Setting your 2007 farm budget by the numbers


Lower fuel and nitrogen prices in the last half of 2006 have signaled trends that should hold throughout 2007.
The outlook numbers laid out in this article can be used to formulate budgets for 2007.
Fuel. As of Dec. 12, the Energy Information Administration pegged the average price for West Texas Intermediate Crude Oil at $65.17 per barrel for 2007.
The administration projects the Henry Hub Natural Gas price to average $7.87 per thousand cubic feet (mcf) in 2007.
The Henry Hub in Louisiana is the nexus of 16 intra- and interstate natural gas pipeline systems that draw supplies from the region’s prolific gas deposits. The pipelines serve markets throughout the U.S. East Coast, the Gulf Coast, the Midwest, and up to the Canadian border.
Natural gas futures quotes are available via the online New York Mercantile Exchange at (Natural gas futures are traded as million British Thermal Unit (mmBtu.) One contract equals 10,000 mmBtu. Natural gas is sold wholesale per thousand cubic foot (mcf).
Btus per cubic foot of natural gas do vary. One cubic foot of natural gas = 1000-1031 Btu. One thousand cubic feet (1 mcf) of natural gas = 1-1.031 mmBtu.
Off-road diesel is expected to average $2.20/gal for 2007. This represents approximately a 2 percent decrease from 2006.
Propane. Futures prices of natural gas and retail survey data point toward slightly higher propane prices in 2007. The price of propane is expected to increase slightly in 2007 and average $1.50/gallon.
A warm start to winter in much of the country may allow for lower prices of some fuel-related inputs.
Fertilizer. Natural gas prices have fallen substantially since they peaked in the winter of 2006 when the Henry Hub price for natural gas was around $15 per thousand cubic feet (mcf).
Since then, the Henry Hub natural gas price has fallen below $8 per mcf. (For the week – Wednesday-Wednesday, Dec. 13-20 – the price for next-day delivery at the Henry Hub decreased 78 cents per MMBtu, or 10.8 percent to $6.43 per MMBtu.)


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(Barry Ward is the leader of production business management in the Ohio State University Extension’s department of agricultural, environmental and development economics.)