Diesel Costs Put Farm Balance Sheets Under Pressure
The rising cost of diesel is putting pressure on farm balance sheets as harvest continues. According to Justin Benavidez, chief economist at the USDA, fuel costs are a significant concern for agriculture. 'Until the Strait (of Hormuz) has reopened or there's access elsewhere to more affordable diesel, I think some of these prices might be with us,' he says.
Bienavidez notes that fertilizer prices are also an issue, but highlights the importance of fuel in farm production. 'Fertilizer isn't part of every run through the field; fuel is part of every run through the field.' He emphasizes that farmers should know their cost of production and have a plan for marketing their grain.
Benavidez also mentions that the USDA's updated cost of production forecast, expected in December or January, will reflect rising input costs. This comes as a reminder to farmers that even if prices are higher than desired, such as $6 corn instead of $5.30, it's essential to understand what covers their production costs.