Blogging by the Bushel
With numerous challenges over the past several years for producers, we at Mercer Landmark understand the need for a comprehensive risk management solution. We seek to provide our customers with unparalleled service to ensure maximum results.

Archive for December, 2014

This Christmas blessing was emailed to me today, but it was too beautiful not to share and I think it sums up the holiday well.

“Christmas is not about presents, gifts, and the man-made bustle of the season. Christmas is for the celebration of the birth of Christ. He gave all mankind three simple gifts, faith, hope, and love. (I Cor 13:13). My Christmas wish for you is that you are able to enjoy those three gifts, and to give them unconditionally.”

Merry Christmas from all of us at Mercer Landmark. May you and your family have a blessed holiday and happy new year.

New crop corn is knocking at the door of $4.00 – is this an “early Christmas present” for you?

As a grower you should know if this is a good thing for your revenue management strategy.  How does this price increase impact hedges?  Does it approach your break-even? Will you make money by selling some cash?  Or will it simply minimize some losses on corn?

That said, for anyone saying the market “should be” above $4, or “it’s long overdue”, please remember that the corn market never has to be above $4.  If you’re trying to understand why markets go up or down, please remember – it doesn’t matter!

The market will do whatever it will do.   Your responsibility is to be profitable, regardless of market direction.

Don’t try to figure out the market – you’ll go crazy.  There are career traders who make a living TRYING to anticipate the markets.  There is a reason such a small percentage of traders “make it” – it’s very hard!

If individuals who dedicate their careers to the markets are not profitable every year, how can America’s Farmers grow their crop, manage a farm, manage employees, vendors, etc. AND profitably trade the markets?

No one can “tell” the market what to do, or have any influence on the market’s direction.  Again, your responsibility, to yourself, is to ensure you are profitable at any price in the grain markets.

Is $4 corn (March 2015 contract) an early Christmas present for any grower holding ’14 corn (or even ‘13 corn)?  Perhaps.  It may be a step in the right direction for growers who have break-evens of $4.25.

I have been encouraging any grower marketing grain to evaluate all resources available to them and objectively evaluate opinions they hear and receive.

Regardless, I encourage you to set your objectives.  Build your plan.  Execute that plan.

By Gary Prill, Mercer Landmark Agronomist, CCA

By now most farmers have at least heard about Senate Bill 150 and the new governmental regulations requiring an agricultural producer to become certified/licensed to apply fertilizer (not including animal manure) to his fields if he is applying it on more than 50 acres.  The deadline to get the required training to become certified is September 30, 2017, so there is plenty of time to get this done and training sessions have already started.  Most farmers think of phosphorus(P) and potassium(K) when they hear this, but it applies to all nutrients including nitrogen(N).  So even if a farmer has an ag retailer spread his P and K for him, if he plans to apply nitrogen himself in any form(urea, 28%, anhydrous ammonia) or in any manner(preplant, sidedress, broadcast, etc) on more than 50 acres he will be required to be fertilizer certified.  The only exception to this is applying N,P,K in a starter fertilizer through a planter at planting time.

The process is really fairly painless.  You are just required to attend a fertilizer training session which lasts 2 hours if you already hold a pesticide applicators certification, or 3 hours if you do not have a pesticide applicators license, and then sign a fertilizer certification form at the end of the training session.  If you already have a current pesticide applicator license and have paid your $30 fee there is no additional charge for the fertilizer certification.  If you do not hold a current pesticide applicators license, then you will be required to send a $30 check to the Ohio Department of Agriculture to receive your fertilizer certification.  The training is focused around following the 4R’s of fertilizer application.  4R stands for the Right product, at the Right rate, at the Right time, and in the Right place.  Below are several links to websites with more information about this process, and a schedule of training sessions for the various areas around Ohio.

Ohio Dept. of Agriculture Webpage for Fertilizer Certification Information: http://www.agri.ohio.gov/apps/odaprs/pestfert-PRS-index.aspx?ols=AgriculturalFertilizerCert.htm

Ohio State University webpage for Nutrient Education & Management: http://pested.osu.edu/NutrientEducation/

Website for upcoming Fertilizer Certification trainings offered by OSU: http://pested.osu.edu/NutrientEducation/nutrienttraining.html

One of the phrases that you always hear this time of year is “The market is in holiday trading mode.” This statement would seem to imply that things are quiet and people are just sitting on the sidelines. However, this is really not the case because December is one of the most important times of the year from a producer marketing perspective. It’s true that sometimes the volume at the CME declines towards the holidays. This decline often presents a huge opportunity for producers because we tend to see some price spikes as a result of the lower volume and liquidity.

