Is Contracting Your Fuel for Spring/Fall Really that Important?


Do I really need to contract? When is the right time to contract? How do I know if I’m getting a good price? Why is the price of the contract higher than today’s price?

Over the years, there has been a lot of discussion and even a slight bit of controversy over the subject of fuel contracting on the farm. Let me tell you this, there are no right or wrong answers to these questions. I honestly don’t know if these are even the questions you want to be asking yourself when thinking about contracting.

Since last year at this time crude oil has risen almost 50%, and most of our commodities have followed suit. I remember a few years back; when OPEC signed their 1st production cut agreement, speculators were calling for $65-$70/barrel crude. At the time, that seemed pretty far fetched. Back then, the norm was about $45/barrel- and there really wasn’t a whole lot of volatility. Well, it may have taken two years, but today’s crude oil value is $68.50, And it seems to be pretty darn comfortable in that spot! Anyone that locked in last winter when crude was $10-$15 barrel lower, for 2018 spring/fall did pretty well (so far!).

We have also witnessed it go the opposite direction. 2013-2014, led way to all time crude oil highs, we saw crude rise up to over $100/barrel. This frightened many and we all locked in, maybe a bit early (Sept./Oct.) for the following Spring. By the time planting came around, the energy markets tanked and we saw crude oil; basically in the clearance aisle, down 50%. When this kind of stuff happens, it stings…for a long time! But, I will tell you this, although diesel prices dropped to more than $1 lower than most customers lock in, we all survived. Why? Because we budgeted for the original contract price. Did that make it sting any less, no…but again, we all survived and lived to see another crazy season.

So, let’s go back to the original questions:
Do I really need to contract? That depends, how bad will it hurt you, financially if diesel spikes up over $1+ higher than current pricing?

Does contracting give you piece of mind? Do you like to gamble? When is the right time to contract? There is no right or wrong time to contract. Historically, pricing is at it’s best between December & March…but history doesn’t always repeat itself! Leaning on your energy sales consultant is the best idea.

How do I know if i’m getting a good price? What is a good price? The question you really need to ask yourself is, does this price work with my annual budget? In other words, can I spend this much for fuel and still make a profit?

Why is the price of the contract higher than today’s price? Contract prices can sometimes be higher than the current rack price (not always) because we are buying futures. With futures there is always a risk, and risky behavior comes with a higher price-tag.

Speculation of the futures markets can also wreak havoc on contract pricing- will there be supply issues in spring/fall? Will there be a bumper crop and cause higher demand for fall? Will OPEC make more production cuts this year? These types of conversations will definitely raise eyebrows and lock in pricing!

Back to the question of “Is contracting your fuel important?” Yes it is, but it is not the best option for everyone. Only you can make that decision if contracting is right for you.

One statement I make to my customers: don’t look back. What I mean by that is, if you lock in your fuel at a price you are happy with, stop shopping for a lower price. There is always going to be a lower price, but there is also going to be a higher price. For your own piece of mind, lock it in and forget about it-don’t look back -you might trip over something in front of you!

Make a Smooth Transition to New Corn Silage


Opening up new silage is commonly associated with a dip in milk production, but the transition can be smoother — and less costly for producers — with a few easy fixes.


“In the fall, producers often tell us they see a drop in milk production,” says Renato Schmidt, Ph.D., Technical Services – Forage, Lallemand Animal Nutrition. “This is usually due to an abrupt change from old corn silage to recently fermented corn silage. It takes a little planning to ease this transition, but it’s worth it to maintain peak milk production.”


Producers can make adjustments at harvest, during ensiling and after the new silage is opened.


During harvest, Dr. Schmidt recommends adding a proven silage inoculant containing enzymes, like Biotal® Buchneri 500. Inoculants with high activity enzymes can help break down plant fiber, which improves fiber digestibility. The product label should clearly indicate guaranteed levels validated by independent research studies.


Lactic acid bacteria (LAB) — like Lactobacillus buchneri NCIMB 40788 and Pediococcus pentosaceus 12455 — in silage inoculants also help initiate a fast, efficient fermentation immediately after ensiling, which works to help prevent milk production drops by maintaining feed quality.


After ensiling, Dr. Schmidt recommends waiting until the starch is more digestible to open. Ideally, producers should wait at least four months before feeding. This is particularly important for forage harvested above 35 percent dry matter (DM) and/or flint corn varieties.


