Farmers Finally Catch a Break, Thanks to Cheaper Fuel, Fertilizer01/25/2016
The stock market may be suffering a serious case of the January blues, but commodities seem to be finally kicking the December doldrums.
“Lo and behold, we bottomed out,” said Jerry Gulke of the Gulke Group, speaking to Farm Journal Radio’s Pam Fretwell. “We’re actually higher than we were at the end of December—in corn, considerably higher. But the stock market took a hit, and while all that negative news was out there, our commodities didn’t suffer at all. Even cattle held their V-bottom lows this week. Feeder cattle were up seven bucks and live cattle were up five (dollars), ahead of the Cattle on Feed report.”
It gives Gulke hope that the market will finally start moving higher.
“Maybe, just maybe, the worst is over,” he said.
Before commodities prices improve too much, though, growers should take advantage of current low prices to lock in fuel purchases.
“You can’t buy it a dollar better anymore,” said Gulke, who was quoted $1.15 a gallon for diesel fuel delivered to his farm. “How better of a deal can you get? It’s kinda nice to pick that off, get it out of the way and say, ‘I locked in my diesel fuel for the year.’ If it goes to $2.50, then I’m smart. If it goes down another 50 cents, fine. At least you’ve got one (input cost) out of the way, and we can start working on the seed and fertilizer guys.”
Those costs, too, are finally easing. “Fertilizer has come down,” Gulke said. “A lot of people are saying they are going to be able to produce corn this year for 40 cents to 50 cents a bushel less than last year, including some rent reductions. … Maybe we’ll make a profit even with corn under $4. It’ll be a stretch, but we’ll be close.”
Source: Alison Rice, AgWeb.com