Now is the time of year when producers need to get their marketing plans in place. On the easiest things they can do is to get some Open Orders in above the market to price Delayed Price, Basis Contracts or even some new sales. Now is the time to begin putting a plan together to get the old crop priced so you can begin focusing on the new crop. If you replaced sales with long call features, these need to be actively managed with targets to liquidate or roll up.

Speaking of new crop, the cornerstone of any marketing plan is a wide array of pricing tools. Mercer Landmark not only offers your basic contracts, but we also have 3 over the counter (OTC) contracts that can be utilized. These tools allow producers to take the emotion out of marketing and they can be tailored to specific risk tolerances according to each individual farm operation. Ask any Mutual Fund trader and they will tell you that diversification using a portfolio approach is the essence of risk management. This disciplined approach helps correct for human bias by allowing higher returns on average rather than doing nothing or “doubling down” because you have a strong market bias. You cannot market your grain by using just one approach. You need a blended approach which has been proven to work over the long haul. Doing nothing or doing too much may work once in a while, but it’s never a good long-term strategy.

Please make a point to get in touch with your grain originator today to learn about all that Mercer Landmark has to offer.

European wheat shippers will be the winners if Russia continues to restrict grain supplies leaving the country.

Exports from Russia may be less than U.S. government forecasts this season as the nation adds rules to make shipments more difficult, according to Rabobank International. Grain buyers may turn to other European countries, while the U.S. is too expensive, said Stefan Vogel, head of agricultural commodities research.

“A lot of people are seeing the uncertainty in Russia and trying to secure some quantities in other origins,” he said in an interview yesterday from London. “It will be different regions, partly France, partly Germany, maybe the Baltics, and also the Black Sea countries, Romania and Bulgaria.”

Russia, the world’s fourth-biggest wheat exporter, is battling a currency crisis that has weakened the ruble by about 45 percent this year and raised the cost of bread. Wheat rallied for the six days through yesterday on concern the country is using a variety of methods to slow shipments, such as denying export certificates and restricting railway deliveries.

Russia has already shipped 15 million to 16 million metric tons of wheat out of the 22 million tons expected by the U.S. Department of Agriculture for the season, Vogel said.

While the country will cut some deliveries, exports to major buyers including Egypt and Turkey will continue, he predicted, leaving total exports about 3 million to 4 million tons less than the USDA estimate.

Wheat Licenses

Wheat exports from the European Union are 1.8 percent higher than the same time last year, even though the USDA projects shipments will decline this season. Licenses granted to ship wheat total 13.6 million tons since the marketing year started in July, according to data released by the bloc yesterday.

If EU wheat exports keep rising, shipments from France will be limited by the poor quality of the harvest and Europe may need to import more corn to meet demands for livestock feed, Vogel said. Wheat futures on the Chicago Board of Trade are up 4.9 percent this week, while corn is little changed.

French wheat is competitive on the international market. Spot-market prices for French milling wheat were about $10 a ton cheaper than supplies from the Black Sea region as of Dec. 16 and $34 a ton below soft, red winter wheat from the U.S., according to data from the London-based International Grains Council.

Alternative Suppliers

“This situation will confirm the importance of alternative wheat suppliers from the Black Sea like Ukraine,” said Sergey Feofilov, the general director of Kiev-based researcher UkrAgroConsult.

Ukraine may have few stockpiles left to export after a record 9 million tons of wheat were shipped this season, according to Feofilov. Shippers at this time of year are mostly focused on corn instead of wheat, he said.

U.S. prices may need to fall before the country sees an uptick in business, said Christopher Narayanan, the head of agricultural research at Societe Generale SA in New York. Export sales since the marketing year began have dropped 24 percent from last year to 17.9 million tons, according to the USDA.

“We’re not seeing the U.S. take up any business right now,” Narayanan said by phone. “That could change, but given the fact that it’s really expensive versus everybody else, it’s not very likely.”

By: Ryan Stucke

  1. Hybrid Selection
  • Drought Tolerance
  • Stress Emergence and High Residue Suitability
  • Disease Tolerance
  1. Planting Rate
  • Many hybrids aren’t being pushed to the limit
  • Optimum planting rates for a lot of new hybrids 34,000-38,000
  1. Planting Date
  • Soil Temperature (about 50 Degrees)
  • Timing of cold Stress, check forecast and check for warming trends
  1. Stand Establishment
  • Having warm temperatures and less residue will help in optimum stand
  1. Row Spacing
  • Some studies have shown 22 inch row spacing have out yielded 30 inch row spacing due to more plants per acre, gets back to increasing population
  1. Nitrogen Management
  • Most expensive input of all, finding a way to preserve N till later (N-Serve) in the plant growth (grain fill) will help increase yields,
  1. Cropping Sequence
  • Rotating crops is a significant factor in corn yield increase
  • Rotating crops can help reduce nitrogen requirements, decrease disease and insect pressure, and allow farmers to alternate herbicides
  1. Residue Management
  • Having less residue will help with emergence and also help warm the ground up
  • Less residue will also reduce nitrogen immobilization and lower disease pressure
  1. Disease Management
  • Choosing a hybrid with a good disease package is very important
  • Applying a fungicide will also assist the corn with a healthier plant and long stay green, therefore staying alive longer for grain fill