When producers are ready to open the new silage, make the transition gradual and adjust the ration to balance changes in dry matter (DM) and nutrient content. Switch silages over a 10- to 14-day period. New silage can be introduced as 25 percent of the silage portion of the ration in the first three days, then 50 percent of the ration the next three days, and so on until the transition is complete.


“It’s important to have the new silage analyzed during the transition,” Dr. Schmidt recommends. “The analysis undertaken covers fermentation profile, NDF digestibility and starch digestibility, plus the associated rate values. Forage can range in composition among silage structures and between years. What you harvested last year can have a different nutrient value than the new forage. Part of the fall slump is cattle reacting to those changes in the feedstuff composition. Testing and adjusting the ration can help minimize fluctuations.”


During the transition from old to new silage, herds are particularly vulnerable to Sub Acute Ruminal Acidosis (SARA) due to high levels of fermentable sugars in the silage. SARA is a sustained period of time with lowered pH levels in the rumen. When rumen pH dips below 6, cellulolytic bacterial activity is decreased and fiber digestion are impaired.1 As a result, milk production and feed efficiency can suffer.2,3


Supplementing feed with an active dry yeast (ADY) probiotic helps increase pH and improve fiber digestibility in the rumen. Results from multiple trials show cows fed a specific strain of ADY, Saccharomyces cerevisiae CNCM I-1077, had an increase of 2.1 pounds of 3.5 percent fat-corrected milk (FCM) and were more efficient than controls.4


“When SARA occurs, it’s difficult for cows to make the best use of any ration — no matter how expertly analyzed or carefully introduced,” Dr. Schmidt says. “There’s no substitute for making a smooth transition from old to new silage, but a proven probiotic can help optimize the rumen environment and maintain peak performance even during changes to the ration.”

Original Blog Post by Lallemand Animal Nutrition

Omro Fire Department Hosts Emergency Response Fire Training

The Omro Fire Dept., in partnership with the Wisconsin Propane Education & Research Council (WiPERC), hosted an emergency response, live propane fire training on Monday, August 13, 2018. Approximately 50 fire fighters from the Omro Fire Dept. and surrounding areas were in attendance.  At times during the training, area residents may have seen flames shooting 20 feet or more into the air.  Local media and other observers were welcome to watch.

The training consist of classroom instruction on the physical properties of propane and a hands-on portion that includes five fire scenarios including a grill, forklift, bulk tank, and propane terminal piping props. All hands-on training is overseen by Wisconsin certified fire instructors, FIRE LLC and is conducted in accordance with NFPA 1403. The Omro Fire Dept. is providing local coordination and the location for the training.  The WiPERC estimates the value of this training is $4,000 to $5,000 depending on the size of the group trained and the number of trainers required.

Propane was provided by CHS Larsen Cooperative, who is a WPGA member and participates in the propane industry check-off program, which provides the funding for this training.

“We were happy to be able to provide the propane for this training as we find great value in our local fire departments understanding the dangers and risks in propane safety,” said Pat Brosseau, CHS Larsen Co-op Energy Department Manager.

 The Wisconsin Propane Education & Research Council is the education foundation of the Wisconsin Propane Gas Association (WPGA).

For more information on this program contact Emma Corning, WPGA/WiPERC Executive Director at or 608-210-3307.

Grain Update – August 23, 2018

Written August 16, 2018

The USDA Gives The Industry A Bearish Outlook.  Corn Demand Remains Stout, But No Trade With China Is Causing Beans To Stack Up.

The USDA released its August monthly crop report last Friday, and shocked the industry with its findings.  Starting off with corn, it left last years supply and demand table the same as last month and made no changes.  However, for the ‘18/19 crop year, the USDA raised the corn yield 4.4 bpa up to a whopping 178.4 bpa.  Many times the USDA raises the yield in the August report based on the weather and crop conditions during the summer months.  However, the increase from 174 last month to 178.4 this month was a rather large one month adjustment, and it surprised many in the industry.  This increase in corn yield caused total production to increase by 357 M bu up to 14.587 B bu.  The USDA increased feed usage by 100 M bu up to 5.525 B bu and also increased corn exports by 125 M bu up to 2.35 B bu.  All of these adjustments caused the ending stocks for next year to grow by 132 M bu up to 1.684 B bu.  Obviously, the increase in yield was the over riding change and even though feed and exports improved, they were more than offset by the yield.


