2019 Profits

[marketeye]

In an upcoming Successful Marketing newsletter, Al Kluis, Kluis Advisors, offers up cost estimates needed in 2019 to turn a profit farming. Based on your grain marketing plan and overall farm business plan, are these realistic thoughts?

Thanks,

Mike

[k-289]

Is   this  message  towards  producers  and  suppliers  alike  ?  

[illinifarmer]

Crooks

[ne 50]

so I cut costs to make 3.70 corn, 9.50 soybeans, 5.00 wheat work and now the prices available at my local market are

3.46 corn,  7.94 soybeans, 5.08 wheat for 2019 contracted today... do you forward contract everything now locking in a 8.00 loss on corn per acre...93.60 loss on Soybeans and a 4.00 profit on wheat... or roll the dice...prices are going downhill daily now 

exports aren't that bad yet ... 

maybe i should just retire.. idk... would be better to quit when prices are rising and people have to spend money to lower taxes not while they are hunkering down to save the operation..

[wrightcattle]

More getting corn cost down to say $2.70 beans down to $7.00 etc.,

And somehow get your farm aid from Uncle Sam up to say $500k per farm...that way the rest of the afore costs won't end up losing dough.

i kinda don't like where trump and co has so far taken the farm economy...or lack thereof.

[hwr247]

what a difference a decade makes!

RFS plus drought in the world pushed our commodities ever higher! 

We are losing markets every day! Not sure how many will be left when the dust settles.

[BA Deere]

Unfortunately, I`ll bet he means the board of trade prices and you have to deduct 45 cents off corn and 80 cents off the bean price for basis.  If I could count on getting a true blue $3.70 corn and $9.50 beans without any expensive options schemes, I`d be happy as a lark, I`m lean and mean enough now those prices would have me bidding with both hands on machinery at the Dexter Labor Day sale  

http://www.hamiltonauctioncompany.com/auction-details/?auctionGuid=92d8878c-69c3-4901-bf4d-ef6cd7402...  

A little quote from the sale bill

AS OUR LOT IS  GETTING FULL WE ARE NO LONGER ACCEPTING RACK ITEMS OR SMALL MISC. ITEMS FOR THE GROUND.

[erikjohnson61y]

To get your cost per bushel down, you can do one or more of these things:

1 - cut inputs (or shop around for better prices)

2 - increase yield with the same input cost (better hybrids for your soil, better fertilizer allocation based on soil tests, etc)

3 - get a better price for the crop through forward marketing, using crop insurance as a hedge.

4 - Cut overhead (get rid of equipment you don't need all the time - rent instead, pay down debt to reduce interest cost)

I lean heavily on the third option, and am fortunate enough to live within driving distance (90 miles) of an ethanol plant that posts prices online for corn and beans out to new crop 2019.  I can't remember the last time I sold spot corn.  Last spring when the Argentine drought was in the news, I sold several truckloads for July 2019 delivery at $4.08.  There is a lot of carry you can take advantage of in the corn market. Not so much (usually) in beans, and I confess I know nothing about wheat.  

Actually raising the crop is only a small part of running a successful ag business.  Doing the above, my average corn cost of production (not including living expenses) is $2.90 if I make my APH yield. It's about $3.50 if you include making $100/acre net profit. My average selling price for 2018 is $3.64, so I'm doing OK.  Not great, but OK.  Some of my land and most of my equipment is paid for, and that obviously lowers my costs somewhat. I sure wouldn't want to be starting out in this environment.

[sw363535]

But its all trash if you don't raise that crop or stumble 30%.

[marketeye]

erikjohnson61y,

Thanks for your detailed response. I appreciate your candor. It was refreshing to read your post.

Mike