Risk manager finds little interest in switching from corn to beans in ’22

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Risk manager finds little interest in switching from corn to beans in ’22

Although input costs are higher, one risk management specialist says few farmers are switching from corn to soybeans.

Mike North with ever.ag tells Brownfield he’s been traveling to many events in seven states and asking farmers about their planting intentions. “I ask every crowd the same question. Are you going to plant more beans than you are corn as a response to what’s going on with inputs? If I’m lucky, I might get one hand to go up in every crowd.”

North says the cost of inputs is dramatically higher, but there’s still potential for profit in corn. “The bottom line is when you pencil profitability on corn right now, it’s there because futures are trading in that $5.50 to $5.60 range. As we run a cost-of-production analysis with our clients, we’re seeing a lot of $5.00 cost structures give or take. That puts money in their pocket.”

North says the futures market prices may not seem like much more than the cost of production but do the math and the choice becomes clear. “Even if it’s only a fifty-cent gain, if you do the math on that, that’s a 10% return. Where are you going to find a 10% return anywhere right now?”

North spoke to Brownfield during the recent Dairy Strong conference in Madison, Wisconsin.

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