Commodity Prices Affect Our Business Immensely

Josh Nelson
CPS Tangent


Commodity prices affect our business immensely. The table below shows trends between Nitrogen, Diesel and Wheat prices from 1993-2011. 
 
World economies, power struggles in developing countries and natural disasters have made for very uncertain times. No surprise to anyone, commodity prices are volatile. These three commodities are trending nearly twice their 18 year average. The 18 year average for Nitrogen is $0.34 ($/unit), Diesel $1.84/gal and Wheat $4.95/bushel. As of March 2011 prices for these are Nitrogen at $0.59, Diesel $3.87/gal and Wheat $8.55/bu.
As in 2008 the question is will these prices hold through the summer and fall? Will prices continue to rise? Will there be a correction? In 2009, commodity prices fell 20% on Nitrogen, 40% on Diesel and 50% on Wheat.
There will continue to be many questions and concerns moving into the harvest season of 2011, however, as with any turbulent markets there are opportunities as well. Carefully consider crop rotations, no-till versus conventional planting, bailing straw versus chopping, soil testing, nutrient management, etc. Ask your CPS fieldman about nutrient removal when bailing; it is important to understand the true value of your straw. Develop cost effective strategies to managing nutrient deficiencies with Nature’s Supreme, Lime and Variable Rate applications. Sign up for commodity reports from Tangent CPS website, USDA Grain Reports, Pendleton Grain Growers, etc. Keeping yourself informed will help you find and take advantage of these opportunities.