Examining ROI for Crops

At the recent Commodity Classic AgResources President Dan Basse shared what farmers need to consider in this lower commodity prices environment when it comes to return on investment.

Basse: We're back to levels that we haven't seen now going back to 2002-2003 so it is a little bit of a struggle as markets have fallen and world competition has increased. But as the farmer think a head — we still have $4 corn — we have prices higher than a year ago. So the farmer needs to be focus on maximizing his revenue by using the market and then making some adjustments if there is a weather problem. As we see it today — it is still profitable out there. Soybeans in particular are a good place to make some sales right now."

He continues with predictions for the remainder of this year.

Basse: "The farmers that made money last year are the farmers who maximized yields. It was those extra bushels that got them over the finish line. I think the same will be in the year ahead. What has changing in the year ahead that farmers need to think about is we had the blessing of crop problems in Brazil and Argentina last year that helped for this big demand profile especially on exports from August to today. Unfortunately this year, South Americans are going to have a monster crop too. So we had the big demand, big crops scenario and now it is just big crops. As we look down the road, that is why we think the farmers need to be thinking ahead and making sales. Again you need to think of these crops as your first born — boy or girl — and give them the best opportunity you can."