Surviving the Times:

 

I am not telling you something you do not already know, “we are in and will continue to be in tough agricultural times”. Grain and livestock prices are low, milk prices are below low and inputs are still too high.  I’ve been in ag-business for 40 years and have experienced a lot and learned from what I experienced. I have seen times similar to this in the past, they will get better and they will return.

Being in the agricultural finance world I read plenty on what Ag bankers for all over the country are suggesting farmer should do to help weather the current agricultural economy. I would like to share some of their ideas which I feel are important to you and that I agree with.

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Crude Market Update

 

US oil prices are treading water above $60/barrel for the 1st time since 2015.  A little scary for some!  It poses the inevitable question whether or not we secure our fuel now, at what seems to be the high point or wait for a possible drop in the market, but risk a continued rally?  Sometimes looking back at history can help make these tough decisions a little easier.

Since 2013 we have seen the price of the barrel of oil peak at $110, capsize to $26, then roll back to that $50-$60 mark.  After watching this huge price fluctuation over the past decade, this is what we have learned.

Above $80 crude is too high-  Cash flow is ample & investors end up flooding the market by funding way too many drilling rigs, this is corporate greed at its finest.  What this ultimately does though, is send inventories through the roof, while demand stays the same; ultimately reversing the market and we see price fall.

Under $40 crude is too low- Cash flow dries up, investors start to tighten their belts and not only are there no new drilling, but the current drilling starts to shut down.  Basically production comes to a screaming halt, inventories decline; while demand sees no change.  That is when you start to see the price rise.

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Weekly Grain Update – January 17, 2018

1/17/18

USDA Confirms Huge Grain Supply

On Friday, the USDA released its January crop reports and confirmed the huge grain supplies across the globe.  Starting with corn, they raised the final yield on the crop by 1.2 bpa up to 176.6, which is a new record and larger than expected.  However, they did reduce harvested corn acres by 400,000 acres down to 82.7 M and they did reduce planted acres down by 200,000 acres down to 90.2 M.  On the demand side, they left exports and corn used for ethanol unchanged from last month.  They also pegged the December 1st corn stocks at 12.516 B bu which was larger than expected.  When the dust settled, corn ending stocks increased by 25 M bu up to 2.477 B bu.  This is a tremendous amount of corn and March corn futures made a new low on the news, trading down to $3.45 ½.

On beans, the situation was not quite as bearish.  The USDA left the harvested acres unchanged, but reduced the yield by .4 bpa down to 49.1 bpa.  They did increase the amount of beans used for crush by 10 M bu but they did decrease the amount of beans exported out of the country by 65 M bu down to 2.160 B bu.  Even though we did see a yield reduction and an increase in crush, these gains were more than offset by the decrease in exports.  Dec 1st bean stocks came in at 3.157 B bu, which was slightly supportive.  When the dust settled, bean ending stocks increased by 20 M bu up to 470 M bu.

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CHS reports $180.1 million first quarter earnings for fiscal 2018

CHS President and CEO, Jay Debertin

CHS reported net income of $180.1 million for the first quarter of its 2018 fiscal year (three-month period ended Nov. 30, 2017), compared to net income of $209.2 million for the same period a year ago.

Consolidated revenues for the first quarter of fiscal 2018 were $8.0 billion, the same as fiscal 2017. Pretax income was $199.6 million and $225.6 million for the first quarter of fiscal 2018 and 2017, respectively.

“Despite challenging market conditions, CHS experienced a solid first quarter thanks to our continued focus on three key priorities: strengthening relationships, sharpening operational excellence and restoring financial flexibility,” said CHS President and Chief Executive Officer Jay Debertin. “In the first quarter, we recorded solid earnings from our businesses and reduced long-term debt. These actions are helping to strengthen and grow CHS.”

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Weekly Grain Update – January 11, 2018

1/11/18

Major USDA Report on Friday

The USDA will be out with its January crop report at 11 am on Friday.  This will be a significant report and it usually causes a big move, one way or the other, for grain futures at Chicago.  On Friday, the USDA will report Dec 1st grain stocks, update the monthly grain supply and demand tables, and also update the trade on wheat acres planted.  This is a big report with a great amount of information being released.  There is a good chance that the market will be surprised by something, and thus it is likely that the market will gyrate significantly after the numbers are released at 11 am on Friday.  Many feel that the corn yield could grow slightly and many feel the current corn export projection is too high and it needs to be lowered.  If either one of these scenarios happen on Friday, this will cause the already massive corn carryout to grow larger, and this will put downward pressure on the market.

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Calling for 2018 National Ag Day Essay entries

National Ag Day LogoHigh school students across the United States are encouraged to share their views about agriculture’s role in a growing world through the 2018 National Ag Day Essay Contest.

