Those record crude oil prices may not have as big of an impact on spring planting as one might think. Dr. Bruce Jones is a professor of agricultural & applied economics at the University of Wisconsin-Madison, he says growers are somewhat insulated from the market.

“Farmers have already locked-in their anhydrous and fertilizer, probably most of their chemicals and a good deal of their fuel. So, this latest increase in petroleum prices is only going impact that fuel that they have to buy to supplement that fuel that they’ve already got.”

Jones agrees with the latest Planting Intentions Report from USDA which indicates acreage being shifted from corn to soybeans. “I think that was the result of people looking at the high anhydrous and fertilizer prices but that, again, was set by last year’s prices.” While he believes farmers will not deviate much from those intentions, he does think they will be more aware of how many trips they make across the field. That could mean more acres converted to minimum or no-til. On the positive side, Jones says the acreage shift has pushed corn prices higher and that will help offset some of the increased expenses.

There are no indications that oil prices will back down anytime soon so in the longer term, Jones says it is going to erode farmers’ margins and put more pressure on the bottom line. “All we can hope is that we see some favorable growing conditions that perhaps we can make some of it back on yield to cover those higher input costs and get a little lower average cost of production.” The professor says producers need to keep close tabs on the market and take advantage of any positive pricing opportunities.

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