Kansas farmers are looking at record-breaking yields for crops this year, yet market prices won’t reward them.

Kansas farmers are looking at record-breaking yields for crops this year, yet market prices won’t reward them.

Producers are facing another year of poor payoff for quality yields as prices are still too low to cover costs.

“If we have enough yield, we’ll be able to cover those variable cash costs, but we’re not covering the full cost of production,” explained Jay Warner, agricultural producer in the Inman area. “We need lots of bushels to make up for the price, but that makes the price lower.”

The U.S. Department of Agriculture reports that last June’s wheat harvest, and projections of this year’s corn and soybeans, are benefitting from late spring and summer rains.

The Kansas corn harvest should be up 660 million bushels, which is up 14 percent from last year on yield of 145 bushels per acre. The USDA also projects the soybean harvest at 164 million bushels with a yield of 40 bushels per acre.

The completed wheat harvest is forecast at 462 million bushels, which is up 43 percent from last year, with yield estimates at 57 bushels an acre.

At this point, it’s hard to tell if producers should sell grain at the low prices now, wait a few weeks for more accurate forecasts, or wait a few months in hopes that global prices will rise.

“Right now, we’re at enough surplus that even if we have a bad year, we’ll have more grain than the world needs in storage, which is about 18 months worth saved up,” Warner explained. “The grain merchandisers and terminals do a great job of keeping grain in good condition because they’ll know they’ll be storing it for 18 months.”

In the meantime, producers may just have to wait.

“The old marketing quip says that the cure for low grain prices is low grain prices,” Warner said. “At some point, prices will be low enough that producers will stop producing or we’ll slow production, and then demand increases. So long-term, it can balance out, but in the short term of a few years, we’ll have negative returns. The idea is to make it through those down cycles.”

Long-time producers may see similarities to the market dip in the 1980s. Low prices and high interest rates caused the drop, but today, producers are seeing low interest rates and low debt ratios alongside the low prices.

“Theoretically — hopefully — people can handle this down cycle easier than in the 1980s, but it’s still no fun,” Warner said. “Most businesses don’t fail for lack of profit, but for lack of cash flow, so during down cycles in all business, the key is to get through the cycle.”

Though family farms continue to take losses from low prices, Warner is still hopeful for 2017.

“Next year will not be this year; that’s one thing I can be sure of,” Warner laughed.