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Veteran Contributor
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Floor Talk September 22

[ Edited ]

At the close:

At the close, the Dec. corn futures finished 3 1/4¢ higher at $3.53 1/2, while March futures ended 3¢ higher at $3.66. Nov. soybean futures closed 13 1/2¢ higher at $9.84 1/4 Jan. soybean futures settled 13 1/2¢ higher $9.94 1/2. September wheat futures ended 3¢ lower at $4.49 1/2. Dec. soy meal futures closed $6.10 per short ton higher at $319.00. Dec. soy oil futures finished $0.12 lower at 34.22¢ per pound.  In the outside markets, the Brent crude oil market is $0.07 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 24 points lower.

 

Mike

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At mid-session:

At mid-session, the Dec. corn futures are 2¢ higher at $3.52, while March futures are 2¢ higher at $3.65. Nov. soybean futures are 10 1/4¢ higher at $9.81, Jan. soybean futures are 10 1/4¢ lower $9.91. September wheat futures are 4 1/4¢ lower at $4.48. Dec. soy meal futures are $4.00 per short ton higher at $316.90. Dec. soy oil futures are $0.03 higher at 34.37¢ per pound.  In the outside markets, the Brent crude oil market is $0.04 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 17 points lower.

 

Mike

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At 9:25am:

If you missed it, more soybeans are flying off of the U.S. shelves.

 

On Friday, private exporters reported to the U.S. Department of Agriculture export sales of 190,000 metric tons of soybeans for delivery to Mexico during the 2017/2018 marketing year.
The marketing year for soybeans began Sept. 1.

 

Mike

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At 9:15am:

In early trading , the Dec. corn futures are 3 1/2¢ higher at $3.53, while March futures are 3¢ higher at $3.66. Nov. soybean futures are 12 1/4¢ higher at $9.83, Jan. soybean futures are 12 1/4¢ lower $9.93. September wheat futures are 1 1/2¢ higher at $4.54. Dec. soy meal futures are $3.70 per short ton higher at $316.60. Dec. soy oil futures are $0.17 higher at 34.51¢ per pound.  In the outside markets, the Brent crude oil market is $0.02 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 2 points lower.

 

Mike

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Soybeans rose in overnight trading on a weaker dollar and strong export sales, while corn and wheat were up, just not as much. The dollar dropped another 0.3% overnight, again nearing the lowest level since January 2015. Soybeans added 8 cents, corn was up about 2 cents and wheat added 2-3 cents overnight in Chicago. Exporters sold more than 2.3 million metric tons of soybeans last week, topping expectations, while corn sales were disappointing. Wheat sales came within expectations, but on the low side. In weather news, it's going to be hot, hot and hot this weekend in much of the Midwest. Head index warnings have been issued for much of central Iowa and Missouri, and indexes may reach triple digits in several states from Nebraska to Ohio. Stay cool out there. Check out all the details in today's 3 Big Things at http://www.agriculture.com/news/three-big-things/3-big-things-today-september-22.

 

Here's what happened overnight:

 

Brent Crude Oil = down 0.1%

West Texas Intermediate = down 0.4%

Dollar = down 0.3%.

Wall Street = U.S. stock futures lower in pre-bell trading.

World Markets = Global stocks higher, following the euro.

Esteemed Advisor
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Registered: ‎04-29-2011
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Re: Floor Talk September 22

Hey, let's see another video of a 300 bushel yield monitor.   Or....how about an 80 bushel soybean yield monitor video.    We wouldn't want to rally the market too much.  Smiley Wink

Veteran Advisor
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Re: Floor Talk September 22

Do you have some orders on the books if we do rally, or do you figure we're near seasonal lows and you're going to ride any rally higher and higher?

 

Some local farmers are already talking about welding be bin doors closed.  When do the doors ever get opened?  (Well, maybe when mother or the banker says we need money and then all marketing plans are "revised".)

Esteemed Advisor
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Re: Floor Talk September 22

Opened the bin doors here after the August report on what was left from 2016 crop.  Much of this was moved with  basis contracts.  Rolled the dice on those bushels by storing that long and haven't lost yet......just kicking the can down the road.  As far as 2017 crop, not much sold ahead.  I will refill storage again and roll the dice again on those bushels.  Not sure yet what's gonna happen with those bushels that aren't contract and that won't fit in the bins.  Might just sell off the combine, might use commercial storage, might do another couple of basis contracts, might store it on the ground, or.......might just give it to the less fortunate.........lot's of possibilities.   FWIW, welding supplies are too expensive to weld the bin doors shut.......plus it's a pain to cut them back open.  Smiley Wink

Honored Advisor
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Re: Floor Talk September 22

Only welding I do is to fix something. Welding  grain bin doors shut isn't on the list.

