ATTICA Wait for a good corn price before selling this fall's crop, but sell soybeans now. And watch the futures markets for 2010 crops to lock in a price at a comfortable profit margin.
That was the advice economist Matt Roberts gave to almost 100 farmers and agribusiness people gathered at the Attica Fairgrounds Tuesday evening to hear this year's Ohio State University Policy and Outlook forecast.
The program by OSU's Department of Agricultural, Environmental and Development Economics and OSU Extension was sponsored by Sutton Bank.
"I'd be worried about carrying much old-crop corn out of February unpriced," Roberts said during his corn, soybean and wheat outlook. "If current prices are solidly profitable, start marketing. Know your cost of production and look for profitable prices.
"It's nice to be in a situation where 2010 can work for some people," he said.
Roberts, of OSU's Department of Agriculture, said corn prices continue to be based on ethanol production and recent news of an "E15 waiver" will have an impact on next year's prices.
The E15 waiver is a request to the U.S. Environmental Protection Agency to increase to 15 percent the allowable percentage of ethanol in standard gasoline from the current 10 percent.
He said EPA is conducting tests to determine the effect on vehicles and air quality and won't make a determination until next summer.
"No ruling on E15 will be made until then," he said. "But EPA seems to be favorable."
He said the request was made because federal law mandates 12 billion gallons of corn-based ethanol be used in the United States in 2010, an increase from 10.5 billion gallons this year. At present levels of adding ethanol to gasoline, not enough ethanol would be used.
Roberts also said a federal mandate requires the use of 1 million gallons of cellulosic ethanol next year, even though the technology is still in the testing stages.
"That's tooth fairy ethanol," he said. "I don't know of anybody who's seen commercial-scale cellulosic ethanol. It just doesn't exist."
Overall, Roberts said 1 million to 1.5 million more acres of corn must be produced next year to meet demand.
"Basically, this year we are using all that we produced and we're doing this in the second-largest harvest in history," he said. "And still we're not building inventories. That tells me we need more corn next year."
The soybean market also looks good for 2010, Roberts said. He said there are plenty of soybeans available from world markets, but they're all being used.
"We are pretty much selling them to other countries as fast as we can get them to port, almost," he said. "This has been an overall bright spot in the overall grain outlook."
Wheat remains unstable, he said. He suggested using only cash-based systems for selling wheat.
Economist Barry Ward said seed, fertilizer and other crop inputs are probably going to cost more during the coming planting season.
"Generally speaking, input costs are going to have a lot of pressure upwards," he said. Seed costs are estimated to rise 5 percent to 10 percent.
The largest factors in setting fertilizer prices are the world economy and crude oil costs.
"We are going to see a very seasonal pattern for this next year," he said. "I see a fairly upward sloping movement as we get into the spring and into the application window."
However, Ward said skimping on fertilizer to save the cost probably isn't a good economic move.
"Eacg input that delivers a return on investment should be continued," he said. "Follow sound agronomic principles."
He said farmers should beware of not adding phosphorous and potassium to the soil just to save costs.
Chemical costs are expected to follow a similar trend. Two-thirds of the world's supply of glyphosate is being made in China now, Ward said.