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Senior Contributor

Look for a $4 Harvest Price on Corn

U.S. corn ending stocks are projected at 2.0 billion bushels, up 1.2 billion from 2012/13. The season-average farm price at $4.30 to $5.10 per bushel is down sharply from the record $6.70 to $7.10 for 2012/13.

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Well, let's see here, the above is a projected corn price range for 2013. A 205bu yield times a $4.30 corn price= $881.50/acre in corn sales. My total Input Costs, Land/Fixed Costs and Custom Farming Fees are roughly $550/acre. So $881.50- $550= $331.50 for a very rough profit profit. My land costs are only $25/acre in Property Taxes which makes a huge difference. For the guys paying a land cost of either cash renting or a mortgage payment of $500/acre, They could end up farming for free, just like in the mid-1980's Farm Crisis. Well, time to put the wife on a budget!!!!!

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Senior Advisor

Re: Look for a $4 Harvest Price on Corn

It's always fun to work with cherry picked numbers.  Using 5.50/bu would have a gross of 1045.50/acre rather than 881.50, a difference of $164/acre.  No more reason to pick the low than the high, is there?

 

The 2013 Iowa Cash Rent Survey just came out today.  There is very, very little $500/acre rent reports.  Oh, there is some.  And we have to keep in mind these surveys are by no means guaranteed to be scientific - it's just what the guys who felt like reporting wrote down.  Nevertheless, it's worth noting that the range for the top 1/3 crop ground is quite wide and the average price paid is often $100/acre or more less than the top price for that county.  So, should we say $375/acre?  That is another $125/acre which makes the change $289/acre.  That may well be a horse of a different color.

 

http://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-10.pdf

 

Without a doubt, the farmer on the low end of the scale is going to be hurt very bad, but using the same range of numbers a farmer may have made nearly $300/acre as well.  So, I'm not going to plan to go to anyone's bankruptcy sale until I see the flier.

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Senior Contributor

Re: Look for a $4 Harvest Price on Corn

Yes, I would say that the $500/acre Cash-Rent that people talk about in Iowa is confined to probably the very top 10% high quality farmland. This would be land that has an 85+CSR Rating for the soil types, and this is a big item too. This is drainage tile which is the 2nd most important item that you look at in either cash-renting or buying  a farm in the North-Central Iowa area. An Iowa farm that has an 85 and higher total whole farm CSR Rating and Pattern Tiling, along with other tiling are the Iowa farms that are bringing the $500/acre cash rent prices. But as mentioned, Iowa farmland that makes up this extremely high quality land is only 10% of the 26 Million acres of Iowa row-crop land. So, I would say there is only 2.6 Million acres of Iowa land that meets this high-quality standard. The corn yield on this top 10% of Iowa land is north of 220bu/acre, and maybe as high as 240bu/acre with normal weather. Iowa land with an 80 and higher CSR Rating probably makes up the top 20% of quality in Iowa. But an 80 CSR overall whole farm CSR Rating, plus good tiling can very easily do 220bu/acre. Most of my land in North-Central Iowa is 80 CSR and higher, but I have one farm that has a 76 CSR Rating, but it too can do well north of 200bu/acre yield-wise given good weather. 

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