■ Agribusiness trends

Agriculture/

Agribusiness

8 20 16 12 8 2 4 0 DNOSAJJMAMFJ 0

Iowa-Minnesota hog prices

125 25 105 22 85 19 65 16 45 13 25 DNOSAJJMAMFJ 10

Source: USDA Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points. C. Sankey

Corn prices — southern Minnesota Source: USDA

185 pound carcass, — 2020 — 2021 negotiated price, weighted average $114.80 $51.71

(dollars per bushel)

— 2020 — 2021

8 20 6 $6.84 16 12 4 8 2 $2.87 4 0 DNOSAJJMAMFJ 0

Soybean prices — southern Minnesota

8 125 20 25 6 105 6 16 22 4 4 85 12 19 65 8 16 2 45 4 13 0 DNOSAJJMAMFJ 25 DNOSAJJMAMFJ 0 DNOSAJJMAMFJ Source: USDA 10 20 6 125 1625 105 1222 4 85 8 19 2 65 4 16 0 45 DNOSAJJMAMFJ 0 13 DNOSAJJMAMFJ 25 DNOSAJJMAMFJ 10 DNOSAJJMAMFJ

Milk prices — 2020 — 2021 Minimum prices, class 1 milk Dollars per hundredweight

125 25 105 22

$16.21

85 19 65 16 45 13

$13.87

25 DNOSAJJMAMFJ 10 DNOSAJJMAMFJ

Source: USDA. Based on federal milk orders.

lower than the Southern Minnesota grain bids, depending on the “basis” level in a given area. The “basis” level is the difference between the local bid prices and the December corn futures price and November soybean futures price on the Chicago Board of Trade (CBOT). Basis levels for both the corn and soybean local cash prices and new crop bids have been highly variable in recent months across the Midwest, depending on local grain demand and 2021 U.S. crop production estimates.

Local cash bids in Southern Minnesota for corn store on the farm have ranged from $6.50 to over $7.00 per bushel since mid-April, with local soybean price bids over $15.00 per bushel. As prices rose above breakeven levels last Fall, most farmers began selling their 2020 crop. A large majority of the corn was sold from $3.50 to $5.00 per bushel and most soybeans from $8.50 to $10.50 per bushel, well below current levels. A very small percentage of the 2020 crop has been sold at the current high price levels since April of this year, as a majority of farmers had already sold their grain. — 2020 — 2021 (dollars per bushel)

Many farmers have been struggling with making grain marketing decisions for the 2021 $15.39 crop. On one hand, the current new crop price bids are above breakeven levels for both corn and soybeans; however, farmers do not want to miss a potential run-up in prices, such as occurred with the 2020 crop. A lot of farmers are taking a mixed $7.99 approach to marketing the 2021 crop, locking in a portion of the crop as a risk management tool, but keeping the marketing opportunities open on the remaining bushels.

Looking ahead to the 2022 crop year, one of the big concerns is the likelihood of higher crop input 8 expenses and land costs for next year. The price of most forms of nitrogen fertilizer have risen by 50 to 70 percent since the beginning of 2021. The cost of most forms of phosphorus and potassium have risen by 25 to 35 percent since the beginning of the year. The cost of fertilizer inputs for corn production in 2022 are likely to be 50 percent or more higher than 2021 fertilizer costs.

Crop input costs are also expected to be higher for seed, chemicals, fuel and repairs in 2022, as compared to expense levels in 2021. Land rental rates for 2022 are also likely to increase substantially in many areas, as most land rental rates in a given year are based on farm profit levels from the preceding year. Most 2021 land rental rates were set in the Fall of 2020, prior to the current rise in commodity prices. Approximately two-thirds of the crop land in many areas of the Corn Belt is under some type of cash rental agreement. Land values have also increased substantially in recent months in many areas, which tends to raise property taxes on owned land.

It is quite likely that breakeven costs on cash rented land for the 2022 crop year will be near $5.00 per bushel for corn and near $11.00 per bushel for soybeans. Based on the latest USDA price projections, the national average prices for