The contest deadline is January 31. This year’s theme is “How Will Agriculture Feed the World?” The contest, organized through Agriculture Council of America (ACA), is divided into two categories: the written essay contest and the video essay contest. Both are national competitions and there will be one winner for each category. (more…)

Weekly Grain Update – January 3, 2018

Cold Start to the New Year

As we start a new year, the market is dealing with several items that have moved to the surface.  First is the extreme cold temperatures across most of the Corn Belt.  This has the market worried about the winter wheat crop and how much damage will be created since many of the acres in the US do not have a snow cover to add protection.  For months, the wheat market has been in a downward slide.  For now, it looks like we might have hit solid support, and are bouncing back.  For those of you who have wheat planted, I would keep my eye on new crop wheat values in the coming weeks.  I believe the wheat market has shifted, and is now on an uptrend, and could move significantly higher.

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Preparing Your Propane-Powered Home for Winter

 

Temperatures are dropping, which means many homeowners are turning up the thermostat to heat their homes. For those who heat their homes with propane, preparation can help make  for a safe and easy transition.

Rural homes in particular require extra steps to keep the inside warm and cozy all winter long. Below are some tips and tricks to help ensure your home is heated by propane  safely and efficiently all winter long.

Inside your home

1. Refill your tank at the beginning of the season. If possible, talk to your dealer about setting up automatic deliveries to make sure your heat stays consistent and you don’t have to worry about your tank running low.  Lastly, check your tank level prior to extreme weather or a long holiday weekend.

2. Have your heating and appliances checked by a technician. A check-up with a qualified service technician will ensure everything is running as efficiently as possible, which will help conserve fuel and save money on utilities.

3. Install a programmable thermostat. Homeowners save an estimated 10 percent per year by using a programmable thermostat. Be sure to set yours to a lower temperature when the house is empty.

4. Adjust your water heater. Heating water is usually a relatively large energy expense. If you haven’t already, set your water heater to no more than 120 degrees Fahrenheit to help cut down on costs.

5. Reverse your ceiling fan blades. Switching your ceiling fan’s blades to run clockwise will push warm air downward.

Outside your home 

1. Clean and store your propane grill. Be certain the tank valve is closed. Scrape any food off the grate, wipe down the outside and refer to the owner’s manual for additional cleaning suggestions. Make sure the grill and the grill cover are completely dry to avoid rusting. If possible, store your grill in a dry place as well.

2. Store only empty propane tanks inside. Ideally, after a long grilling season, your propane canister will be empty. However, if it’s not, don’t store your portable grill tank (or your grill, for that matter) inside your home.

3. Never use portable equipment inside. As much as we’d all like grilled steak in February, the inside of your home is not a safe place to use propane appliances like grills and generators.

4. Clear any debris in your propane appliance vents that may have accumulated (such as bird nesting material) over the summer months.

Preparing your household propane tank and appliances for winter is an important step to ensure the safety and efficiency of your heating. If any questions or uncertainties come up, reach out to our Certified Energy Specialist

Original Source: Andy Ernst CHS Propane Marketing Manager in Safety Tips

How a Larsen Co-op Scholarship Helped Matt

Matthew Johnson, son of CHS Employee Jennifer Johnson, was a recipient of a Larsen Cooperative scholarship back in 2010. After graduating from Iola-Scandinavia, he attended UW Oshkosh for five years. He earned a bachelor’s degree in psychology with a minor in business administration, graduating summa cum laude (“with highest honor”) in the spring of 2015. His honors thesis from UW Oshkosh was entitled “Reaping the Benefits of Meaningful Work.” With this senior research project, he found that people who consider their work to be meaningful (i.e., purposeful and fulfilling) experience work as energizing and inspiring, and that these experiences at work can spill over into non-work life, thereby enriching life as a whole. The project was published in the fall of 2016 in a scientific journal called Stress and Health.

Once he graduated from UW Oshkosh, he was accepted to Central Michigan University (CMU) in 2015 for their graduate program in industrial-organizational (I-O) psychology. With a scientific focus on workplace phenomena, I-O psychology applies the theories and methods of psychology to benefit individual employees, work teams, and entire organizations. For example, how can organizations identify the best candidates for a given job? How can they predict who will perform the job effectively? How can employers help their employees manage work-related stress and prevent the adverse physical and mental health issues that come with it? These are only a few of the questions addressed by I-O psychologists. A few relevant projects that Matt has worked on in grad school include the development of job interview questions, development of an organizational culture assessment, and development of questions for a mobile-phone based selection test for prospective call center employees.

Now entering his third year as a doctoral candidate at CMU, Matt is hard at work on his master’s thesis, studying for comprehensive exams, preparing to teach his first online class, and working on various other projects. His master’s thesis, another independent research project, investigates job crafting. Job crafting is the various ways that employees customize their jobs to better suit their abilities, needs, and preferences.

Once he completes the doctoral program at CMU, Matt hopes to begin a career as an organizational consultant, helping organizations develop systems and tools to identify the best job candidates, hire them, and develop them into outstanding employees.

When asked about the Larsen Scholarship, Matt said, “It was very helpful in getting me started as an undergraduate student. When companies like Larsen give scholarships to young people just starting college, they’re making an investment in those students, an investment in our workforce, and investment in the future of our country.”

CHS Larsen Cooperative encourages their patrons to share this scholarship opportunity with graduating seniors and students already in college. For more information on their scholarship program click here. Students can apply right online; applications are due March 15, 2018.

 

© 2018 CHS Inc.