The current down swing in the market has put a damper on farmer’s spirits lately. Are you currently looking to get more out of the market? Cash + contracts have done well for corn pricing. Farmers are getting anywhere from a $0.12 premium on a cash contract for a $4.40 new crop offer, to $0.20 premium for a $4.10 new crop offer. These need to be in 5,000-bushel increments. New crop prices are currently lingering above $3.50 which is a good place to start your pricing for the year.
The soybean market has been bleak especially when it comes
to basis. Everybody needs to be proactive on getting some priced before things
get worse. Cash + contracts on the compass programs is not very promising below
$0.30 premium. However, getting some bushels on the books instead of selling
over the scale is a good idea. It is never too late to start looking towards
2019 harvest. New crop bean prices have been shaky, especially the last few
trading days around $8.50 with a -$0.90 basis. HTA contracts can possibly help
make up the difference by locking in the futures and hoping the basis improves
by the time harvest comes around.
If you have questions or want to get some contracts in place feel free to reach out to Mike Steingraber and he would be happy to go over options with you.
January 3, CHS Larsen Cooperative welcomed, Jenn Stowe, to their Dairy
Nutrition team. Stowe graduated from UW-Platteville with a Dairy Science Degree
with an emphasis in Animal Nutrition. She has relocated to the Waupaca area
from Harvard, IL. She’ll be working as a Feed Sales Rep in conjunction with,
Jay Hoffman, Feed Department Manager.
Stowe grew up in northern Illinois on a hobby farm and has been involved in the
agricultural industry her whole life. She was very active in her 4-H club
working with and showing horses and cattle, which helped her decide she wanted
to work in the Ag Industry. She achieved her Associates of Science at McHenry
County College before attending UW-Platteville. While attending county college
she worked on a dairy farm. This is where she first became exposed to nutrition
by working with the head herdsman on their ration formulation as well as doing
the actual mixing and feeding.
was one of the first to graduate with the Dairy Science Degree, as this is a
new degree for UW-Platteville. She was very involved in extra-curricular
activities. In the Pioneer Dairy Club, she attended the ADSA and PDPW
conferences as well as helped chair the Pioneer Consignment Sale. The
consignment sale is a completely student run cattle auction where the students
work with local farmers to get commitments of selling their cattle at the show.
They create the show magazine showcasing the consignments. Stowe worked with
the cattle the week of the auction to monitor for their health and make sure
they looked good for the show.
While at UW-Platteville, Jenn Stowe was selected to compete in the Midwest Intercollegiate Dairy Challenge. Students from around the U.S. and Canada apply theory and learning to a real-world dairy while working as part of a team. Each team is assigned a real farm to evaluate their nutrition, animal health, reproduction and financials. They then have an opportunity to walk the farm to see their conditions and have only a few hours to complete and memorize a presentation on how they feel the farm can be improved. They present their findings to a panel of judges, the producer and an audience. Jenn worked on the nutrition side of the competition which was another experience that lead her to wanting to work in Dairy Nutrition.
During College, Jenn Stowe worked at two vet clinics: Galena Square Vet Clinic and Family Pet Hospital. She enjoyed working closely with the clients and their pets. She acquired information from the clients to learn about animal history and issues, which she would then share with the vet. She assisted with surgeries, animal analysis and bloodwork. She gained a lot of customer services skills and genuinely enjoyed working with people.
looking forward building relationships with the producers, expanding her
knowledge of the dairy industry and helping farmers achieve their farm goals.
She is excited to meet CHS Larsen Co-op’s producers and customers. Outside of
work Jenn really enjoys riding and training horses, trap shooting, hunting and
enjoying the outdoors. Please help us in welcoming Jenn Stowe in her position
at CHS Larsen Cooperative.
CHS Inc. has reported a net income of $347.1 million for the first quarter of fiscal 2019. “Our strong first quarter results position us well as we start our 2019 fiscal year,” said Jay Debertin, CHS president and chief executive officer. “We are focused on making CHS our customers’ first choice by advancing our technology solutions and equipping employees to meet the changing needs of our customers around the world. We will do this while maintaining financial discipline and rigor.”
