By Jamie Martin
Agricultural economists are urging farmers to lock in prices early through forward contracting to avoid harvest-time price drops that often fall below breakeven.
Extension economists Ryan Loy and Hunter Biram explained on the “Morning Coffee and Ag Markets” podcast that many farmers may not earn a profit this season due to low commodity prices. “While the decline in commodity prices is very concerning, seasonality has tended to favor the price increases in this pre-harvest window,” said Biram.
June and July are key months to set crop prices, as harvest usually brings an oversupply, leading to the lowest prices of the year. Delaying decisions can leave farmers stuck with below-cost sales. Loy warns against relying only on harvest prices.
Scott Stiles, another agricultural economist, said historical data backs early marketing. Corn futures beat harvest prices 79% of the time, and soybeans did so 71% since 2000. He recommends selling 10% of expected yield early.
Markets are highly sensitive to U.S. weather and global conditions, especially in South America. For example, Brazil has overtaken the U.S. in soybean production.
Such factors can create price spikes in February to July, offering chances for better sales through local cash markets or futures.
Biram noted that no crop has surpassed breakeven this year, making it vital for farmers to calculate the minimum sale price to cover costs.
The Cooperative Extension Service’s Profit/Loss calculator helps farmers determine their breakeven prices and plan accordingly.
“This is the time to be making some very serious decisions. This may be the best price environment,” said Biram.
Farmers can access tools and guidance through the University of Arkansas Division of Agriculture’s Cooperative Extension Service and other resources.
Photo Credit: gettyimages-eugenesergeev
Categories: National