Seed Prices Expected to Significantly Rise Next Year

05 Nov Seed Prices Expected to Significantly Rise Next Year

Allison Floyd —  Growing Georgia Magazine —  November 5, 2012

Corn and soy bean seed will be significantly more expensive next year, but that shouldn’t deter farmers from planting as much – or even more – than they intended, an expert at Purdue University advises.

Farmers will pay more for the seed they’ll plant in 2013, but they likely will see higher returns on their investment, said Alan Miller, a farm business management specialist.

Prices for corn seed are expected to rise 5 to 7 percent, and soybean is expected to cost 7 to 10 percent more than a year ago,

That would mean a bag of corn seed would sell for between just under $200 to more than $300, depending on whether it is a conventional or biotech variety. Soybean seed would go for about $50 a bag, with wheat seed priced in the low $20s per bag.

Even with high seed prices, corn and soybeans should be strong in south Georgia and north Florida as drought grips the Midwest and commodities prices for both continue to climb. In two years, corn prices shot up from less than $5 to $7.50 a bushel. Soybeans climbed from $11.25 to $15 a bushel in the same time.

“I expect to see a lot more corn next year,” said west Georgia farmer Rufus Short. The high price of peanuts last year kept some farmers from switching some acreage to corn, but now there is a surplus of peanuts.

“Peanut prices were high and stole a lot of acreage from corn. But they won’t be that good next year, Short said. “Cotton prices are down, too. I think across the board, you will see more corn.”

Other input prices, like fertilizer, probably will remain steady, making the seed expense less of a concern.

“Seed supplies could be tight,” Miller said. “This is especially a concern with soybeans, because farmers might surprise the seed industry by deciding to switch to planting more beans next spring.”

He urged farmers to place their orders with seed dealers in the next few weeks.

Seed companies increased their planted acreage this year, hoping to make up for poorer production in 2011, Miller said. The drought ruined those plans and had an adverse effect on the crop that survived.

“No one could have planned for a drought of that magnitude,” Miller said. “Seed quality could be a concern next year.”

Farmers should earn enough from their 2013 crops to more than make up for the costlier seed.

“We’ve done some preliminary estimates and we’re looking at some very high levels of return, with the potential to cover all costs next year, even on our low-yield estimates,” Miller said.

Miller projects that a farmer growing rotation corn on average-yield soil would generate $560 in crop returns above variable costs per acre in 2013. Rotation soybeans would bring in an estimated $466 an acre on average-yield soil, with wheat generating $372 per acre on that same type soil. If realized, those margins would represent an increase in revenue from this year of 24 percent for rotation corn, 17 percent for rotation soybeans and 51 percent for wheat.

“The economics at current prices for next fall are very good, even with the higher cost of seed and some of the other inputs,” Miller said. “I’m expecting a good opportunity for profits, if we can avoid another drought.”