CHS Larsen Cooperative recently completed an interior and exterior lighting upgrade to LED lighting at their New London main office. After learning about the Focus on Energy rebates from Jeremy Bellile, owner of BNH Lighting, LLC, they worked together to get everything in the offices, warehouse and parking lot converted over to LED technology. This will save the cooperative thousands of dollars each year on their electric bill.
CHS Larsen Cooperative received a rebate from Focus on Energy that covered half the cost of the project. After the rebate and the savings on maintenance costs, the conversion will pay for itself in approximately 1.5 years. They are proud to work with Focus on Energy, which partners with New London Utilities, to help businesses reduce energy waste.
“Working with BNH Lighting, LLC, was great from designing the new LED solution and maximizing the Focus on Energy incentives,to the installment of the lights,” said Randy Marx, New London location manager.The install went quick working with Nass Electric, a local electrical contractor.Jeremy was thorough with the LED solution, paperwork for Focus on Energy,organizing the installation and quick to follow up with the completion. “We are excited about our new lighting and the savings to come.”
CHS Larsen Cooperative, a full-service ag retailer, is part of CHS Inc., a leading energy, grains and foods global agribusiness owned by farmers, ranchers and cooperatives across the United States. Diversified in energy, grains and foods, CHS is committed to helping its customers,farmer-owners and other stakeholders grow their businesses through its domestic and global operations.
The 2018 CHS Annual Meeting wrapped up December 7 as more than 1,900 CHS member-owners took part in educational sessions, board elections and governance, and heard company updates in Minneapolis, Minnesota. A recap of the meeting, including the 2018 CHS Annual Report, videos and photos is ready to view.
During CHS Board elections Friday morning, CHS owners elected a farmer from Nebraska and re-elected four other farmers to serve three-year terms on the board. CHS Directors must be full-time farmers or ranchers to be eligible for election to the 17-member board.
Newly elected Director David Beckman of Elgin, Nebraska, succeeds Don Anthony of Lexington, Nebraska, who retired after serving on the board since 2006. Along with his wife, brother and their families, Beckman raises irrigated corn and soybeans and operates a custom hog-feeding operation. He received his bachelor’s degree in agronomy from the University of Nebraska-Lincoln, and he serves as board chairman for Central Valley Ag Cooperative, York, Nebraska, and secretary of the Nebraska Cooperative Council.
Re-elected were Steve Fritel, Rugby, North Dakota; David Johnsrud, Starbuck, Minnesota; David Kayser, Alexandria, South Dakota; and Russ Kehl, Quincy, Washington.
Following the annual meeting, the CHS Board re-elected Dan Schurr, LeClaire, Iowa, to a one-year term as chairman. Other directors selected as officers for 2019 were:
J. Blew, Castleton, Kansas, first vice chairman
David Johnsrud, Starbuck, Minnesota, secretary-treasurer
Jon Erickson, Minot, North Dakota, second vice chairman
Steve Riegel, Ford, Kansas, assistant secretary-treasurer
USDA Released Its December Crop Report. China Buys 30 Bean Cargos, Finally…
The USDA released is December crop report on Tuesday and really did not change much from November. Corn carryout did increase, but bean carryout remained the same. Let’s look at the numbers.
For the ’18/’19 crop year, the USDA dropped corn used for ethanol by 50 M bu down to 5.6 B bu. They also lowered the amount of corn imported into the US by 5 M bu down to 45 M bu. When the dust settled, the USDA raised corn carryout by 45 M bu to 1.781 B bu. The cut in ethanol usage was not a surprise to the market as their margins have been negative for some time. Each week it seems like there is another ethanol plant being moth-balled because the industry is not profitable right now, so the higher cost operations are being shut down. A 1.781 B bu carryout is tighter than last year’s numbers, but it will be interesting to see how the higher priced corn will affect feed demand incoming weeks, as lower priced corn from South America will be coming on line in March.
