Economic Tidbits

Moderating Production Costs

Nebraska corn and wheat producers might catch a break in 2024 with moderating production expenses according to crop budget estimates by the Center for Agriculture Profitability (CAP) at the University of Nebraska–Lincoln. Figure 1 highlights estimated per bushel costs for dryland and irrigated corn, soybeans, and wheat compared to last year. The lower costs for corn and wheat are driven by reduced fertilizer costs, off 20-40 percent in many of the budgets. Countering the lower fertilizer costs are higher machinery, interest, pesticide, and land costs. Soybean producers, though, are expected to see higher costs this year. And this comes on top of significant increases experienced since 2020.

FIGURE 1. ESTIMATED PER BUSHEL PRODUCTION COSTS

Source: 2024 Crop Budgets, Dept. of Agricultural Economics, University of Nebraska-Lincoln

After experiencing significant increases in feed costs since 2021, last year cattle producers saw much needed relief. Between March and November, the monthly average alfalfa price in Nebraska was down 7 percent, the hay price was down 17 percent, and the price of corn off 30 percent. Absent a resurgence of drought or other supply shock, the costs of feedstuffs should continue to moderate in 2024. Other costs, though, (i.e. feed supplements, fuel, labor) are expected to remain relatively high.

FIGURE 2. NEBRASKA FEED COST INDICES (THROUGH NOVEMBER 2023)

Source: Rolling Prairie Economics using data from USDA National Agricultural Statistics Service

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