Budget operating costs if planting sorghum in June
Tuesday, May 30, 2017
Oklahoma farmers planting sorghum in June need to be aware that sugarcane aphid infestations before the boot stage can decimate their crop, underscoring the need to budget a corrective insecticide application before planting.
Trent Milacek, Oklahoma State University Cooperative Extension area agricultural economist, reminds sorghum growers that operating costs – including seed, fertilizer, harvesting, pesticide, custom application, equipment, fuel and cash rent – could total $200 per acre.
“Operations are different in their use of equipment and resources, so the figures will vary with the producer,” he said. “A single sugarcane aphid insecticide application is included in the $200 per acre cost estimate.”
Assuming these figures are representative of the average producer, a yield of 67 bushels per acre will be required to break even on operating costs at $3 sorghum. Milacek said each producer must consider his or her fixed costs and determine the extra yield required to operate the business and maintain equipment.
Sorghum prices have moved lower with other commodities over the past few years. This, coupled with a weaker basis due to reduced exports, has driven prices down to a critical point.
“Producers looking to market sorghum in 2017 can currently lock in a cash price of $3 to $3.25 depending on delivery location,” Milacek said. “Managing for large yields on highly productive land will help a producer remain profitable.”
Milacek added grain sorghum in 2017 may be a good choice for Oklahoma producers. Acres have been reduced in favor of soybeans and other oilseeds, which may cause local buyers to increase basis bids in order to secure bushels.
“The current harvest-time basis ranges from minus 91 cents to minus 65 cents at area terminals,” he said. “Two years ago, when sorghum demand was high, basis bids were as high as plus 50 cents at times. To market this crop, a producer can use the corn futures price.”
Any weather events that jeopardize the Midwestern corn crop likely will provide support for grain sorghum prices.
“Consider purchasing puts on rallies to limit downside while leaving basis open,” Milacek said. “This will allow producers to realize potential increases in local demand.”
Producers are encouraged to utilize Oklahoma Cooperative Extension Service Enterprise Budgeting software to help them make decisions on their farms.
Many Oklahoma sorghum producers were forced to delay planting this year due to wet field conditions in April. A general rule is that producers forgo May plantings in order to avoid summer heat at flowering. This will result in a large number of first-crop and double-crop sorghum to be planted in early June.
Oklahoma produces more than 21 million bushels of forage and grain sorghum annually, according to USDA National Agricultural Statistics Service data.
Anyone seeking additional information about planting sorghum should contact the nearest OSU Cooperative Extension county office, typically listed under “County Government” in local directories.
The Oklahoma Cooperative Extension Service is one of two state agencies administered by OSU’s Division of Agricultural Sciences and Natural Resources, and a key part of the university’s state and federally mandated teaching, research and Extension land-grant mission.