340 E 13th Street  |  PO Box 1205
Junction City, KS 66441
785-238-4177  |  877-838-4177


Stock Market Crash

*Markets average one 14% annual decline

*Daily dips of 2% or more occur about 5 times/year

*Every 5 years or so, markets decline more than 30%

*Markets rise 3 out of 4 years

*Over long periods of time, markets significantly beat inflation

*Selling low and buying high never works

*Turn off the TV and don’t check your account

*Never make important decisions based on emotions


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Marketing Awareness

Corn and soybeans are both carry markets.  The deferred months are trading at good premiums compared to the nearby futures contracts.  2018 cash corn bid is $3.23, new crop 2019 corn bid is $3.58/bu, or a 35 cent, or 11% premium.  2018 cash soybean bid is $7.38, new crop 2019 is $8.25/bu, or a 87 cent, or 12% premium.  The 2019 new crop bids are much closer to profitable levels.

Producers would do well to plan their 2019 grain sales.  My suggestion would be to market 70% of APH yields, split into thirds.  Offer 1/3 of these bushels at $3.70/bu for 2019, 1/3 at $3.90/bu and 1/3 at $4.10/bu.  If  the price were to go higher than these levels, producers would still have more bushels to sell, assuming normal yields.  I would suggest a similar stategy on soybeans, offer 1/3 of the bushels at $8.50/bu, 1/3 at $9.00, 1/3 at $9.50/bu.  If these offers do not all fill by July 5, 2019, producers should reset offers to reflect market conditions.

Forward marketing grain is an option that does not cost the producer money.  Planning for and selling grain at profitable levels are important tasks and must be given priority.

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In 1960, the national corn yield was 52 bushels per acre.  In 2018, the corn yield is estimated at 178.4 bushels per acre.  In 1960, the national soybean yield was 23 bushels per acre, compared to the 52.8 bushels per acre yield forecast for 2018.  This incredible increase in yields is due to greatly improved hybrids, better weed control, new technologies is preparing, planting and harvesting the crops, and a greater degree of management by 21st century producers.

With equipment that is larger and more efficient than in the past, producers are able to farm more acres and raise bigger yields from those acres.  These producers supply an increasingly larger corn crop for livestock production, ethanol production and exports while still are not increasing the acres that are devoted to production.  The soybean crop is used for livestock feed, human consumption and various other products and for the export market.

One of the effects of the great increase in per acre productivity is the steadily increasing long term land price.  Producers and landlords are willing to pay ever higher prices for land that are at least partially justified by increased per acre productivity of the land.

The increase in productivity of American agriculture is an amazing success story.

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Summer 2018

We are in the midst of a local drought. This seems to be foremost on producer’s minds.
Producers who are proactive and good marketers have new crop sales on at good prices. But dryland corn looks to be a near bust this year. Some producers are scaling back or canceling sales to more accurately reflect current production levels. There is a lot of feed crops planted wheat stubble and in places where the corn has been chopped, milo or sudangrass is being planted for cattle feed. Producers have also scaled back or stopped machinery purchases.
Most producers will survive through these trying times and will see better situations in the years to come. They have seen times like this before, and likely will see them again if they farm long enough. On the brighter side, the soybean crop needs timely rains, but we still have a chance for good yields.
Reflecting on the drought we are currently facing, I am reminded of the old saying “When times are good, we borrow money. When times are bad, we pay it back!”

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Successful producers are people who can make a decision.  They do the research, do the homework, and make a decision.  But we all screw up and make bad decisions sometimes.  But the successful producers are quick to react and fix the bad decision they made.  The ability to make a decision rationally helps producers in all facets of their operations.  Good marketing means making good decisions, even if they are not at the top of the market.

Good grain marketers:

1.  Control emotions.

2.  Know their cost of production.

3.  Tailor their plan to sell at a profit.  The good marketer is always looking forward for pricing opportunities.

4.  Make decisions based on profit, not price.

5.  Have a written marketing plan.  This plan is subject to occasional revision, but not constant second guessing.  They know how many bushels they produce and they try to market these bushels.

January is a good time to develop a marketing plan.  Make your marketing plan now and act on it.

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I would propose that December is a good time to formulate a marketing plan for 2018.
To start the plan, take your anticipated planted acres times your APH. Take that number times 70% and try to get that number of bushels forward contracted. Most people are happy with three pricing levels that would fill as prices rise. If all three levels get filled, your marketing problem could be that you have additional bushels to sell at a good price.
The corn market has good carry in it, while the wheat market has tremendous carry in. The soybean market has a modest carry in it. With carries all the way to next harvest, the new crop price levels are better than nearby prices by as much as 10% to 20%.
I would suggest the following:
1/3 new crop corn $3.50/bu, 1/3 at $3.80, 1/3 ar $4.00

1/3 new crop beans $9.20/bu, 1/3 at $9.60, 1/3 at $10.00

1/3 new crop wheat $3.90, 1/3 at $4.20, 1/3 at $4.50
For wheat, revisit the marketing plan April 1, 2018, for fall crops revisit the marketing plan August 1. If no sales have been made by these deadlines, either contract some grain, or put offers in at lower prices.
These are prices that could be obtained without a large rally. Also, many producers should be able to make a profit at these prices.
I saw this on Twitter lately, ” January soybeans at $10 is a thousand times better than bitcoin at $10,000.” As always, we need to stay focused on what is important.

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Xtend Soybeans

A few things have become more clear as we are finishing the 2017 growing season.  Driving around the country, most of the clean soybeans fields seem to be Xtend soybeans.  Liberty Link soybean fields look pretty good, too, but Roundup Ready fields are really struggling with water hemp and palmer amaranth.

