Management Time

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Partners,

Into the new year! The last few weeks, work-wise, have not been too intense due to holidays and personal time. We have most of our crop inputs ordered for the 2017 crop year: seed, fertilizer, and herbicide. For the most part seed prices and herbicide are steady from last year and fertilizer is down 20-25%. We tried some different herbicide products in 2016 to reduce costs and are looking at more generic products this year. We're also considering ordering some products direct from distributors to cut out middlemen. We have evaluated our equipment situation and are planning very little tweaking to our current lineup. We are replacing a few worn out items—auger and backhoe—but will inspect and repair all other items and put a few more dollars in the repair and maintenance budget. We have come up with a list of some surplus items, mostly livestock stuff, that we are marketing on several sites. We are also planning on raising our bean acreage; due to the increasing prices in the bean market, soy is getting more competitive with corn, especially if we can keep increasing yields. Our labor force is remaining stable although we feel for Marcus being the only employee under 60 on the full-time payroll. 

As for the ag economy, it is interesting that the president elect is waiting to choose a candidate for Secretary of Agriculture till the end of his nomination process. With a new farm bill on the list of legislation in the next two years, the background of the pick will probably play huge into the favored crop legislation process. But with the tighter budget constraints expected, the hope for larger ag subsidies are bleak. We keep in mind that over 60% of the agriculture budget is for the SNAP food assistance program.

On the home front we celebrated a great holiday season. Our whole family was together the day after Christmas. I had a new right knee put in on December 13—recovery going as expected. Marcus and Shanna celebrated a 10 year anniversary with a trip to a warmer climate for a week. The Lord has truly blessed us! 

Hope everyone is having a great 2017—we hope this year is your best ever! 

Steve   

Something for Everyone at the Ag Summit

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Phyllis and I recently returned from the DTN Summit in Chicago - here are the quick takes from the presenters and their topics.

DTN 2016

China and World markets
U.S. Will lead the way in global macro economy
Global demographics that drive food demand are still in place
For global markets there is a supply issue-not a demand problem

Farm Safety Nets & Farm Bill
2012 farm bill not passed till 2014-expect next bill passed quicker as economy worsens
For next cycle a late farm bill will be almost as bad as no farm bill
Farm Policy battle lines- payment limits, crop ins, regulations, snap vs farm programs

Tax Habits - Built to Last
Possible revisions to tax law and estate taxes
Dealing with the IRS-don't go it alone
Lessons on tax planning-need to do every year

Using Precision Ag
Food production must increase by 70% by 2050
We are competing with lower cost producers around the world

Weather
Ocean warming back up now-trending toward normal growing season-trend line yields

Teamwork fundamentals - astronaut Mike Mullane
1. Guard against normalization of Deviance
--Challenging but attainable goals
2. Responsibility & Accountability
--See something-Say something-Do something
3. Courageous self-leadership
--We are better than we think & so is our team!

Checking Ag's Vital Signs - Farm Credit & Rabobank
These financial times are not 80s ag economy repeated
Continued corn & soybean losses in 17 & 18
Producers will exit - just shifts acres to better producers
Need 6-8 mil acres to come out of production-CRP?
The greatest danger in times of turbulence is not turbulence ; but to act with yesterday's logic

Market Outlook-Darrin Newsom
Bean outlook not bullish technically or fundamentally
Ditto corn-stocks to use over 17%-ending stocks 2.4 billion bushels
Wheat is a very ill sister--record stocks globally
Challenges are gifts from Heaven
To achieve without risk is to win without glory
Problems are only opportunities in work clothes
Corn is strong cash price against record stocks
SB weak cash against record demand
Futures & cash will only decouple for so long
Don't look for soybean basis rally throughout this year
Action-buy Dec 3.80 puts .25-.30
Action-HTA 2017 bean production at 10.30

Lots of bullets here - if you have any questions or comments please contact us - very easy through the website!

Have a great holiday season!

Steve

Giving Thanks

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Partners,

We took advantage of the great mild November weather to work on many projects. Last week we completed NH3 fall application--in the fall we apply a half rate of nitrogen along with a nitrogen stabilizer to reduce the chance of leaching. We are also completing a rather large waterway renewal and upgrade project which included two new dry dams. There are pics of the earthwork and seeding above. With the rolling, more fragile type of ground we farm (we do have some nice flat fields as well) we have taken the charge to keep erosion control a priority. This includes regularly maintaining waterways, cleaning and maintaining the over eighty dry dams we have on the property we farm, and maintaining fences and field edges. Even without livestock, on a crop farm of this size there are always projects to keep us busy in the non-crop season.

The Thanksgiving season has given us time to pause and reflect on our blessings. Last week was filled with family, friends, and too much great food! There was plenty of political discussion around the table about what to expect in the next few years--how many campaign promises can be turned into real action? We appreciate the freedoms we enjoy in these United States, and recognize the processes which have led to many of the systems that we have in place--i.e. electoral college, health care, drawing of representative districts. The strength of the dollar since November 8th is one of the indicators we are watching. That affects our competitiveness globally and our commodity prices locally. We are in the process of putting together our crop budgets for this next year, and marketing will again be a very challenging part of our process!

Families are doing well and we look forward to having everyone together during the Christmas season. I will be having knee surgery in a couple of weeks. Marcus and Shanna are going to be celebrating their tenth anniversary this month. 

Fall 2017 prices:

Corn 3.47

Soybeans 9.93  

Let us know what you want to hear about--please leave comments and "Likes" below!

Steve

Last Day

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Partners,

Finished up Tuesday just in time to get the combine to the service center for an inspection, and all the grain tucked in before it started raining. Then the rain continued throughout the day on Wednesday. Harvest was a good one with above trendline corn and soybean yields. We are still compiling all the records to figure specific yields. 

The basis would seem to indicate that all the farm storage built over the last several years has changed the way crops are marketed. The old days of dumping all the extra crop that the bins won't hold at harvest are less. Most farmers are doing a better job managing the extra bushels, marketing-wise. We usually have enough HTAs (hedge to arrive contracts) to soften the blow of overrun bushels and allow us to absorb the extra crop to be marketed more orderly. This year even with the quick harvest due to the weather, there didn't seem to be a real harvest price low.

We put in pictures of my parents--Marcus's grandparents--in the field on the last day of the 2016 harvest. This year was the 62nd harvest by Hesses on the home farm where Marcus & Shanna live. Farming runs deep in the blood of the Doll side of the family also: at the farm where Phyllis and I live, which was homesteaded by Phyllis's ancestors, this year marked the 147th harvest by the Doll family. Marcus is the 6th generation to pick a corn crop here. We love this rich history!

Speaking of history, enjoy this World Series--GO CUBS!!!

 

Current cash prices:

Corn 3.19

Soybeans 9.67

 

Steve

Team Hess

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Partners,

Harvest is moving swiftly along. Last week we had a day that we handled a record number bushels of corn--almost 40,000. In our area there is not a lot of crop left standing. We are down to about 300 acres of corn which is about 3 days worth of good running. Fertilizer is being spread now and we have started tilling the fields for preparation for next year's crop. We appreciate all the good help this fall and the long days that have been put in. The heart of this operation is the people who make it run--all year round.

Prices seem to have been put in a harvest low, but with all the piles of corn across the Midwest it will be a long, slow road to much recovery. There are piles where there have never been piles before. A new challenge is the major appearance of a corn mold--diplodia--in the later picked crop. Apparently the growing conditions this year were perfect for its spread. I cannot ever remember getting dockage for this before.

 

Prices:

Corn 3.26

Soybeans 9.49

 

Stay Safe,

Steve