Input costs easing

Fuel, fertilizer, chemical and even seed costs all should be easier to manage for the 2010 growing season, according to agronomists Larry Lunden and Daniel Davidson.

Davidson, a staff agronomist at agricultural information services provider DTN, is encouraged by current prices.

"I'm actually very optimistic about input costs for this year, surprisingly," he says. "We just came off a very tough year, as we came out of 2008. We had higher fuel costs, fertilizer costs were through the roof -- $1,000 a ton -- and there were steep ramp-ups in seed costs."

Fuels

One of the brighter spots on the inputs side of farming should be the cost of fuel. After a string of years with sky-high costs for farm diesel and propane, fuel costs are beginning to settle back down.

"There's no doubt fuel costs are down 30 percent from a year ago," he says. "Fuel costs, in general, for farm diesel, have been pretty low this year."

Compared with 2008, when a gallon of farm diesel was running at or more than $3.50, the current prices, in some cases less than $2 per gallon, will provide good savings for farmers.

Propane appears also to be less of an issue than it was just a few weeks ago, when everyone was scrambling for it to dry their corn.

"Farmers did curtail some of their applications last fall because of cost and availability, but that turned out to be not as big an issue," he says. "There have been some shortages this fall in propane, particularly driven by drying everything, but we're not anticipating any shortages now."

Propane prices still are fairly reasonable, compared with the latter part of 2008, when costs ranged from $1.80 to $2.80 per gallon.

"It has increased, probably 20 (cents) or 30 cents a gallon," he says. "I remember booking some last summer for $1.10 and now I got up to about $1.40 here recently. So compared to over $2 last year, it's been kind of reasonable."

And the delivery problems associated with the extra drying are expected to disappear, barring a return to heavy drying in 2010.

"There have been supply issues with all the drying, but it wasn't because of supply, it was because of distribution," Davidson says. "Sometimes, if you needed 1,000 gallons of propane, you just couldn't get it the day you needed it. It might require another day. It just could not be distributed rapidly enough to meet the demands for drying corn."

Fertilizers

For the most part, fertilizer prepay prices are at tempting levels. Nitrogen appears to be the exception, according to Larry Lunder, agronomist at the Alliance Ag Cooperative in Bismarck, N.D.

"I think you're seeing definite pressure on the nitrogen portions," he says. "We're seeing nitrogen, more so the urea, higher than it was last year at prepay time."

He says, on a per-unit basis, anhydrous ammonia is a better value right now.

"We're currently going out on a prepay at $410 (per ton). But everything is very, very subject to change. It's very volatile," he says.

Some of the reason for this may be the soil tests that have come back after this year's harvest.

"The nitrogen is as wore-down as I've ever seen and I've seen 17 seasons worth. There was a pretty good crop that came off and a lot of nitrogen came off with it," Lunder says. "It's not just here; it's in a lot of areas."

Phosphates, however, are less expensive than they were a year ago.

"Currently, for a 1152 or a MAP (mono ammonium phosphate), that currently is $385 (per ton) on a prepay. That shows a trend of going up some, but it was in the $500 range last year, so it's definitely an improvement," he says.

Crop protection

The big crop protection news this year is Monsanto's recent announcement that they are going to halve the price of Roundup for 2010. This is putting heavy downward pressure on the glyphosate market.

"The glyphosates, in general, have reduced a huge amount from where we were a year ago," Lunder says. "There's been a pretty big decrease in the cost of the glyphosate market."

For example, growers were paying close to $50 a gallon for RT 3 herbicide last year. This year, it is available at $17 per gallon.

"That's probably the bright spot for the growers in all this, especially for the minimum-tillers and no-tillers; really reduced costs," he says.

Fungicides also appear to be in good shape, both from a price and availability standpoint.

"We're seeing some deals in the fungicide market, some move-downs," Lunder says. "That all looks, I would say, pretty positive for the upcoming year. Growers will probably find that it will take less of a hunk out of their budget this year."

He adds that there are no indications of supply issues at this point.

Seed

In general, yields have risen significantly in the last five years and seed costs have come up with them. There were large increases for the 2009 year.

"But as you go into 2010, those seed cost increases, while they are still there, have slowed down a bit," Davidson says. "If farmers are prepared to buy in volume and pay early and, if they shop around, they can still find some pretty good prices on seed."

Soybean prices are pretty fixed with the Roundup Ready trait, whether it's Roundup or Roundup Ready 2 Yield, he says. He does not expect to see much price differential unless growers go with the conventional seed types to negate the technology fee.

The new eight-way "SmartStack" corn varieties from Monsanto and Dow reportedly are approaching $400, but Davidson says, for the time being, growers prepaying for corn seed and buying in volume probably will be able to find them for around $300 to $330.

"But you will still be getting triple-stack materials back in that $240 to $270 range, so quite a bit less than you might have anticipated," he says.

The key to getting off to a good start for the 2010 growing season may be in buying at 2009 prices.

"That applies less to crop chemicals, but on the seed and the fertilizer, anything you can buy in the fall, if you are able to do that, is another significant reduction in production costs," he says.