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BA Deere
Honored Advisor

Average ain`t gonna cut it anymore.

I wish I could post a link to David Kruse`s radio broadcast, but he was saying how "average yields" won`t be enough to make it and on corn farmers will have to find $100 in cuts for next year.  Seed, chem, fert and rent aren`t taking their fair share in cuts in proportion to the grain price drop.  But Kruse observed that fungicide paid on corn this year, 40 bushel better ...well there you go there`s $100/acre extra income after cost...yes but will it pay again next year or be a flat out extra expense? 

 

This is the perfect receipe for shooting ourselves in the foot, going all out producing "above average" in order to make it and be the last man or woman standing.  But individually, that is the only way I know of to survive going forward, to be the one that gets "40 bushel more" that everyone else.  Actually when we had the last gasp rally in July, hindsight being 20/20, everything should`ve been dumped @ $4 corn and $10 beans. And last spring took the cows, calves and everything bovine and dumped them and saved back a few more gilts  Smiley Happy

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5 Replies
bruce MN
Advisor

Re: Average ain`t gonna cut it anymore.

I beieve you told us this Spring that you were going to plant some short line non trait corn.  If so, how much did it decrease your &/@ on those acres and how did it turn out?  Reports and comments that  I've been  picking up around here are of a general 30-50 b/@ difference.  One guy referred to an 80 he had planted to base conventional as the "world's largest refuge".  

 

But, yeah, if everybody everywhere planted conventional the results would be relative, and there would be less corn.  Now if that took it back to $8 would remain to be seen.  And if so, the integrated and consolidated livestock industry could implode. And I suppose there would be some nice games to be played for a. Little while with yield guarantee crop insurance up against yield histories built up over years of traited  products.  Some of those policies require proof of best production practices having been employed.  It might be interesting to see how the underwriters would view it.

 

Not ot to mention only a fraction of the seed required to go around.

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BA Deere
Honored Advisor

Re: Average ain`t gonna cut it anymore.

Bruce, I chickened out this year, but planted some untraited last year, wasn't overly impressed might be Corvus damage or a quickly thrown together seed by the company. We have gotten spoiled maybe you'd see an occasional ear on the ground o ea lodged stalk, but every case is different, does it amount to $40 extra seed cost? Sometimes yes.
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westernia80
Senior Contributor

Re: Average ain`t gonna cut it anymore.

Last year I planted a 10 acre block to refuge corn.  Straight roundup, no other traits.  It was 3 bu better and 1 point dryer than the the full traited corn it was next to.  Of course Mycogen discontinued that hybrid this year.  I did plant some VT2 instead of VT3 on corn on corn this year but haven't gotten into it yet, but does look good.

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Jim Meade / Iowa City
Senior Advisor

Re: Average ain`t gonna cut it anymore.

Farming is a commodity business and at the end it's cut throat.  

 

Given that yields have trended higher over the years they've been charted, it's oxymoronic to say that "average doesn't cut it" but I understand he is implying a higher level of production, not simply an incremental increase.

 

One thing that hurts is that low yields no longer bring high prices.  Demand brings high prices.  But if I have a bad year, everyone else makes up for it and I have a short crop and poor prices.  I had it in 2005 and much of the lower part of the I states and soudh are having it this year.

 

Rents have to come down and that may be a hard pill to swallow.  Landlords will resist and farmers may not want to risk losing the land.

 

I was told that corn seed may be flat or donw 5%.  A seed district man told me that, but of course that's one very small sample and has yet to be proven.

 

The deal is that if beans are only projected to be in the $9 range in 2016, some people, myself included, may be tempted to try to lock in some break-even on corn, buy a call and go heavy on corn.  Of course, that costs more to plant.  Lot's to ponder.

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BA Deere
Honored Advisor

Re: Average ain`t gonna cut it anymore.

John Phipps on USFR sort of brought this issue up about the oft-repeated "prices are down, so you need to get more productive in order to survive"  ...if corn goes to $1, then we need to shoot for 700 bushel yields to obtain our "$700 gross"  Smiley Happy     When corn was $7, no one coasted and said they only needed 100 bushel yields to get by.  It seems that every senario that the farmer faces, the solution is to produce full out.

 

But countries as Brazil that devalue their currency, is that gimmick ultimately a good one?  It seems that the only way that can work is if they put tariffs on what them import or their cheap currency would slam them on that end.  Basically, they are "mining" their natural resouces, in Brazil`s case their soil fertility in the form of soybeans on the cheap, what is a one trick pony long term.

 

Those of us in the economic and Biblical tinfoil hat crowd, see that the end game will be a one world currency to eliminate this manipulation and I could see the Farm Bureau supporting it  Smiley Happy  But before we get from "here to there" the US at some point will probably also get into lowering the dollar to get a grip on the trade deficit.  That could mean a guy that forward contracts new crop grain when the dollar is at "96" might have to deliver that grain and paid with the dollar at 60.  Not saying it will happen anytime soon, but eventually I would count on it.

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