We had good luck this season spraying Engenia.  We tried to follow all the rules with speed, pressure, tips, gallons, boom height, wind speed and buffers.  Physical drift did not seem to cause trouble.  The trouble we had seemed to be caused by the volatility of the dicamba compound.  We deposited the spray correctly to the growing crop, but vapor seems to come off the crop for several days and move to adjacent non-dicamba soybeans. Temperature inversions don’t help us any either.  Non-dicamba tolerant soybeans are very sensitive to extremely low doses of dicamba.

Dicamba damaged soybeans exhibit cupping and in some cases, stunted soybeans plants.  Most of the damaged soybeans seem to have good pod counts and lots of blooms, so we are hopeful the yields will be alright on these damaged soybeans.  Stunting causes the soybeans to not grow as thick or shade the ground as well as non-damaged soybeans.  Nobody wants to see their beans damaged by the neighbor’s chemical drift!

We will recommend Xtend soybeans for 2018.  This is partly a defensive measure against dicamba drift from neighbor’s fields.  We still don’t have a good answer to control volatility of the dicamba products.  The Extend soybeans benefit from the newest genetics.  With these genetics, we feel like Extend beans will be top yielding soybeans.  Roundup Ready and Liberty Link do not benefit from the newest genetics.

Growers do not like the feeling that they are being “forced” to plant Xtend soybeans.  Part of the complaint is the additional cost with Xtend soybeans.  The cost will be somewhat offset with lower in crop costs for an Engenia and glyphosate application, as compared to one or two trips in Roundup Ready beans with glyphosate and a burner.

Some growers are also concerned with drifting to their neighbors with their dicamba spraying.  We have found non-dicamba tolerant soybeans are very sensitive to dicamba, probably more so than cotton or even grapes.  We would recommend telling your neighbor that you intend to plant Xtend soybeans and that it would be a very good idea if they would also plant Xtend soybeans.

As always, we would recommend a fall application of Cloak EX and dicamba to help control winter annuals.  This would be followed by a burndown trip in April with a good pre emergent herbicide.  In crop, we recommend spraying with Engenia and glyphosate when the weeds are less than 4″ tall.  When growers have followed this plan, they have been rewarded with some nice looking soybean fields.

We do not know if and when we will see more dicamba resistance, but for the near future we hope for good results with Xtend soybeans.

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Recently, a climber scaled the extremely challenging wall on El Capitan without the aid of another climber and also without any safety ropes.  Until this climber scaled this wall freehand, all attempts had been very involved with multiple climbers, safety ropes and a very slow, planned ascent. The endeavors would take days to reach the summit.  The recent climber scaled the wall in only four hours!

His comment was that he had been preparing for this climb for 10 years.  He was in top physical condition and had been planning and rehearsing his route for years.  He said that he knew all the details of this climb from many other outings on El Capitan.  He also said that the climb was easier than a roped climb because he was not encumbered with 10 pounds of equipment hanging from him at all times.

Another climber was asked to comment on how this climber was able to complete this climb.  He said the climber had meticulously planned his route and was able to have great concentration on the climb by knowing how to do the movements at the moment and also to know what his next move would be.  He also stated that one of the reasons he was able to complete this climb was that he was able to overcome his fears by having such complete confidence.

What a great lesson on preparation and also having confidence in our planning processes.  The old saying is, if you aim at nothing, you will hit it every time!

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Do The Best Job You Can Do

Neil Gaiman on Imposter Syndrome, which we all suffer from:

“…Some years ago, I was lucky enough to be invited to a gathering of great and good people; artists and scientists, writers and discoverers of things.  And I felt that at any moment they would realize that I didn’t qualify to be there, among these people who had really done things.

On my second or third night there, I was standing at the back of the hall, while a musical entertainment happened, and I started talking to a very nice, polite, elderly gentleman about several things, including our shared first name.  And then he pointed to the hall of people, and said words to the effect of “I just look at all these people, and I think, what the heck am I doing here?  They’ve made amazing things.  I just went where I was sent.”

And I said, “Yes.  But you were the first man on the moon.  I think that counts for something.”

And I felt a bit better.  Because if Neil Armstrong felt like an imposter, maybe everyone did.  Maybe there weren’t any grownups , only people who had worked hard and also got lucky and were slightly out of their depth, all of us doing the best job we could, which is all we can really hope for.”

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Grain Marketing

The old adage is “Good things to come to those who wait” has a lot of truth to it.  But when it comes to grain marketing, delaying needed decisions can be very costly.

All options of post-harvest marketing come with costs.  Costs can include storage fees, interest costs, option premiums and an added risk of paying these costs and accepting a still lower price at a later point. A better option is to use the period before harvest to forward contract.

Often times, there is a chance or several chances to forward contract grain during the growing season at a profitable level.  Producers need to be cautious in their marketing, but also have a solid plan nailed down.

Knowing the cost of production is important.  Adding the needed profit to the cost of production should give a good number to sell grain. Using target offers let producers decide ahead of time what prices they are willing to forward contract.  Doing this can help remove some of the emotion from grain marketing.

Another old saying is “You can’t go broke making a profit”.  This mostly eliminates the impossibility of selling at the high point of the market, but sets realistic goals for forward pricing. Using a proactive marketing plan helps to eliminate some of the stress from this part of the management system!

Keep the marketing plan simple.  Sell at a profit and avoid paying extra fees or taking unnecessary risk.

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