Outlook

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Partners & Friends,

I attended a farm marketing/economic outlook meeting a couple of weeks ago, here are my Cliff notes from it:

Gulke 7/2022
Ukraine:
-war is going to last a long time
-commodity prices will be strong the next 1-2 years at least
-demand not reduced globally
-Russia is not crippled by sanctions
-Ukraine production is down 30% this year, and estimated to be down 50% in 2023

Fertilizer:
-global fertilizer markets are controlled by few key players
-ammonia prices have more upside than downside
-US phosphate mining industry is mature and end is probably 10-15 years away
-prices are probably at lowest period of year during summer fill
-sanctions are not having much effect on Russian economy; the world needs what they have

Weather:
-warmer and drier the rest of summer
-Europe is warm and somewhat dry
-Australia is having a good crop season
-Russia and Ukraine are having decent weather
-China is wet
-Canada is having a good season
-Brazil is looking average

Economy:
-we are in a recession that started last year
-business profits are non-existent
-inflation is real, world is curing it quickly; Christmas merch way overstocked
-winners are agriculture, automobiles, chips, and defense
-losers are housing and consumer goods
-Europe is sending 80 billion/mth to Russia last month for energy

Gulke Presentation:
-Dow Jones and NASDAQ turning lower—collapse?
-the dollar is making new highs
-soy stock-to-use ratio is tight, will depend on Brazil crop and how high prices move
-corn is trading close to value for expected size of 2022 crop

Wallace:
-sell $5, $550 puts
-Tyson profits $600/hd last year
-US raises as much chicken/year as beef and pork combined

It is hard to believe that summer is already winding down, with school starting in a couple weeks. We are trying to get our construction projects completed so we may begin preparing for harvest. Our summer help will be gone very soon. It is now time to mow the roadsides and waterways; we prefer to wait until late summer to allow wildlife the opportunity to use cover until new hatchlings are able to protect themselves (certainly not because we are too lazy to get it done earlier 🙃). Hay is ready for the third cutting, but finding a weather window between the myriad of pop-up showers and rain predictions (and goat showing schedule) is hindering our ability to do so. We continue to tend to the crops and will spray some check strips of different products next week. It is still felt that this corn crop has quite good potential, and that beans will be at least average if rain and cool temperatures continue.

Ukraine is shipping grain—loaded ships are leaving ports almost daily. China is stirred-up and threatening retaliation for the Pelosi visit. Commodity prices are weakening as the outlook for good yields increases. Most areas seem to be getting some rain.

The family is good. Phyllis and I will be celebrating our 45th anniversary on the 21st. Goat showing is doing quite well. The state fair goat show is next week. 

Fall Prices:

Corn—5.91

Soybeans—13.83

Enjoy what is left of summer!

Steve

Fungicide

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Partners & Friends,

The intensity of field work is finally winding down for the summer. We are spraying our last pass of fungicide on corn and beans. Our new sprayer has proven a huge benefit; we are now able to spray more efficiently with bigger loads (1,200 gallons vs. 1,000 gallons) and a wider boom (120 feet vs. 100 feet). A principal reason to upgrade the machine was to permit the application of 20 gallon/acre of water on the last pass of corn, opposed to the airplane rate of 2 gallon/acre. This thorough coverage of soaking should give the plant more, lasting protection against diseases and insects. We are conducting several field trials this season, which should provide insightful data to judge the value on the more complete coverage. We still feel there is much potential in both the corn and bean crops.

The team continues to stay busy working on the summer construction projects. Our window of extra summer labor will be closing in a few weeks as college and school begin to resume. The Fulton County Fair is this week, with the State Fair ensuing two weeks after.

Management decisions are difficult in this global, volatile situation. I attended a summer marketing meeting last week, which I hope to report on soon. Commodity prices have been in a freefall with the scattered rainfall across the cornbelt; corn and soybeans are down almost $2 and $3/bushel, respectively.

Phyllis and I have been getting some family time now that farming is less intense, including a visit to the Luecht family in Grafton, WI last weekend, and the Steele family and Ali in St. Louis, MO this weekend. Charles and Wilma celebrated their 69th anniversary last Tuesday, the 19th.

Fall Prices:

Corn—5.52

Soybeans—13.03

Stay cool and safe,

Steve

Happy Birthday, USA!

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Partners & Friends,

The 4th of July celebrations this weekend mean we are already to the middle of summer (and year)! The pace of farm activities is a bit easier now that we’ve completed the first cutting of hay and finished the second spraying of corn last week. I just noticed some tassels today, which is good news because it means the corn crop is catching up after a slow start. I have not seen any local sweet corn at the market yet, but it can't be far off! The Hess Family Farm is in full construction mode, with some of the remodeling already at the rebuilding stage. The last of our grain has been shipped; now we need to prepare the grain center and storage bins for new crop. The weather over the next four weeks will be critical. We currently have no excess moisture, but the corn and soybeans are looking very good. The two-week weather forecast shows chances for rain (although nothing substantial) and no extreme heat.

