New Year

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Partners,

The new year is moving so quickly! We are diligently finishing up last year’s records, getting W-2s and 1099s out, looking back at what we learned last year, and making plans about what to adjust for 2019. Our office seems to be a beehive of activity with some late nights involved. Schools are all back in session but there have been several late starts and snow/ice days this past week. The official snowfall this past weekend was around 14" and more is forecasted for tomorrow. Marcus attended the Top Producer meeting in Chicago this week and brought home some new management ideas. Steve was at the Precision Planting meeting in Tremont Thursday for catching up on the latest updates in planter technology.

The government shutdown has affected us a bit. The local FSA office is closed but will reopen for three days next week; but there is very little traffic through there this time of year anyway. The soybean market is very volatile according to who-says-what about trade negotiations with China. It seems that agriculture supports a border wall but also wants a rewrite of immigration policy to allow foreign workers access to our labor market legally. Now the leadership of the house wants to take a vacation! All of this political brinkmanship is quite the show to watch. 

All children and grandchildren back in school -  at home, elementary school, or college . All the snow days are enjoyed (except for the makeup work). Lots of sledding and snowman building. Phyllis and i hope to make it south for a bit in February. 

Current prices:

Corn 3.56

Soybeans 8.54

Fall Prices:

Corn 3.68

Soybeans 9.00

Be careful in the winter weather!

Steve

Notes from the 2018 DTN Summit

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Ag Secretary Sonny Perdue

  • Trusting but verifying China trade reform

  • China rising storm

  • China growth rate lowest in over a decade

  • Huge food deficits

  • Rural to city population move continuing along with higher food standards

  • Asian swine flu causing major disruption of meat consumption & prices

Grain Marketing

  • # of farms in US has declined 23% in 30 years

  • # of acres farmed has declined 3%

  • Bunge-1818

  • Louis Dreyfus-1851

  • Cargill-1865

  • Average managed futures fund- 4.5 years lifespan

Jim Carroll, Futurist

  • 7 out of 10 children will work in jobs not existing today

  • Multiple trends merge, speed accelerates

  • Massive transformation, crazy ideas, bold thinking

  • Every industry becomes a software industry

  • Moore's law defines innovation velocity

  • Science exponentiates

  • Strategies scrambled

  • Reinvention dominates

  • Time collapses with advanced methodologies

  • Global trends globalize

  • Science, health and tech get married

  • Packaging changes, packaging connects

  • Gamers game, virtualization emerges

  • FarmVille

  • Generations change

  • Think big, start small, scale fast

Blockchain

  • Bitcoin or some digital currency will become common

  • Connected computers reaching agreement over shared data

  • Public Key Encryption

  • Any supplier of leafy greens to Walmart must use blockchain

  • Product traceability in 2.2 seconds

  • Market transparency

  • Security Efficiency

Improving Your Family's Business Together

  • Ownership vs Management

  • The change from business to legacy

  • Healthy communication

  • Articulated expectations

  • Agreement on goals

  • Accept & respect

  • Professional development & emotional intelligence

  • Understanding business performance

2019 Weather-Rolling Sevens, Bryce Anderson

  • Weather looking like 7th growing season with no big problems

  • There is enough corn acreage planted that we are affecting summer weather patterns

  • Slowest harvest since 2009

  • 70% chance of weak El Niño into summer of 2019

  • Colder than normal winter - winter lasting into March

  • Cold & reduced snow

  • Global warming continues - not so much in Midwest US

  • More weather volatility coming-heavier spring rains, drier warmer summers

Market Outlook, Todd Hultman

  • In 2015 extreme poverty fell to 10% of world population (>$1.90/day)

  • World demand for soybeans up 260% in 30 years

  • Cash corn price range estimate 2.40-3.80

  • Cash wheat price range estimate 3.80-5.50

  • Cash soybean price range estimate 6.50-9.50

April Fools

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Partners,

Growing up, on the 1st of April every year my mom would wake us up announcing, "It snowed last night!" Then there would be a pause and the words, "Aprils Fools!" Well this year the trick was on us: we received about 3-4 inches of white stuff on April 1st. It was gone the next day, but we enjoyed the beauty of it while it lasted.

On the farm we are keeping busy with hooking up our new (to us) planter, tractor maintenance, building organization, grandbaby sitting, and tree clearing. The weather has not been conducive to planting and it is actually giving the market some support. Today's farmer has proven over and over the past decade that we can put 80% of the crop in the ground in a week, so this delay isn't too serious yet, but another two week forecast of wet and cold will start getting attention. We know one of the keys to high production is early planting. 

The farm economy seems to be in a holding pattern. Our friends in the dairy industry are really suffering with low prices, and even the Wall Street Journal picked up on the issue for a front page story. We are watching the trade talk negotiations going on which looks to me like posturing and some scare tactics to let our trading partners know we are tired of giving away the farm to reach a deal. If nothing else our president does have a lot of experience making deals. Stay tuned where this one goes, and ag is usually one of the first whipping boys for retaliatory measures.