 

Not too worried about what's left in the bin s if anything. 

 

Ag PHD is after me to help themselves to some of my Hard work. The last three days if I'd listened to them I'd be about $7,000 in the ,hole on the bean side of the ledger. Not gonna work too well for them here in South Podunk country.

 

I've gotten real comfortable in my own little slice of heaven here.

 

I don't have to be big to be "profitable enough" 

 

As brought up in another thread, yep very small land costs here in Iowa. 35 years of scrimping and doing without.. losing money every time one of those know it all experts was turned lose with some of my capital has jaded my attitude.

 

Yep small land costs at this time in my life cycle, the days of land payments and operating notes and associated rent costs are not in my cost structure. I'm past the point of leveraging everything for just a little bit "more".. Just land taxes, and insurance are the only IRS recognized deductions on my land costs. The pay yourself the going rent is a Total crock as long as this is what I want and can do.

 

In my dictionary "farmer" is an all inclusive term...kind of like a one man band, play all the instruments. That includes marketing.

 

Now that most are into being a "grower" well that's a whole different animal. Synonymous with "the help" "surf", "Surfdom", "contract laborer".

 

I've tried it both ways, farmer, fits my temperament the best.

 

Jim you need to change coffee shops, don't worry about the top, just concentrate on being here next year. You're driving a new tractor without pmts aren't you? Might be doing just fine.

 

 

 

 

 

Veteran Advisor
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Registered: ‎10-18-2016
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Re: Floor Talk September 22

Yep, I followed your model and don't pay anything on anything,  except for ever increasing land taxes.

 

We are the guys who are busting the guys who are buying or renting.  We can and do 'make money" below the cost of production since we don't have land payments.

 

Given that one can't get any interest on money in the bank, there isn't too much reason to pay ourselves actual land rents.

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Honored Advisor
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Registered: ‎01-10-2012

Re: Floor Talk September 22

Jim "we" are still in a taxable situation at a level below their cop. We still have a cop, just way below theirs.

 

With today's land prices they have little hope or chance of joining our club of dinosaurs...

 

When was the last time "suc farming" or "Farm Journal" published stories about us small farmers on a 1000 acres or less?

 

Many of us have way more discretionary spending abilities then the ones in their current stories. Just one more year of these current prices and it'll become even more apparent.

Senior Contributor
Posts: 369
Registered: ‎05-16-2010
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Re: Floor Talk September 22

Hobby, I also have been on your program for a number of years.  Getting closer to retirement, though, and I think it would be fun to be a "producer" for one year so I could "collect" my crops instead of combining themSmiley Wink

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The reverse mirror image...

Michigan Farm Considers Options

By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- Zeeland, Michigan,-based Boersen Farms is set to either restructure its debt or file for bankruptcy, according to a motion filed in the U.S. District Court for the Western District of Michigan this week.

Boersen Farms had asked a federal court to place its operation in the hands of a receivership, in response to a lawsuit alleging the farm defaulted on about $145.3 million in loans from CHS Capital LLC in August.

 

On Friday, the district court denied the farm's motion to reconsider that action. In the farm's motion for reconsideration, it indicates it is preparing for either restructuring the debt or filing bankruptcy.

Boersen Farms Inc. bought the bulk of Decatur, Michigan-based Stamp Farms LLC's land-lease agreements and other assets in what was considered one of the largest farm bankruptcies ever in 2013.

 

CHS Capital has asked the court for a receivership. That would place all property used as collateral for the loans under the control of an independent person known as a receiver. According to court records, Boersen Farms agreed with the motion, only to change its mind.

CHS Capital is a limited liability company based in Minnesota and a wholly-owned subsidiary of CHS Inc.

In Friday's ruling, the court said Boersen Farms could ask a bankruptcy court to allow it to continue as a debtor in possession. Debtor in possession is a person or corporation that files bankruptcy while remaining in possession of property.

"The defendants in this case originally consented to a receiver with much broader power than the court ultimately granted," the Kalamazoo, Michigan, court said in its ruling.

 

"In fact the defendants expressly agreed to a receiver with the power about which defendant Boersen now complains. The court previously provided several opportunities for the defendants to object to plaintiff's motion. No one objected. If defendant now believes he is better positioned to handle the matter without the receiver, he can file before the receiver does and ask the bankruptcy court for permission to proceed as debtor in possession."

 

An attorney for Boersen Farms did not respond to DTN's request for comment.