10.  Insect Management

  • Having a corn with BT traits within the genetics helps tremendously especially in corn on corn situations (Triple Stacks/Rootworm protection)
  • If you are in a rotation with soybeans or wheat, I would suggest a “double stack” which includes defense against just corn borer.  With a rotation there isn’t as much rootworm therefore  rootworm protection isn’t as critical

Contact your local Mercer Landmark agronomist for more information.

By: Jeff Keller – Mercer Landmark

With the grain bins busting this fall; and in areas piles on the ground, 2014 harvest is slowly getting more and more finished up. Across the country we hear record yields, so what do grain farmers do for this next year.

There has been many discussions from growers they will be switching acres from corn to soybeans. Many factors contribute to this with land rent, inputs of seed, crop nutrients and crop protection products all not dropping below last year’s cost. Corn is a costly crop, but back to back soybean fields can bring on nematode pressure and weed control issues. Using the same herbicide plan on a field this year and coming back next year with the same life cycle of crops with the same modes of action can contribute to weed resistance.

So will there be an abundance of corn next year? There might be a lot corn stock piled from this year’s crop, but the USDA is also expecting a record use of corn as well. Many factors come into play with corn usage such as higher ethanol production, greater feed usage, as well as other alternative options.

There is no cookie cutter approach to 2015’s crop season. It for sure will be another interesting one. Therefore, keep in good contact with your Mercer Landmark Agronomist to pencil out your inputs and plan for a successful 2015 season.

The past few months have been a wild ride for soybeans.  Below is an article from the Anderson’s that goes into detail a little more about NOPA and what it all means.

by Risk Management Team, The Andersons

With the recent soybean meal situation we are going to discuss the organization behind the most popular monthly soybean crush data, the National Oilseed Processors Association or NOPA. NOPA was originally organized in 1929 as the National Soybean Processors Association, the association was renamed in 1989. NOPA represents thirteen regular member firms engaged in processing and nine members who are consumers of the end products from processing. Through its various committees, the association cooperates with the US department of Ag, State and Commerce and many other private organizations. Every month NOPA releases their crush data through Thomson Reuters providing the industry with state-by-state crush data. The last two months of data have been extremely important to the market as a good measure of industry utilization as we finish harvest of a record Soy bean crop. Considering a large portion of the crush plants are involved in the association the data is usually converted by traders at a ratio to understand where the entire industry could be from a crush standpoint. The last two months have certainly been interesting when analyzing the NOPA information as the jump from September to October is a record and proves we are quickly refilling the near empty meal pipeline. Many in trade felt last month’s crush number would be hard to attain given poor logistics and a slower harvest, as the front end of the pipeline is replenished focus will shift to the back end of the marketing year.

By: Amy Hayes (Battles) Mercer Landmark High Yield Specialist

Now that harvest has mostly come to a close it is time to firm up seed orders for your 2015 cropping plan. Along with yield potential, trait package, relative maturity, disease tolerance, emergence, and all of the additional talking points we often hear in the seed industry, I feel there are two topics of discussion that are often over looked, test weight and drydown.

Despite 200+ bu/ac farm averages this year, test weight and drydown were seriously lacking in a lot of hybrids. These two factors can play a HUGE role in the profitability of your farm, and is a topic your Mercer Landmark Agronomists pay very close attention to when it comes to hybrid selection.

Although price/bag seems to be the focus of conversation during seed pre-pay, I challenge you to think differently, in terms of profit/hybrid. The chart below is based off of estimated discounts/bushel for test weight and moisture deductions, assuming a seeding rate of 32,000 seeds/ac, the price of corn at $3/bu, both hybrids yielding 220 bpa, Hybrid A at 21% moisture and 51# test weight, and Hybrid B at 17% moisture and 54# test weight.

Even though the grower ended up saving $40/bag of corn at the time of purchase, he ended up losing $36.80/acre in the end due to poor drydown and test weight. In fact, based on the numbers listed above, Hybrid A would need to cost $158.00/bag to make up for the profit lost due to moisture and test weight docking. Also, keep in mind that the calculation above is not factoring in discounts accrued due to shrinkage, which in the case of Hybrid A, could deduct an additional $37 from the grower’s profits.

In conclusion, as we begin to focus more on the bottom line, do not forget to look a little closer at the yield data being distributed in our growing area, and don’t forget to think different.  If you have questions regarding hybrid profitability talk with your local Mercer Landmark Agronomist today.