The commodity market absorbed the quarterly grain stocks and planted acreage reports last Thursday with downward movement. The weather over the next few weeks will offer plenty of volatility. There has been some decrease in price in the fertilizer and fuel market, and we are looking to lock in some input (fertilizer, chemicals, seed, and fuel) for the 2023 crop soon. Here in Illinois, the Democrats and Republicans both claimed victory in the Republican primary.🤔 Phyllis opted out of serving as an election judge for the first time in decades due to the unfortunate issues with her eye.😔

The family is keeping busy with vacations, camps, shows, and fireworks. This month of July will fly by with county fairs and meetings to attend.

I hope you all have a great holiday, enjoying and appreciating the freedoms we have here!

Fall Prices:

Corn—5.95

Soybeans—13.90

To read a message from Dennis, a Ukrainian farmer, click here.

Please feel free to leave comments—we do our best to reply to every single one!

Steve

Get Out the Shorts!

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Partners & Friends,

While entering the middle of June, the forecast has turned HOT, with heat indexes over 100. We are trying to get the beans sprayed before June 20 (the last date to spray), but the label says no dicamba on days over 85°. 🙁 We will see what can be accomplished this weekend. The cool, wet weather has been fantastic for crop development, yet the crop is still behind “normal” for growth. This heat should help them catch up, as long as moisture does not run out. Stands of corn and beans are near perfect. Our seed dealer told us that he did not have to send out a single bag of replant seed, which is the first time ever! Corn has potential to be a great crop, depending on weather during and after pollination. Beans are not looking to have record potential, with slow growth and delayed flowering. 

We have arrived in our third season on the farm: construction. This is our window of opportunity to remodel and upgrade facilities and property for better utilization throughout the year. We are upgrading the horse barn at Marcus’ farmstead, remodeling our parlor building for work area and goats, and converting one of the former freestall barns for hay and machine storage. That, along with waterway repairs and driveway improvements, always has our list longer than time and resources permit. The HFF team feel it necessary to continually upgrade to keep the farm—both what we own and the property our landowners contribute—as productive as possible. Haying this summer is frustrating with the recent weather…first cutting should have been completed 2 weeks ago.😐 We have been doing some custom CRP seeding when ground conditions allow, as well as spraying fences and creek banks to control rogue trees and sprouts. We are also still delivering corn and beans; the bins are almost empty. I have never sold $8/bushel corn, but getting very close to that right now. 😁

Questions are looming in the global marketplace: how much crop got planted in Ukraine? How much will they be able to export? How much demand destruction has occurred? What will fertilizer availability and price be next crop season? Where will energy prices top out? Can we agree on a long-term energy policy in the US? How long and deep will this (possible) recession be?

The family is in the throes of summer activities: VBS, camps, goat shows, vacations, ball games, and hopefully a little relaxation. With a few more issues that popped up recently, Phyllis will be tending to her eye for quite a while.

Fall Prices:

Corn—7.06

Soybeans—15.68

Let us know what you want to hear about!

Steve

Planting Green

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Partners & Friends,

Over the past several years, we have been experimenting with cover crops for multiple different reasons. The main reason is soil conservation; a cover on the soil for the non-cropping months helps hold soil in place and reduce erosion. The plant growth can also help collect snow, retain rainfall, and improve moisture recharge in the soil (which is a great balance on tiled ground). Covers also often help soil nutrients to be more readily available for the following corn or bean crop. We are trying to build organic matter on our lighter soils, which improves productivity and value of the fields. This is a very slow process. We have undertaken the cover project entirely on our own, and have tried conveying to the landowners the value we are adding to the property. The expense of seed and seeding cereal rye—the main cover crop used—is around $30/acre. This is a long-term investment, as the benefits are not perceived for several years. A similar example to this is our strip-till and minimum tillage protocols, which are for long-term soil conservation and land sustainability. We are committed to make each acre, whether owned or leased, as productive as economically possible.

The planting season has gone well. As of Tuesday night, corn and bean planting is completed, and all fields are sprayed first pass. Although the rainfall event last Friday was highly variable, every field received some rain, including over 2" at Marcus' homestead along with 20 minutes of hail. We are hoping the weather cooperates and no replanting is necessary, but we have not cleaned up the planters yet either.🙃 We are beginning to sidedress NH3 on the corn and will try to get hay put up during the weather windows over the coming weeks. We are also delivering grain as fast as allowed to keep cash flowing. A long list of summer projects will be getting our attention soon as well.

Commodity prices have surged higher yet again; there is so much uncertainty of worldwide production and availability. India has stopped wheat exports. And in the situation that Ukraine does produce a crop, their ability to export looks questionable. Energy prices are at all time highs. Yet the president is throwing money at the agriculture sector to "boost" production…next year. 🤔

The grandkids get out of school for the summer this week. However, there remain countless scheduling conflicts and challenges between the entire family that make it difficult to plan get-togethers or vacations sooner than multiple months out.😔 Phyllis continues to nurse her left eye (prayers are always appreciated). One of our high school team members, JD Runyan, placed in the Top 18 in a National Pitch Competition (more details in picture above). Congratulations to him!

Fall Prices:

Corn—7.40

Soybeans—15.20

Thanks for reading,

Steve