The family is doing well and we appreciate all the blessings of health and new life. Opa and Oma got to meet their 10th great-grandchild (our niece's son) this week. Alison is still in college search mode for the right fit. Our house reconstruction has begun and looks to be a longer process than we would prefer, but it'll be nice when it's done.

Fall Prices:

Corn 3.80

Soybeans 10.09

Keep in touch,

Steve

Same Kind of Different

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Partners,                   

We are keeping as busy as we want to be at this time of year.  It won’t be long until we find ourselves back in the field!

I want everyone to know that things do change here on the farm.  Here is a list of some changes we are implementing for the 2018 cropping season:

  • Per our fertility consultant’s advice, we are applying higher rates of dry fertilizer. (Producing larger crops means more nutrients taken from the soil.) This has increased our dry fertilizer cost approximately 15%.
  • We will be implementing an improved method of nitrogen application (split applying) in order to increase N efficiency and reduce nitrate runoff.
  • One result of the water quality study we have been participating in is to see how we can supply N to the plant when needed with less chance for leaching.
  • We are applying supplemental elemental sulfur to all acres with a straight spread of P and K. With fewer coal-fired power plants there is a decrease in available sulfur in the soil.
  • We plan to reduce soybean seed planting population. Research shows lower populations do not reduce economic yield. The money we save on seed is spent on inoculants and biologicals and seed treatments.
  • We are planting more full-season varieties of corn and soybeans.  This may result in additional drying costs, but will help prevent phantom yield loss in corn, and help keep moisture in the SB crop to reduce harvest loss.
  • We are using multi-mode of action herbicides for pre-plant and post-planting to help prevent weed resistance. Our biggest weed issue right now is tall water hemp. We have been told that the invasive plant, palmer amaranth, is only a county away and it is a very tough weed to combat.
  • We are moving forward with the purchase of an additional planter for soybeans. Even though this does increase our equipment cost per acre, we expect an increase in yield since we will have the ability to plant corn and beans at the same time. Research shows higher yield in both crops when planted by the first of May. This is going to increase pressure for the two-week planting window so any offers for planting assistance would be welcome!
  • We are putting sensors on our planter to give us the ability to measure soil organic matter on the go. We hope to use this data to fine-tune our management zones for our multi-hybrid planting (seeding rates and varieties). 

The planter has been delivered and we are in process of getting both units hooked up and ready. Some parts are replaced almost every year. We have also been shipping corn, and hoping our seed beans will be called for delivery soon. 

The agriculture industry is watching with great interest the trade talks with our partners and the buzz about changing the RFS (renewable fuel) standards. It has been estimated that within 5 years Brazil will grow more corn than the US. We need world trade and cannot afford to seem like the bullies on the block!  Grain markets are showing some life as the drought in Argentina hangs on. 

Family is doing well--Lindsay and Keith had their third son on March 4th. Alison is on a school trip to Germany during spring break and is still undecided about college choice. Phyllis and I have returned from a few weeks in Florida.

Fall bids--

Corn--3.70

SB--10.14

Keep in touch,

Steve

Data Decisions

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Partners,

We are in the middle of winter, reminding ourselves that we live in Illinois and winters can be harsh! Doing chores for the heifers can be brutal some days, especially when the waterers are having issues. We do have two waterers currently that we cannot thaw out. Thank goodness the temperatures are moderating and hopefully soon we can get back to normal operation.

It is still meeting season. Last week Marcus and I attended the Precision Planting Conference in Tremont to learn the latest agronomy tips and equipment available to raise corn, soybeans, and wheat. The planting pass is the most important one of the year and we are learning new things all the time about how to fine tune the process to give us a better chance of successful harvest. It struck me during the meeting how much data is digested in agriculture now, to come up with practices which will give us better chances of economic success. The technology in our multi-hybrid planter is coming of age, and the decision process regarding how to place varieties is being modified all the time. The number of tests and trials to pick which agronomic practices to implement is mind boggling. After 40+ years of farming and collecting data, I finally feel like we are getting useful information for decision making out of the time and money spent collecting the mass of information.

Also striking is the amount of money we must spend to keep up with the equipment technology advances. Our technology budget is around $10/acre/year. One of our take-homes from our data analysis is that we should be able to pencil in a payoff of a separate bean planter in three years or less. Having the ability to plant beans and corn at the same time, and planting in narrower rows to take advantage of sunlight and weed control make this decision seem like an easy one. We are also adding seed firmers to the planter which will be able to sense five things on the seed trench, on the go while planting.

Agriculture is trying to digest the new tax laws. It appears to me that we will have somewhat reduced personal taxes, while the tax rates for our corporation will be higher. We have unlimited equipment write-offs but what good is that in an environment of such low margins? The president's appearance at the American Farm Bureau annual meeting was a great PR event, but little substance. Fuel prices are slowly rising as crude oil supplies remain tight. 

Family is doing well. School is back in session for all elementary and high school students and college professors in the family. Alison has applied to several colleges of her choice. Our house had a pipe freeze and break and we have been drying out for two weeks now. Phyllis slipped on the ice and is slowly recovering from two cracked vertebrae.

Fall Prices:

Corn 3.51

Soybeans 9.58 

Steve