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02-26-2016 05:24 PM
Well.......what can i say ? I think the dog has packed his bags and run off, after hearing the USDA report, he's
figured out things ain't going to get better.
I'm increasing my insulin dose.....so maybe i can have that cold one after all......i might need it.
To go along with that, news comming out on what all the people running for president are going to do with healthcare.
Trump thinks "universial care", is a good idea......Cruz.....will repeal everything......including (what has my interest)
pre-existing, the only one that has addressed that subject is rubio, saying he "would put protections in place".
now...we will see even less income next year.........the grain piles will get even larger......and we will see "consolidation".
I frankly can't see any "marking" options........when the USDA kills any and all hope of a rebound in commodity
what is the idea....we are going to "produce ourselves out of the hole" i've already been to a meeting, suggesting
to "shoot the moon"....they said the only way to make any money is to produce more, and more bushels at a lower
price is the only way to make money...........
that kind of logic is used when you throw a bucket of gas on a fire to put it out.
i have been looking at the private insurance products, thinking they might "help"......but still havent
seen one yet, from price flex, to enterprise units plus, private area revenue protection, total crop revenue and
others......still not a winner
the weather insurance products might be intersting, but all money up frount, and some higher premium % cost vs
odds of collecting.
the other.......buying a call or put and hid it in the desk drawer.......just about even money both ways......on a put and call....
so if we are going to the bottom of the ocean, maybe locking in that number would be good.........but then, if there
will be such huge piles everywhere to all this huge amount of grain we have........imagine what basis will do !
i guess you could get you a put, for corn, i think it's close to 30 cents a bushel......then do a basis contract at
but the question is, even with all the above........will it be enough to make a profit........ie make money, not loose ?
I'm not sure
anyone else have any ideas ? i'm listening
02-26-2016 07:01 PM
Will your crop inputs change for 2016?
|1)||Add inputs to improve chances of higher yields?||18|
|2)||Reduce inputs to save on expenses?||84|
|3)||Keep inputs the same and move forward?||117|
|4)||Does not apply to me.||6|
Results current as of:
26-Feb-16 06:58 PM
02-26-2016 10:23 PM - edited 02-26-2016 10:25 PM
The purpose of crop insurance isn`t to insure a profit, it`s intended to cover the very basics in the event of a a disaster, also provide confidence to make forward sales. Though for a couple years the March 1 insured that regardless what happened, if you took insurance you were going to have a very very fantastic year.
It may very well be that we hit our highs for the year and it just drifts lower in the $2`s into harvest, all the sub-COP prices may be in our rearveiw mirror....that is what everyone and their brother thinks will happen, the only saving grace may be that the job of the market is to prove everyone and their brother and their dog wrong i don`t know what the catalyst will be, but it isn`t going to happen like most people think and they will be proven wrong.
I talked to a couple guys today that do not want corn to go to $5 this summer...I kid you not! I don`t understand them, but what they say is seed and other inputs won`t go down if corn went to $5. And you know as crazy IMO they are believing that, I can`t help but believe they represent a fair number of others that want low grain prices to bring input prices down. "Cut off your nose to spite your face" is what it sounds like to me.
Seed corn companies invested in technology and machinery and bldgs, they probably need +$200 a bag for seed to stay solvent ..and give Bigshots sweatheart deals on the seed that they buy. If they have to drop the seed price, they will probably go broke and will just lead to more consolidation. Ending up with less competition, keeping prices higher still on seed.
02-27-2016 03:08 AM - edited 02-27-2016 03:09 AM
The purpose is to make you feel better about going out of business.
And maintain usda jobs while the public goes unemployed...
02-27-2016 03:34 AM
I am going to disagree with chasing the last ten to twenty bushels per acres and going to lay out a similar strategy to what helped me make money in the late eighties and early nineties on crop production. Cut expenses to the bone and then cut again....that is what the markerts are telling you.
First, if you owe a lot of money, nothing is going to help you. The last several years gave you an unprecedented opportunity to get your house in order and have a financial cushion and if you misread the tea leaves and took it as a signal to buy $10k land on credit, to roll over your equipment line several times without paying it off, to buy a vacation home, new vehicles, a shop that the guys actually working as mechanics at the implement dealership would dream about, etc....not much is going to help you. THat is part of the reality of capitalism...some other guy read the tea leaves differently and is probably positioned to both ride out the storm and expand in these times. You can always sell the toys for what you can get back out of them and get a streamlined array of equipment that can still do the job. Equipment costs should be low to non-existent for the next three years...you should have excess capacity in iron from the economic windfall that the last five years brought you.
Next, look at the farms you run and pick the ones that will continue to make money and ditch the high input, low output ones. If you are renting land that doesn't improve your bottom line, get rid of it...now. Don't pay even $150 or $100 for land that doesn't pay the freight. Some "cheap" land costs you a whole lot more than the most expensive rented ground around. Let that low margin land compete with the other low grade land to go back into a CRP government retirement program. If you still have land under contract for a few years that is like that, you are really going to have to cut to make it work...hope you have enough residual fertility and lime to get to the end of the contract and let your competitor worry about it. I never pursued renting some low quality land in my area this spring just for that reason...it would not add a penny to my bottom line and I am already losing enough on land like that. THe 200 bushel per acre ground is what you want to be running, and nothing else. Rent the 200 bushel per acre ground...the extra 50-75 bushel per acre is what will keep you farming, even at $250 per acre rent. Whole lot better deal than the 100-150 bushel per acre ground at $100 per acre...do the math.