Brent King, managing director of GlassRatner Advisory and Capital Group LLC, based in Kansas City, Missouri, a company that helps manage companies going through bankruptcy, said the receivership essentially puts the brakes on a move to bankruptcy court.

"CHS has achieved their main goal: removing Boersen so they won't push for a Chapter 11 filing now," King said.

"Furthermore, the remaining creditors are likely to assist the receiver and have a higher level of confidence for now, in working with the receiver, so they're unlikely to push for a Chapter 11."

 

Chapter 11 bankruptcy protects companies from creditors while companies restructure.

A number of equipment and chemical companies, as well as other financiers have filed motions to intervene in the district court case, essentially letting the court know Boersen Farms owes them money as well.

Boersen Farms also faces related lawsuits in Utah and Kansas.

 

In U.S. District Court for the District of Utah, equipment company TFG-Michigan filed a lawsuit claiming it has not been paid for more than 120 center pivots leased by Boersen Farms. In U.S. District Court for the District of Kansas, Boersen Farms was sued for breach of contract related to its pursuit of finding someone to acquire the CHS debt.

 

Stamp Farms filed for Chapter 11 bankruptcy protection in November 2012. Boersen Farms bought the farm's assets at an auction on Feb. 5, 2013, including irrigation equipment and unexpired three- and five-year leases on a farm that once claimed to operate across 46,000 acres.

 

As collateral, CHS said in the lawsuit it is entitled to Boersen Farms' current crop in the ground that includes about 25,000 acres of corn and about 58,000 acres of soybeans, valued at an estimated $49.7 million, according to the lawsuit.

In addition, CHS lays claim to 56,415 bushels of corn stored from the 2016 crop at three storage locations.

 

GETTING HOUSE IN ORDER

 

King said the Boersen Farms case is a good reason for producers to take inventory of how they handle debt. There are safeguards farmers should follow, especially in the current farm economy environment.

Producers should set their equity levels at 25% or more for yearly production costs, King said. It is important to borrow no more than 75% of your operational cost and fund at least 25% with your own equity, he said.

"This rule goes a long way to insure that your operation is financially responsible, fully engaged and protected from bankruptcy," King said.

 

"For crops, funding 25% of your operation's production and linking that ratio to your crop insurance means that, even in a worst-case scenario, you are likely to pay back your production loan. This simple equity rule builds a solid relationship promotes a healthy financial operation."

 

When it comes to long-term debts, King said farmers should establish debt-to-equity ratios for long-term assets based on the "depth of your pockets and the profits the asset are likely to generate."

Producers need to carefully forecast operating profits from the asset using historic commodity prices, he said. Farmers should structure their equity/debt ratio to insure their operating profits fund the long-term debt payments.

"Predict periods of low profits and have a workable plan to get through the tough years," King said. "Above all, never allocate your short-term operating funds to pay for long-term assets."

 

On cash rents, he said rent payments must be "feasible" in your cash flow models.

"It may be exciting to win a cash rent auction for the largest fields in your area, but temper that excitement with your own financial models to demonstrate that the cash rent you decide to pay is likely to earn the profit you deserve for farming those big fields," King said.

 

"Remember, it's better to walk away from a cash rent auction knowing you're operation remains protected than to enter into a cash rent agreement that exposes your operation to losses."

Boersen Farms purchased the Stamp Farm assets at a time when corn on DTN's National Corn Index stood around $7. Now, the DTN National Corn Index is at just under $3.06 a bushel.

 

"Do not be distracted by irrational commodity values," King said.

"Welcome high profits of peak years and wisely allocate the extra income. Pay down debts, increase your contribution to operation expenses, acquire some important long-term assets or upgrade production facilities. Nevertheless, remain vigilant and know that commodity values will soon return to normal, near the cost of production."

King said it's important to rely on "rational, historic" values in forward-looking models.

"Basing the financial decision of your operation on conservative, historic commodity pricing will place your operation on a secure ledge as the troughs and waves of commodity values break around you," he said.

Honored Advisor
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Re: The reverse mirror image...

Some of these coops have spread themselves too thin.   To gin up business they give sweetheart deals to BTOs like pick up grain in the field for free the BTO doesn`t have a trucking expense and free use of the coop employee, but the trade off is the coop has possession of his grain.  The question is, if the BTO goes broke or a different coop offers a better deal, will that loss of 30,000 acres of business put the coop in jeopardy?  I take it the dividends would be non-existent years after such a loss   Smiley Happy   One cattle feeder kind of uses the coop as a "banker" coming in every few months to pay a >$100,000 feed bill, who knows if they charge him the 1 1/2%/mo like everyone else or not.  But there`s some trainwrecks that could occur out there.