Grain Update – August 2, 2018


World Wheat Production Problems Causing a Huge Wheat Rally.  Corn Tags Along For The Ride.

Grain prices have rebounded significantly in the last three weeks due to world wheat production problems and a very strong corn demand outlook.  In the midst of all of this, the Chinese are talking with the US again about working on the tariff issue.  All of these factors have placed a bid under the market and now we have grain futures significantly higher.  Corn has rallied 31 cents from its low, beans are 67 cents off their recent low, and wheat is a whopping 94 cents off its recent low.  These levels might not be exactly what you want, but if you have old crop corn or beans left in the bin or in storage, or if you don’t have enough new crop corn or beans sold for harvest, you need to be paying attention.  This is your opportunity to make catch up sales and put a plan together to help salvage your revenue for the year.

Lets look into the details.  Over the last month, several wheat producing areas of the world are having incredible problems with their wheat crop.  Canada, Europe, Black Sea, Ukraine, and Australia are all suffering from reduced wheat yields due to a lack of rain.  Then last week, the wheat tour witnessed better yields in the Dakota’s compared to last year’s drought, but the current yields of the hard red spring wheat crop is significantly less than the market thought was in the field.  All of this news have caused the bulls to have the upper hand and have pushed wheat futures significantly higher.  The funds were short roughly 10,000 contracts of Chicago wheat.  This news has forced these funds to cover their short positions and to go long.  Today, they are probably close to 50,000 contracts long of Chicago wheat futures.  If the world wants to buy wheat, they come to Chicago and buy wheat futures, and this is what we are seeing.  Currently, September wheat futures at Chicago are trading at $5.65.  The next high point in the chart is at $5.70, which should be attainable in the next day or so.  The contract high is $6.12.  They way this market is acting, I believe this level will be challenged as well in the next week or so.  When a market continues to trade higher each day, no matter the news, it has legs and it will challenge the past highs.  Volatility will ramp up, and the market will start to gyrate around as a top is made.


Save Input Costs

No matter the crops you grow it is important to know what your soil fertility is.  Having soil sampling done by our CHS YieldPoint™ Team, can help you, the grower, apply the correct amount of nutrients based on your soil sampling results. With these results you are able to increasing your economic return per acre. Unfortunately, with crop prices low it’s very important to keep your inputs low when possible. Producers can realize a significant savings by reducing or eliminating unnecessary nutrient applications based on their sampling results. Contact our CHS YieldPoint™ Team, to schedule a time to do your soil sampling.

by Olivia Wagenson, CHS YieldPoint™ Specialist

Energy Market Update – July

The past month has been pretty exciting in the energy sector.  We saw some huge jumps, there were days the market gained over $3/barrel and days it lost that much and more.

Looking back, crude oil was valued at $65.91 30 days ago, it saw its highest price on June 27th at a whopping $77.41, then ended it’s month long adventure, currently sitting at $68.06.  That’s puts it up about 3.5% in the past month.  Compared to last year at this time though… we are 32% higher, crude was at $46.02/barrel!  What a difference a year can make!

Now let’s take a look at the energy commodities: Over the past 30 days the only commodity to follow crude oil was Propane, seeing a 4% rate increase; in the heat of summer.  This is super odd, since we would expect propane to run its own show during times of what should be higher supply and low demand.  But thanks to the continued record exports, our supply is not building like it used to!  I wonder if the propane “summer fill” will become a thing of the past?  Will we as consumers be forced to start tinkering with the idea of full year lock in pricing, as opposed to winter lock-ins???

Gasoline and Diesel played a little different game this month.  While Crude & Propane both saw small increased values, Gas & Diesel both ended this 30 stretch with small losses.  Gas was down about ¾% which amounts to about 1.5 pennies, while diesel was a little more aggressive with a 2.5% loss; equaling a little over a nickel.  It’s odd that we saw these losses especially with the higher crude values, then factor in that we are technically right in the middle of our official “driving season”.

