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08-30-2018 10:12 AM
So, sw here is a good example of us reporting the news from USDA. I will show you their report today on Net Farm Income for 2018. To have balanced reporting, and not act like "I work for the USDA", as you put it the other day, I should get the farmers' perspective. So, you're up. Here's the release, and I would love to hear from farmers on how this drop in net farm income and net cash farm income will be coped with on your farm? What steps either through grain marketing steps or farm business decisions are you making to account for this drop in income in 2018?
Net cash farm income and net farm income are two conventional measures of farm sector profitability. Inflation-adjusted U.S. net farm income is forecast to decline $11.4 billion (14.8 percent) from 2017 to $65.7 billion in 2018, while inflation-adjusted U.S. net cash farm income is forecast to decline $14.6 billion (13.8 percent) to $91.5 billion. The forecast declines are largely due to higher production expenses, which if realized, would reduce net income. Additionally, government payments are forecast to decline $2.3 billion (19.1 percent). However, the 2018 forecast for government payments, net farm income, and net cash income do not include payments under the Market Facilitation Program (MFP), because it is too early to tell from the details announced August 27, 2018 how many farm producers will complete MFP enrollment and receive payment in 2018. Inflation-adjusted net farm income is forecast to be just slightly above its level in 2016 and at its second lowest level since 2002; inflation-adjusted net cash farm income is forecast to be at its lowest level since 2009. Net cash farm income measures cash receipts from farming as well as farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates non-cash items, including changes in inventories, economic depreciation, and gross imputed rental income. Find additional information and analysis on ERS’s Farm Sector Income and Finances topic page, released August 30, 2018.
08-30-2018 11:05 AM - edited 08-30-2018 11:17 AM
I read it, here's what I "heard" --
USDA story . . . boring . . . Net farm income to decline from 2017 . . . higher production expenses . . . lower government payments . . . net second lowest since 2002 . . . lowest since 2009 . . . we're farmers, no big surprise. And, what(?), no blurb about lower prices received (?).
Mike, no complaints on your reporting.
My reaction? Not really news, maybe good for us for non-farmers to hear. Had a few really good years, controlled capital spending, not currently carrying an operating loan balance, weathering the storm. This too shall pass, assuming the government doesn't take actions to kill us while taking actions to make things better.
08-30-2018 11:15 AM
Not participating in the decline.(Not everyone is)
46 years of hard work, and some planning is bearing fruit and paying out in one instance huge dividends.
Blindly following the herd will get you in the pile at the bottom of the buffalo jump.
Many, many people think they have lots of years of experience. What they actually have is one to three years experience many times over. Doing the same thing over and over and expecting a different result will only make you old.
08-30-2018 02:50 PM
I'll repeat WCMO's comments Without his contradiction,,,
It is not news if the reader knows it --- and not really news to anyone with any connection to agriculture. WCMO says he has "no complaints on your reporting". Sorry Mike, but I can make the same statement sound like a complaint. Primarily, usda is dealing with historic data. Why are you? We have been discussing how we are dealing with this economic drop for 2 years. And as usual usda states the obvious at a safe distance (2 years later). My concern is why do you look to them as a news source. I think the monthly report should be referenced to note the prognaustication changes, but guessing for a week and then reacting for a week, every month, is a waste of two weeks out of four. Those reports are available from usda to us all and complete without spin and they are at best... budgeting data. They should be noted but not the only source of information.
All real marketing is local.... whether it is the river market, the ethanol regionally, NW export, gulf basis change, feedlot cattle on feed an grain basis changes, etc etc etc. All grains go to three places --domestic use, export, feed use...... info on each is available fom many sources...on current activity.
The cbot floor has been replaced by the buzz of the internet. Here is my marketing reference source list when I am serious about marketing..... We market corn, wheat, milo, soybeans, and cattle.
fc stone int. -----daily info------- for futures contract data, overnights, trending, hedging, and speculating, charting, etc --- not so publicly available--but available.
Cactus Feeders, Amarillo Tx ------on request---- Grain basis changes and contracting information, cattle on feed numbers(who owns them), feeder grain purchasing plans --- tend opinion and feedlot outlook.
Hitch Feeders, Guymon, Okla....... Grain procurement ------ Grain inventories, feeding profitability. Wet corn bids, local acre expectations.
Conestoga Ethanol, Libeal or Garden City, ks ---------------- Ethanol bids, open contracts available, basis changes, weekly bushels processed. --all available to you on internet site.
Local ADM, Coop bids -------------------------- and info. available though web sites.
Scoular Grain, KC Mo.--------------------------- Area merchandiser, for protein bids, logistics, storage advisory, wheat, corn, milo, beans
Cargill, Wichita ks ----------------------------Bean bids and contracting.
Port reported inventory changes ------------- One of those wonderful sources Palouse said to watch
SF Marketing is not on that list...... even though I spend time here........I like to read the coffee shop comments.
Even if you quoted river port bids and movement news, Ray J. comments (or his former hangout), Ethanol grind from Iowa-- weekly, Bean processing data, central an NW Iowa basis changes etc.
Every bit of the monotonous info you print will be relevant to marketing and at least 6 months ahead of being included in a usda report or usda comment.
SF and Usda's old guess information does not address my marketing near as much as these other sources of information. And we have no choice but to find news from private sources with skin in the game and with some slant.