As harvest ends in the US, the corn basis levels have moved higher. This is most noticeable in the southern Corn Belt where harvest has been over for quite some time. Basis levels there have been stronger than normal for some time to try to stimulate movement. The recent run up in corn futures has allowed the basis to back off slightly, but the farmer still is in no mood to deliver big quantities of corn yet, especially with the questions with China and how much they will buy of Ag commodities going forward. China will focus on beans, but if they buy beans, the market should react positively, which will affect corn futures as well.
The USDA did not change one item in the bean complex on their December crop report. This is odd as the market feels confident that bean exports need to be reduced at some point even if China starts buying now. Bean exports are currently pegged at 1.9 B bu, and probably in January they will start to get trimmed back. In the meantime, the USDA probably wants to give China some time to see what they will do. Yesterday, their state-owned grain company SinoGrain purchased 30 bean cargos of US beans mainly from the PNW. This is roughly 42 M bu or so. Will they buy more? Time will tell. However, we finally have them buying our beans and the northern plains finally have a market for their bean crop. Brazil is just about out of beans, but they have a huge crop on the horizon. This crop is at least 30 days earlier than normal, and Brazil’s weather so far has been just about perfect. Even though China purchased beans yesterday, the window will close rapidly on the amount of beans they will buy from us for the balance of the year as Brazil will have a huge quantity available to them in roughly 30 days at a cheaper price.
The USDA left bean carryout at 955 M bu. I don’t see how this bean carryout number can shrink much if any over the coming weeks. Frankly, I think there is a bigger chance that bean carryout will grow to over 1 B bu, and there is no doubt this would have happened if China did not step in yesterday and buy some beans. Now, the real question is how many more will they buy before going back to Brazil? Yesterday’s buying from China has caused the bean basis at the Gulf and PNW to firm quite noticeably and will cause the basis in Brazil to weaken substantially. The market’s role now is to get us back to a neutral market between the US and Brazil and unwind the premiums it placed on Brazilian beans over the last 6 months. In the US, the bean basis ought to start to firm. However, we are still carrying out nearly 1 B bu of beans which is a huge quantity, possibly the biggest ever for the US. This will likely weigh on the bean basis for the balance of the crop year unless China really ramps up its US buying program. Time will tell, but China holds the cards at the moment.
We have seen a nice run up in the price of beans over the last 2 weeks as the market gets excited about China returning as a bean buyer. I would recommend that all producers take a good look at the bids for new beans for next fall. Nov ’19 bean futures at Chicago are now trading at $9.65 and have rallied over 50 cents in the last 2 weeks. You need to seriously look at this opportunity and start to lock in bean production for next year. The bean basis has firmed in the last 2 weeks, but if you still don’t like the basis, lock in the futures using an HTA contract. The HTA contract will allow you to sell futures now, and then come back and set the basis at a later time. However, there are fees involved for an HTA contract as the co-op will be covering the margin calls that you would pay if you sold futures in your own hedge account. Also, now is a great time to use our Cash plus contracts as it will pay you a big premium now in exchange for a new crop offer. The calls for new beans next year are nice and fluffy and a great time to sell them and put these premiums in your pocket. I will describe in detail below. If you would like to arrange an appointment to meet with one of our grain originators to develop a custom marketing plan for you, pleaseclick here. We would be glad to meet with you to help you with this process. To see our current cash bids, pleaseclick here.
Do You Want a Premium for your Beans? Cash Plus Is The Answer.
We are currently bidding $8.12 for cash beans and $8.61 for Oct / Nov ’19 beans delivered into Readfield. If this level is still not enough to satisfy you cash flow demands, you should consider our Cash Plus Contract. This contract will allow you to receive a 21 cent premium over the cash bid, and paid to you today. In exchange for this premium, you will give us an offer to sell the same quantity of new crop November ’19 bean futures at the $10.10 level if on October 23,2019,the price of November soybean futures closes at or above the $10.10 level. This is a win-win for you. You will be paid a 21 cent premium now on your cash beans. If on October 23, November bean futures close at or above $10.10, you will have the same quantity of beans sold at $10.10 futures, less the basis of 95 cents under November (this could vary slightly), equals a new crop bean contract at $9.15 for Oct / Nov ’19 delivery into Readfield or Center Valley. This is a good price considering our posted new crop bean bid is $8.61 and represents a 54 cent premium over our posted new crop bid. If on Oct 23rd ,November bean futures close lower than $10.10, then you keep your 21 cent cash premium, and have no other obligation. This contract has been popular as of late, and if you still own old beans, you should seriously consider it.
