Perhaps thanks to late summer rains, this 2021 cropping season is providing some unexpected strong yields. And that means stronger-than-expected crop revenues too.  Give some credit to China. They’ve been a strong buyer. So too has Mexico, Japan and other countries.

Early reports are indicating near record corn yields for Illinois (274 bushels per acre), Indiana and some Ohio producers. And in the home stretch, lots of 250-plus bushel reports in Minnesota and Iowa too!

However, before we get too smug about this better-than-expected farm income scene for 2021, guys who keep score expect little chance of that in 2022. Why? Because input costs keep ratcheting up on virtually everything a farmer spends money on for his next year’s adventure.

Let’s start with fertilizer. Bullishness best fits! Typically, fertilizer prices hit lows in the summer months. But not this year says Stone X fertilizer analyst Josh Linville. He explains, “This year lots of nitrogen production was lost due to Hurricane Ida. In Europe, a significant reduction because of rising natural gas prices. China is the biggest producer of urea and phosphate; but now their government is starting to halt exports.” 

So Linville says ‘bullishness’ will continue. He points out nitrogen, phosphate and potash supplies are already extremely tight, so supply issues may be even worse this winter and next spring. “If a farmer is uncomfortable buyng the product now, it’s at least a good idea to have a conversation with their suppliers.”

Todd Erickson, general manager of Finley Farmer’s Grain and Elevator, is more expressive. “We’ve seen a massive explosion in urea and anhydrous prices,” he stated. “Anhydrous jumped $400 in the last three weeks; urea increased $250 per ton — more than double the usual cost.”  Erickson isn’t expecting much fall fertilizer applications. “Right now, I think farmers are in a state of shock over fertilizer prices.”

CHS Hedging Crop Nutrient Risk Management Consultant Christ Schwartz doesn’t think the United States has seen the full ramifications of the fertilizer supply situation. “We’ve seen NOLA almost quadruple their nitrogen prices. With phosphate, we were around $500 last year and this year we’re at $680.” He says market fundamentals are at work.    “The cost of production is prohibiting the product from being produced. And that’s not going away … these prices will likely go up even more.”

Yes, pre-pay fertilizer makes sense right now. But Schwartz thinks no more than 30 percent of farmers have pre-paid. “More likely most are trying to factor in what to do for next year.” And now even crop protection products may be allocated for next year. Commented Gerald Gulke, “You’ll likely get only 80 percent of the Roundup you got last year. And this disrupted supply chain may be influencing acreage decisions for ’22.”

With fertilizer prices skyrocketing, University of Minnesota Extension Nutrient Management Specialist Dan Kaiser is fielding lots of questions from farmers. “And a big question is starter fertilizers,” he said. “They want to know if in-furrow alone can work. But that all depends upon soil test values to know where you’re at.” And he cautions that if you’re looking at biostimulants to trim some costs, carefully look at the data.

Corn growers are much aware inadequate phosphorous levels impairs plant growth and yields. But Kaiser advises to first put pen to paper after harvest to determine how much phosphorous was removed by the harvest. For instance, with corn, roughly .34 pounds of phosphorous is removed per bushel. So with a 250-bushel crop, 88 pounds of phosphorous is removed. With soybeans, a 57-bushel crop removes 50 pounds of phosphorous. Multiply by your acres of corn and soybeans gives you a good estimate of the amount of phosphorous needed to replenish the soil for just what your crop removed.

However, despite crazy fertilizer prices, increasing fuel costs, and ongoing inflation tendencies for virtually everything needed for the 2022 farming year, be gratified too!  According to Kent Thiesse, farm management analyst at MinnStar Bank in Lake Crystal, Minn., “The 2021 U.S. net farm income projections show very strong improvement compared to 2020 farm income levels, and are considerably higher than 2014-2019 levels.”

What’s ahead? A big key will be remaining strength in crop and livestock prices — bolstered by strong export sales. “Of course, weather is always the wild card in final U.S. net farm income figures,” concludes Thiesse. 

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