Shoot for a $600 per acre gross and get your input costs in line with that. You can get there with $3 corn and 200 bushel yields, or market ahead and get a better price for a lower yield. Subtract your $250 per acre land cost and you have $350 for inputs, repairs, and overhead. If you need $50 for family living, you probably need to find a second job to pay for that....farming doesn't always offer you a living, and these are the times that show that to be true...that is part of the reality too. Soybeans are going to be hard to pencil in a profit with, unless you can get a 70 bushel plus per acre yield at $7.50 or forward contract for a better price. You better get a $550 per acre gross figured out or they are going to lose money for you.
Forget about the latest, greatest expensive seed. RIght now you can buy triple stacks for $180 per bag, and roundup only hybrids for $170 or less. You can plant 28000 populations and get your seed cost on corn on corn ground down to just over $60 per acre. An agronomist for one of the top seed companies told me that their own internal population data in my area showed that the 28000 pop was optimum on some of their hybrids. Use an older array of chemicals...atrazine, banvel, generic surpass, and generic roundup in a total one pass chemical spray, early post emergence, and get your chemical cost down to under $20 per acre. Get your own fertilizer cart, buy the urea, potash and dap wholesale and get your fertilizer cost to $125 per acre which includes residual for the soybeans if you must plant them. If you dont have a semi to go get the fertilizer or a cart, band together with some neighbors and form your own coop. Thats basically what your forefathers did. Fuel costs, with $1.40 per gallon diesel should be right at $7.50 per acre. Almost negligible.
$60 seed, $125 fertilizer, $20 chemicals, $7.50 fuel...you are at $212.50 per acre, add the $250 per acre rent and you are at $462.50.....leaves you a $137.50 margin for repairs, overhead, a few equipment updates, etc. A spartan budget but a workable one. Take a yield based crop insurance product to give you some protection at low dollar cost, too. Don't buy expensive puts, calls, crop insurance...all the other things that take away your margin...you need those dollars.
Thats how you do it.
02-27-2016 08:38 AM - edited 02-27-2016 09:04 AM
Cheapie, yesterday afternoon this dog showed up out of who knows where. This morning I went out eating a Casey's donut with sprinkles on it, the dog went "nuts" , it'll do about anything but carry feed buckets for a bite of a donut with sprinkles. It might be your dog?
Red, great post, written better than I would have been able to do it.
Have been reading on several ag sites growers saying they were going to intentionally keep rents high and loose money just to control the acres. Others still planned on putting on a "build" level of fert. All candidates for the farming Darwin awards. With their business plan I'm planning on several upgrades
Went to a crop. Insurance meeting, so many choices, my head hurts. Their story was without an add on, no way to guarantee anything but a loss this year. They also had some new outfit there making a pitch trying for another so many dollars a year for their services. They bragged about how cheap their group buying prices were, problem was when asked for their prices on specific products they couldn't find them on their list.
Hard times bring out many snake oil sales pitches. All of them require you to spend money up front. Kind of "magic beans" salesmen, only with a zero germination rate.
RR corn top #'s $160, ngmo less, tripple,dipple cripple' s more. Central Iowa 515-975 2090 ( don't worry it's not me) Dow product.
02-27-2016 09:02 AM
Sounds like the "supplimentals" such as ARC payments will be half of last year, some got $80 some got nothing, but 40 bucks is half your seed expense. This would probably be a great year to actually "start farming" because you wouldn`t be bogged down with old baggage. It`s that old baggage such as having bought a farm a couple years ago or having gotten a little wild using section 179 tax deductions is what can take a guy down looking at <$3 corn.
02-27-2016 09:51 AM
Don't villify 179, it's been a great tool on this farm, Iowa not coupling with the Fed's this year is the villain.
Don't use it on anything you didn't pay cash for. No sympathy from me if for anyone who did otherwise, what did you think would happen when you made those easy yearly payments with after tax only dollars with no offset depreciation available?
I started my farming career in 1972, I know all about the 80's, I was almost a victim. Vowed to never be in that vulnerable a position again. The last ten years were a gift to many of us now old timers. Some of us that didn't look progressive will be the bidders the auctioneer will hope show up at some of these sales that aren't even scheduled yet.
Had to make a parts run yesterday, first megga dealer couldn't help, so 25 more miles down the road to another branch of a 30 store outfit of another brand. Plenty of inventory for a store on the Iowa Missouri border. While waiting as newer parts guy was figuring it out, talked to a salesman just for the entertainment, I really do need a better piece of that brand . Told him what I was in the market for, told him my opinion on price, didn't get laughed out of the office. Was thanked for even asking and stopping. They have some at the other side of the state that might just be suitable. Price at the high end of my range...imagine that.
Then the parts guy showed up with the two different British thread hyd pieces I needed. Great timing.
02-27-2016 10:42 AM
Objectively speaking if you thought there was much chance of sub-$3 corn in the fall you would buy puts.
Based on the technical view that I posted a couple of days ago, closes into new lows (348-4 spot) are concerning and you'd still be able to buy ATM CZ puts for under .30, or I'd probably look at some sort of cheaper protection for extreme downside (you'd be able to get 3.30s for under a dime, for instance, or I might be willing to fence it).
A 200 Bu, $3 crop with .40 gain from marketing and some extras from insurance and supplementals, and the costs you put up, is a nice profit.
No reason to wear your opponent out by taking punches in the face.