Recommendations For Corn & Bean Meal Consumers (Livestock Producers)
The bean market has ramped up over the last 2 weeks with the China enthusiasm, and this has pushed bean meal higher as well. We have not seen the incredible gains in the corn market either, but corn basis is firming, and the corn market slowly trades higher in the meantime. At some point, this enthusiasm will cool and the marker will reset lower. This will be the time for you to lock in corn and bean meal for your livestock. Here are my recommendations for coverage. To see where futures are currently trading, pleaseclick here.
Cash Corn – March 19 Corn Futures – Support at $3.78,
Resistance at $3.95, Place Targets at $3.83
Cash Bean Meal – Jan 19 Meal Futures – Support at $305,
Resistance at $319, Place Targets at $310
LAST CALL – CHS ProAdvantage
We are again offering the CHS ProAdvantage grain contract this year. This contract is a very simple approach to allowing our trading professionals at CHS to market your grain for you. Basically, you will handover a portion of your grain to them to squeeze as much money out of the market as they can. They will do many trades behind the scenes to generate as much profit for you as possible and when the program is over, their profits will be added together and given back to you in the form of a price that should be higher than the prevailing price at that time. You don’t have to worry about the trades that they do, or any complex marketing strategies to learn. This is easy folks. Just give them a portion of next year’s grain production and allow our marketing professionals to make money for you.
This contract has been offered for 4 years and the results have been quite solid. Their bean contract has worked well, and has allowed participants to enjoy contracts that were significantly higher than the current market. All of this goes directly to your bottom line. For bushels in your bin, you can enroll in a contract for July 2019 delivery. For next year’s production, you can enroll in a Fall of 2019 delivery,and we also have Fall of 2020 delivery contracts as well. The cost is 10 cents per bushel for the July 2019 or Fall 2019 contracts, and 12 cents per bushel for the Fall 2020 contracts. The Fall 2020 is an especially good deal because the contract allows our traders an additional year to make trading returns on your behalf for only 2 additional cents. Also, the 2 year contract has worked tremendously well over its history. There is no minimum bushel quantity required. Please click here for more information on our CHS ProAdvantage contract. Every grower in the area should take advantage of this contract on at least a portion of next year’s production. It is a very good contract that has a long history of success. If you have other questions, please call me at Readfield. Enrollment ends December 14th,This Friday.
What Are The Charts Telling Us? Recommendations For Grain Producers.
Here are the support and resistance levels for cash and new crop grains. These are all futures levels as traded at Chicago:
Cash Corn – Mar 19 Corn Futures – Support at $3.78,
Resistance at $3.95, Place Targets at $3.90
New Corn – Dec 19 Corn Futures – Support at $3.99,
Resistance at $4.06, Place Targets at $4.03
To contract or not to contract, that is the question…or is the real question, when to contract or at what price to contract? These things can lead to a lot of stress, not only for the consumer, but for the energy consultant too. Over the years I have developed a strategy that helps answer some of these questions and alleviate the stress associated with planning out your annual energy budget. Let’s look at some of the tools that have helped me assist my customers with making educated decisions.
Recently, I spoke with a customer who has contracted for the past 15 years, though he feels contracting is usually a good option, he still remembers the time about 6 years ago when he locked in and the market tanked. His contract ended up being higher priced than the local market. This made him feel like he “lost”. I reminded him that other years his contract price was lower than the local market, so I guess you could say that he “won” during those years. I am not a huge fan of the “winning/losing” outlook. Customers will actually benefit more from a contract if they use it to set their budget for the year. When contracting time comes around and someone is ready to lock in their pricing for the year, I ask them a few questions:
Is this a price you feel comfortable with?
Will this price work with your annual budget? If not, what price will?
Do you have a target we should be looking at?