Now, why so much volatility this month?  First off, OPEC, with the help of Russia was very vocal this past month.  Looks like Venezuela, as expected is down for the count, they have totally discontinued all oil production indefinitely, mid to late June this created quite a stir with fear of a total lack of supply.  But don’t worry, Russia and Saudi Arabia and going to pitch in and help out!  Both countries were allowed to break their cut agreements with OPEC and start producing right around 600,000 more BPD!  But, wait just a minute, after this verbal agreement was made, our President decided to take to twitter and praise the efforts of OPEC and their way of handling the lack of supply.  Nice gesture, right?  Well, I think everyone forgot how much the Iranians hate our President.  After Mohammed Taed, Iran’s OPEC rep saw this, he was like…not so fast, I think our supply is fine.  He then, went on this big crusade to stop Russia and Saudi from producing more Oil.  After a few days of serious energy volatility, his efforts failed and everything reverted to the original plan.  Just as things got back to normal and markets settled down and were getting comfy in that $70/barrel range, our dear President once again, took to twitter urging other countries to stop buying oil from Iran!  And the cycle of volatility continues!

The next month may be interesting; we are anticipating more crude oil production over seas, but on the other side things Canada has recently seen some major production woes.  This is also the time of year for refinery maintenance.  I think refineries have been putting off their scheduled maintenance because of crude oil and commodity values, trying to hold off until pricing comes down.  What I see happening in the past week though, is unscheduled ER maintenance and breakdowns.  So, I kind of think they are not doing themselves any favors by being a little greedy and postponing those scheduled repairs. The China & Canadian tariffs may continue to play a small part in our fuel values also, I see this as more long term than short though.

Now, what can you do as consumers to protect yourself with the prospect of continued volatility?

  • Know your annual fuel budget
    • How much can you spend on diesel/propane?
  • Be realistic with pricing
    • If diesel is $2.50 at the pumps, it’s certainly not going to be $1.50 delivered on the farm!
  • Communicate your needs to your energy consultant
    • Look at contracting during your peak use times
    • Communicate this with your energy consultant
  • Look for ways to become more efficient
    • New windows/more insulation/new appliances-LP savings
    • Maybe you need to look at a higher quality diesel engine oil to improve fuel economy
    • Look at new technology for planting-Precision Planting?
    • Maybe add more fuel tank capacity at your site- more fuel available/better pricing

With the lower value of milk and the rising costs of fuel, building materials and just about everything else we need to stay in business, this has not been an easy last year for most.  But, I like to think that, if we all continue to work hard-together; everything will work out in the end.  It has to- I love what I do for a living and I want to keep doing it for at least another 20 years & I need all of you to keep doing what you do, to make this happen!

by Kim Leisner, Energy Sales Manager

Grain Update – July 19, 2018


Its All About Politics & Weather. Are Your Ready When Grain Prices Rebound?

The USDA was out with its July crop report last Thursday and indicated a tighter corn scenario but a weaker bean scenario for the upcoming crop year.  Let’s look at the details.

For old crop corn, the USDA cut feed usage by 50 M bu down to 5.45 B bu, but increased corn exports by 100 M bu up to 2.4 B bu.  The other major change was an increase in corn used for ethanol by 25 M bu up to 5.6 B bu.  When the dust settled for old crop corn, ending stocks were reduced by 75 M bu down to 2.027 B bu.  Many in the industry are wondering why feed usage is going down, especially when you consider how much the price on corn has dropped in recent weeks.  The increase in exports makes sense as the US has the cheapest corn in the world now, and with Argentina having a drought and Brazil having reduced yields due to a lack of rain, the world simply does not have an excess of corn, except for the US.  However, old crop corn carry out still starts with a “2”.  This generally puts the market in comfort mode.  But looking right around the corner at the new crop picture, and things tighten up considerably.


CHS reports net income of $229.3 million for the 3rd quarter of fiscal 2018

CHS income
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, reported net income on July 11, 2018, of $229.3 million for the third quarter of its 2018 fiscal year (three-month period ended May 31, 2018), compared to a net loss of $45.2 million for the same time period a year ago.

Consolidated revenues for the third quarter of fiscal 2018 were $9.0 billion, up from $8.6 billion for the third quarter of fiscal 2017. Pretax income was $289.4 million for the third quarter of fiscal 2018, compared to a loss of $209.2 million for the same period the prior fiscal year.

“Thanks to the hard work of many throughout CHS, we’ve made great strides this year in strengthening relationships, optimizing operations and improving results from our core businesses,” said CHS President and CEO Jay Debertin. “The steps we’ve taken will better position us to navigate the inevitable cycles in agriculture and energy. I am proud of our team and their dedication and commitment to operating with excellence.” (more…)

Benefits of Post-Emergence Soil-Applied Herbicide

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