Many producers appear to be frustrated with planting and marketing plans for 2009. Final decisions will be made after March 1st as they are waiting for crop insurance price guarantees to be determined and a better idea of how spring weather could unfold. The priority crops still appear to be corn and beans. Spring wheat acreage is stagnant at the present time with little enthusiasm. However, that could change if Minneapolis futures rebound to the $8.00 area. Many producers waited for fertilizer prices to fall before booking purchases. Thus they have better flexibility in their planting decisions.
A fair number of farmers still have some of their 2008 corn standing in the field. Only 15-20% of last year’s corn ground is prepared for planting this spring. Due to an excessively wet fall, many fields on both sides of the Red River are full of harvest track ruts that are filled with water. Two of the nation’s largest soybean producing counties, Cass and Richland, are facing planting challenges with preventive planting possibilities on many acres, most of which are heavy, clay soils. This will change if the spring season is drier than normal.
Producers that we are working with have been spending considerable time identifying market trends rather than being market spectators. Simply being able to make decisions can be a challenge in this market and most of our customers have approached any trading they do as a way to defend their balance sheet. Everyone knows where their profit points are and they need to enhance them.
It is clear from our conversations that nobody needs to be reminded of the fact that farm income potential is not at the same point as last year. However, there is never a good reason to avoid developing confidence in a plan that keeps a balance of cash sales, call option re-ownership, and put options for un-sold bushels. Staying disciplined, paying extra attention to our money management, and knowing the potential of every trade will be keys to competing in the years ahead.
The message from Dr. David Kohl at the recent 100th annual meeting of Northwest Farm Managers was to remind us why we want to be extra careful with our decision making this year. Farm failures tend to increase in years following an extremely profitable year. Farmers we talk to know the stakes are high and that complacency can be a problem if we take 2009 for granted.
Weather will be the final trump card in our area. While the weather in South America is on everyone’s mind, we are reminded that a weather scare is likely in the United States as well. One of our weather friends likes to say, “If you are not weather-wise you are otherwiseâ€. The market has the potential to do anything and we are advocating positions to take advantage of these possibilities. We have been reminding clients and ourselves that it’s not what the market is going to do that is important. The important question is what are we going to do with the market?
Gerald Melvin
Allendale Branch Manager—Buffalo, ND
melvingrain@mgfgroup.net
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