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Senior Contributor

Re: just ran some cost of prod numbers

Yes, depending on what your debt load is and what kind of yields you are using, and how much you have forward contracted, things could be a little on the tight side.  Of course no one here has an operating loan and they don't forward contract anything since you can't sell what you don't haven't raised.***   Oh, and I think we have been told breakevens don't matter either!** As MT has shown, if you get creative you can shave COP down pretty good.  I believe he is fudging a little but he and Coup aren't that far off.  I don't see this thing going too far below $4 but you never know.  $4 to $5 dollar corn is very manageable for a lot of people.  Everyone is whining and crying about how the guys with all the new paint are going to be in trouble.  Not necessarily.  Many of these people have been spending little or nothing on machinery for years and have made outrageous sums of money the past three or four years.  A lot of the new paint many are so jealous of has been paid for in cash.  The guys that "took advantage"  of the "cheap" money and financed a bunch of new iron are going to be in trouble.  They took the 179 and wrote off the iron to save big on taxes.  The trouble is the payments on that iron are going to keep coming due for the next few years and they are going to have to be paid with money that is fully taxed.  Add to that the fact that these guys will have little if any depreciation expense and you have a problem.  The same holds true for $8000 to $15000 dollar land.  Even if they paid 50% down, that principle and interest is going to have to be paid with fully taxed dollars with a much smaller revenue stream in the event grain prices stay depressed.  Not saying buying machinery or land was a bad thing the last few years but you **bleep** sure better have paid cash for most of it and have your ducks in a row for the balance.  If we go down to $3 things will get really ugly for a lot of people.  I don't see that happening but I am wrong a lot!  I also don't see anything much north of $5 happening anytime in the next twelve months.  You never know though.  Maybe MT will be singing us all the "This Crop is in Trouble"  lullaby by next spring and summer.  Oh wait.  His COP is so low that he now claims to be hoping for super low prices so he can swoop in and buy all of his neighbor's land.  Forgot about that.  Seriously though Happy New Year and good luck to all of you in 2014.  Be ready to seize an opportunity should it present itself.

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Honored Advisor

Re: just ran some cost of prod numbers

With the stock market making headlines of being up 30 percent , if it holds and gains another 10% or more coupled with a soft land market and lesser rent picture will be a lather rinse repeat of the 80's.

 

Most of these investors also have wives that want new bathrooms, kitchens, vacations, cars, etc.

 

Many of them are leveraged and may not have a great equality base to fall back on. After one or at most two lean years I think they will hit the exit button.

 

But wh a t do I know?

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Advisor

Re: just ran some cost of prod numbers

Most will be fine in 14 due to some equity and left over cash but I can easily see low 3s in corn for 15 . Lot of land being bought by putting up a free and clear parcels instead of cash for the downpayment. Not sure thats a good plan.

 

Not sure we will have the chance to sell $5 corn for a few years. Going to invest in tile, fert and cleaning up some brush , make every acre as profitable as possible instead of paying a premium for new land. Probably update the grain system also.

 

 

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Honored Advisor

Re: just ran some cost of prod numbers

Ya got a good point hobby.  I was reminded this week by a friend in the implement business how those with deep pockets still borrow.

 

I have lost a little confidence in the Stock market being an indicator of the US economy strength when the leading stocks are in companies we expect to have short lives and the investment money is freshly printed and never sees public circulation.

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Senior Contributor

Re: just ran some cost of prod numbers

    Looks like another 96 or 06 for the cure.That can be hard for some to take also unless ins,is adequit!

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Honored Advisor

Re: just ran some cost of prod numbers

Currently 40% reduction in potential crop insurance revenue on corn& Milo. Will take effect in the '15 tax year.

 

Slow motion train wreck for the the leveraged folks. 

 

Interest rates are sneaking up for borrowers and if bankers smell blood it will be ugly for some.

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Advisor

The Problem

 ISN'T $3-4.00 CORN!  The problem is our inputs are at levels when corn WAS $ 8.00.   How to get the leaches off  before they suck the life competely out of you is the dilemma at hand.   Mark my words, the Madison Avenue Carnival Barkers in Louisville, KY will have a bunch of seed corn hat dorks lining up for the slaughter come February.

 

  

 

 

 

 

 

 

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Advisor

Re: just ran some cost of prod numbers

425, I would try for some non gmo Soys.. Stick to the ones w high yields in trials. It's extra income. Just don't do all your acres in non gmo.

Buy fertilizer wholesale? Having a planter w 2x2 certainly cuts this bill, due to higher use/efficiency.

Buying all my non roundup chems from DuPont: can save 10-20% through rebate.

Say to all your suppliers: "I need it cheaper" when they give you a price.

I may end up going corn again, if the dekalb seed guy wakes up.. No harvesting over 20% moisture if its to the elevator... But 80-90% my acres Are now soy/wheat.

Can't mitigate diesel/propane risks.. **bleep**!!

If you can get good conventional seed corn I'd do it. No trials, no buy.

Send corn/Soys far away? Fob farm can usually lower your freight! Capture carry?

If you can live with medium soil tests your good. High tests aren't very much more likely to give a profitable return.
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Advisor

Re: just ran some cost of prod numbers

We got some low phosphorus soils here we need to replenish. Not sure what adm premium for non gmo this year...has been a buck and a half
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Senior Contributor

Re: just ran some cost of prod numbers

Here is a close guess on my fringe acre, valley ground.
40/acre rent... Yeah, eat your heart out.
40 combine... I do my own but it's avg for area
40/acre trucking... .25/bu x 160 bu yield
25/acre planting
20/acre spraying.... Up front and post emerge
68/acre for 2tons chicken poop delivered and spread
22.33/acre for 50 units UAN
26.50 starter fertilizer
80/acre seed
53.25/acre herbicide-insecticide (lumax)
415.08 total cost

That's kind of a Cadillac program for my area. Normally use Aatrex and simazine, cheap seed and only spray once. Anyhow, a sub-avg yield would be 160 around here. At that amount of production, 2.60/ bu is my break even. I've been running around 180 but always figure income on the short side and expenses a little high.
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