Higher costs Break-even point of profitability

DTN senior analyst Todd Hultman calculated a few numbers using USDA’s cost of production estimates, updated December 17, 2021. For 2022, the agency predicted that a farmer would spend 715.73 $ to grow an acre of corn. With a yield of 180 bushels per acre (bpf), that comes down to about $ 3.98 per bushel.

To approximate a cost scenario for 2022, Hultman doubled USDA’s estimates for fertilizer and chemical spending and increased the fuel budget by 25%, resulting in a cost per acre increase of 194, $ 40. This brings the total costs to produce an acre of corn to $ 904.10. At 180 bpa, that’s a breakeven point of $ 5.02 a bushel. If a farmer has an average of 200 bpy, the cost drops to $ 4.52 a bushel. The real costs for some farmers could be even higher.

It is important to remember that these are only averages and that every farm’s track record is different. USDA figures include a line for the opportunity cost of land or rental rate. Whether a farmer owns all of the land or how their land costs compare to the average USDA used in their calculations will make a big difference in the actual break-even point of an individual farm.

At the time of going to press, corn futures for December 2022 were trading near $ 5.46 a bushel. Although the estimated profit margin is narrower than in 2021, Hultman said corn will remain a viable option for many farmers.

“If they are near an ethanol plant, they can be more confident about the demand compared to competing with Brazil to try to sell soybeans to China,” he said. .

Katie Dehlinger can be reached at [email protected]

Follow her on Twitter at @KatieD_DTN

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