerned with some of the prices and that's been an ongoing concern, but I think people are optimistic as well and hope that they can see a turnaround this year," he says.

Mockler says they're having some tough discussions with farmers planning for 2019 with the higher fertilizer prices and potentially higher costs for some crop protection products.

"You know there is some undertow that herbicide prices are a little higher and a lot of that has to deal with some of the trade, tariff stuff and the back and forth with China," Mockler says.

However, he's says he still positive about farmers being resilient enough to get through 2019 growing season.

"It's been more profitable to be farmer than it is today," he says, "but you know they are the eternal optimists and these growers will get through this."