Input costs are down, but may not stay that way
The chief economist the Farmers Business Network says relief from record high input costs may be short lived.
Kevin McNew tells Brownfield fertilizer, chemical and fuel prices have all declined to start 2023. “We’re probably not going to continue to go further down and get back to where we were pre-2021,” he says. “I think the story is that the inflation, not only that we’re seeing in the broader U.S. economy, but it’s just going to continue to run it’s course for farm input costs.”
For example, “Spring of last year in 2022, anhydrous was running about $1500 a ton nationally and today it’s running around $1050 to $1100 a ton, so certainly some relief. Same on the chemical side as we’re seeing chemical prices back down.”
He says there are several areas where there could be an increase in costs. “Energy is going to remain inflated. Chemical and fertilizer prices will still be kind of be where we are at today, if not move higher down the road.”
However, McNew says, he’s optimistic that higher costs may not impact margins if commodity prices remain elevated.