Mike I am not intending to irrationally complain ------ more like challenge and inspire thought. Watching the buffalo jump is not new news. And how we each avoid it is personal data. Counting the corpses at the bottom is not going to help me market either. Unless less acres get planted. That would be news. Will usda be the source for that....maybe 2 years later......the obituary is not a substitute for a birth certificate.
08-31-2018 08:47 AM
How are we supposed to know? Somebody from the government has to tell somebody from the press so they can inform us.
Their version of trickle down.
On the flip side , kind of nice somebody is noticing.
Went to the farm progress show Tuesday, May be the last time I ever do that. $20 a piece to get in. Chased out after two and half hours. Haven't heard of any compensation for that. We did get through the varied industries tents. Quite a few empty booth spaces.
Several things on my wanted to see about list. Stopped at one outside exhibit, the two booth staffers were too busy doing nothing and keeping to themselves to answer a question and write up a sale that after a little over a minute I walked off. Only four people there, my wife and I and two booth personnel.
The food vendors are the ones I have empathy for. 11:30 chased off the grounds, they had a perishable product prepared.
08-31-2018 08:59 AM
Well, Mike's question was "I would love to hear from farmers on how this drop in net farm income and net cash farm income will be coped with on your farm? What steps either through grain marketing steps or farm business decisions are you making to account for this drop in income in 2018?"
Seems the implication is that the average (dropping income) applies to everyone, and everyone will have a plan to "deal with it". But I find that there are two kinds of ag business people - those that think they can't control anything and that the "powers that be" are out to get them, and those that think the do have a measure of control and work to maximize that, and mitigate the things they can't (weather for sure, markets to some extent).
Those that feel they have little or no control tend to complain a lot, but don't really change what they'rte doing. Those that feel they have some control have been doing things all along to continuously improve their operations' efficiency. Whether it's studying market trends to find the best times to market the crop, putting up bins and buying trucks to be able to forward contract and get the crop there at the opportune time, or focusing on soil health, fertility, tiling to maximize production, or looking at feed efficiency and whether they're better off selling feeders or finishing the animals out themselves, etc.
If you do what the crowd does you'll get the results the crowd gets, which is usually just enough to try again next year. The commodity booms (bubbles?) like we had from 2008-2013 only come along every 20 years or so. We're in a commodity business - you can't expect those to be the "new normal". Excess profits ALWAYS invites new competitors that eventually reduce profitability back to the prior level.
08-31-2018 10:00 AM
I love your engagement on this forum. I appreciate the willingness to have a thoughtful conversation about how we report the market news and how you, as a farmer and website user, receive the information. This conversation is more critical now than ever, because of the impact that the internet has had on all of us.
Your list of marketing sources is awesome. Thank you for sharing it. I think it's the most interesting and most generous offering that I've seen in Marketing Talk for a long time. People can learn from it. Markets are local, I agree. I work for a national ag media outlet, so covering basis gets a little tricky sometimes. But, I understand its importance.
Even with SF not on your list, it tells me a lot and I can learn from you. And your point, behind it all, is not missed.
Yes, we deal with historic data, at times, to tell a current story. Sometimes the market technicians like to use chart data to give us a feel for what is going on today. Is it always right, not really. But, it's been said before that if you don't know where you have been, you might not know where you are going.
In a nutshell, even though my daily job duties involve tracking prices, analysis, USDA reports, export activity, and more, I don't believe any farmer will have grain marketing success by following the day-to-day goings on. All of this is helpful, but not the key to success. I've come to learn that if you're reacting to the day-to-day up and down of the markets, you're way behind the 'eight' ball.
What I do think can be helpful, is a forum like this one. As long as the folks that stop in have a legitimate offering that relates to grain marketing. Maybe it's a strategy that you tried and it worked. People can learn from you, maybe having to adjust what they do vs. what you did, after fitting it to their own farm.
Or, maybe it's a strategy that didn't work. That would be nice for folks to know, in order to stay away from it.
I'm off my original point, but, I am here to say that at this market desk we're trying to stay abreast of what is happening today, what could be happening tomorrow (whether it be in agronomics, economics, ag policy, etc.), and how it will impact farmers (our audience).
Here's a good example of melding the past news with today's:
So, yesterday, it was noted that China has not bought any new-crop marketing year soybeans since May 25th. Well, today's USDA export sales announcement included a 2018/19 marketing year soybean sale to an 'unknown' buyer. Now, the trade often believes that 'unknown' means China. Maybe it's not this time. But, it's something to keep an eye on, regarding when China will be back in buying U.S. soybeans. It will most likely be a marketmover, don't you think? But, if I didn't track any history of China's purchases, I might not understand the significance of them re-entering the market.
And to bring it more local, I have nearby farmers trying to figure out how to market this new soybean crop. Should they store and wait for that bump when China re-enters? Or, just be satisfied with USDA's tariff aid payment and not store? Not that I'm trying to advise them on grain marketing, because i would never do that. But, if I'm following the USDA announcements and China's purchasing or non-purchasing trends, I can offer up market information that is much more informative.
gotta go for now. But, again, thanks, sw.
08-31-2018 12:41 AM
We will keep working on it.
I think improvement fro beans will be lead by basis improvements. At this point imo there isn’t much risk in being patient to price this bean crop.