Then question of when is a good time? Again, I look at historical pricing. Below is a chart that shows the highest/lowest offered pricing for over the past 20 years. Click here to see historical pricing. As you can see, fuel pricing tends to be at a lower level Dec-Feb. Though, this may not always be the “winner”, it is a great tool to utilize when making buying decisions. FYI: the best contract price offered last year was 2/14/18, but the best retail price was offered in March 2018. So, this is not perfect, but it gives us a darn good idea of when; not to lock in futures pricing.
My suggestion is to talk to your local energy consultant and clearly explain your needs for the upcoming year. Together, you can come up with a plan for your spring/fall 2019 fuel needs. Again, I want to stress that locking in your fuel supply is not about winning or losing, but focusing on setting a budget for the upcoming season. My final advice that I give to all of my customers is DON’T LOOK BACK! What I mean by that is; after you decide to lock in your fuel price at a value that works for you and your business, don’t drive yourself crazy by watching the market and constantly second guessing yourself and the decision you made. Please feel confident that you made a good decision and though pricing may or may not drop lower, you are going to be OK and a few extra pennies per gallon either way will not make or break your business.
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CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, today reported net income of $775.9 million for the fiscal year that ended Aug. 31, 2018.
“Our fiscal 2018 results show the progress we are making on the priorities we set for CHS,” said Jay Debertin, CHS president and chief executive officer. “Our year-over-year financial performance shows good improvement, our balance sheet is solid, and our relationships with cooperative owners are strong. The diverse CHS business platform allowed us to deliver improved earnings and enables us to return $150 million in cash patronage and equity redemptions to owners even as we navigated challenging market conditions.” (more…)
After you park the combine for the year, you should head to the office to grade your financial success and start planning for the next crop cycle.
Harvest marks the end of one season and the beginning of another. After you park the combine for the year, you should head to the office to grade your financial success and start planning for the next crop cycle.
“Just as the combine gives you absolute production yield, an office-centric mind will give you absolute profitability yield,” says Chris Barron, director of operations and president of Carson and Barron Farms in Rowley, Iowa. “Once harvest ends, take time to understand your production cost.”
Use this time to rest your body and mind and then start planning for a profitable 2019.
“Now you have the time to look at the numbers,” says Ashley Arrington, founder of ag consulting firm Agri Authority and a 10-year veteran of ag banking. “What was this year like? What will next year be like? If you start thinking on these items before beginning next year’s crop cycle, you will be better positioned for a more successful and less stressful year.”
With continued financial stress for many farmers, now is the time to be proactive. Ask yourself the following questions, Arrington and Barron suggest.
Were you on budget for the year? If not, why? Should you alter your budget for next year? Or, was it a one-time expense that you don’t need to account for in the future?
Be sure to calculate each expense in terms of cost per bushel, says Barron, also a financial consultant for Ag View Solutions and Top Producer columnist. “This helps you understand the value of incremental changes. You might assume an expense is significantly higher this year than last year when it might only represent a difference of 2¢ or 3¢ per bushel.”
How close were your income and yield projections? Were variances from your income expectations attributed to prices or yields? Analyze and document the reasons, Arrington suggest. If the answer is yields, was it a one-time event impacting yields or the start of a new yield trend?
Can you pay off your annual operating lines and other loans? If not, how short will you be?
“It is probably best to address this with your primary banker sooner rather than later,” Arrington says. “If addressed quickly you can probably work hand in hand with your banker to create a workable restructuring deal.”
Can you make your annual debt payments on land and equipment? If not, talk to your banker soon and start an action plan to work through the shortfall.
Did all components of my operation make money? Look at each profit center in your operation. For example, did your crop acres fall short and cow herd earn profit?
Analyze the expenses and income for each profit center, Barron suggests. “This is critical to determine which parts of your business are performing and which ones are lagging.”
How will next year be different? Will you need to change some aspects of your operation to be on top of your game for next year?
“If you know you will need to make some necessary land improvements, replace some equipment, or make some large but essential repairs, go ahead and talk to your banker about it,” she says. “Start running the numbers on how the changes could possibly positively impact your operation and decide if the changes will pay for themselves.”