New Life

Partners, 

[from Steve the grandpa]

The event we were anxiously anticipating arrived Monday, February 15th at 10:11 AM. Simeon Charles Luecht, Lindsay and Keith's second child, came into the world at 8 pounds, 1 oz; 21 inches long. He spent the first three hours of his life snuggled into his mother's chest gaining nourishment for his life ahead. 

After participating in the births of four beautiful children with their wonderful mom Phyllis, and then being around (not  in the delivery room) for 9 precious grandchildren, my reaction is still the same. What a wonderful and perfect Creator who designed a perfect plan to fill the earth with new life! None of this just "happened" by chance. 

I was involved in some where around 5-6000 births during the time we were milking. Each time that tiny wet calf took its first breath I was reminded how amazing the cycle of life is. How wonderful is it that we live on a planet with the right conditions to sustain us, and all things necessary to survive and thrive. That is a big part of what I really enjoy about my job: working in this amazing creation!

On the farm we're keeping busy with getting  equipment ready, and will work on tiling projects as weather permits; also shipping grain, spreading fertilizer, and cleaning out barns. This stretch of dry weather will allow lots of outside projects to get underway.

The price of crude is tempting us to lock in fuel needs for the rest of the year. Looking for thoughts about where it will bottom. Don't necessarily want to catch every penny but the fuel suppliers have themselves well covered in summer and fall contract margins. The price of fertilizer is gradually drifting lower - we still have half of our nitrogen needs to secure.

Fall prices:

Corn 3.56

Soybeans 8.56

Steve

Winter Activities

Partners,

One of the most important times of the year is now upon us, keeping busy in the office with paperwork. Beginning in late December, we have been plugging away, finishing up the 2015 calendar year, and making plans for 2016. Final rent checks have been sent, W-2's have been filed, 1099's are in process and we are working on financial statements in preparation for tax season.  Budgets for the 2016 crop year are being fine tuned, and we are negotiating with input suppliers for fertilizer, seed, and chemicals.  Our budget for equipment shopping is simple this next year, little to nothing.  We are not planning to replace any equipment, knowing that it will result in modestly higher repair bills and some minor delays.  The good news is that our line of machinery gets a thorough inspection for safety and all preventative maintenance will be completed prior to going to the field.

Phyllis continues to work diligently with our management accounting system, Centerpoint by Red Wing, and I (Marcus) recently traveled to Austin, Texas to attend an intensive management workshop known as TEPAP (The Executive Program for Agricultural Producers).  I was able to network with the best and brightest in Agriculture from all over the nation as well as a handful of foreign countries, while gaining insights on how to best position our farm to thrive in all environments.

Lindsay and Keith are now only three weeks away from the birth of their second son!

We had planned to finish January deliveries of corn last week, but due to high river levels on the Illinois river, it was necessary to wait until this week.  It is important to be able to haul grain out while the ground is frozen, as we have a few remote storage bins that are not accessible by gravel driveways.  We always look forward to having those facilities emptied out so we can fully enjoy the more modern facilities the remainder of the delivery season.

Agriculture is still in the process of "resetting" after the rise of the Ethanol Era, which was followed by erratic weather throughout the world, both of which led to a longer than normal period of high grain prices.  The primary question on everyone's mind is "How far through the reset period are we?"  These cycles have always been a constant in this industry, and the goal is to be able to not only survive tough times, but to be able to grow strategically as opportunities could arise.  

As I was reminded last week in Austin, it is critical that we all take a moment to be thankful to operate a business in this country, and for the good fortune to be able to farm on soils that could only be dreamed about in the vast majority of the world

Fall Grain Prices:

Corn:          3.55

Soybeans:  8.57

We have enjoyed seeing a lot of you in recent weeks, and look forward to seeing more of you soon.

Best regards,

Marcus

Winter = Meetings

Partners,

We continually strive to stay abreast of the ever evolving agricultural landscape.  Phyllis and I just returned from the annual DTN/Progressive Farmer AG Summit in Chicago.  The theme for this year’s meeting was "Mastering Your Margins: Strategies for Ag’s High-Risk Cycles.” This provided us with three intense days of speakers, seminars, breakout sessions, and networking opportunities.  I really enjoy the DTN Ag Summit each year because it helps me with the effort to keep a finger on the pulse of the global agricultural industry.  It also helps me to stay focused, gain fresh insights, and be a better manager.

I thought I would share with you a brief overview of some of the topics that were discussed:

Risky Business:  Ag’s Climate Change Challenges (Greg Page, Executive Director, Cargill Inc. Board of Directors)

• More effort should be focused on possible solutions, rather than debating (the highly debatable) cause
• Long term planning of land usage needs to factor in the changing crop growing degree days
• Fish are very poor feed conversion creatures so aquaculture is not as promising as some had hoped
• Ruminant animals (by nature) have lighter environmental footprint

Weather Meets the Technology Frontier (Jim Block, chief meteorologist, Schneider Electric) & After El Nino: 2016 Crop Weather (Bryce Anderson, ag meteorologist, DTN/The Progressive Farmer)

• There is an astonishing amount of weather data being collected around the globe
• Weather data is being recorded and analyzed by increasingly sophisticated computer programs
• Weather forecasting will continue to improve
• The frequency of extreme weather events will increase

A Lender’s View of the Farm Economy (Mary McBride, president, CoBank)

• US economy is moving into a "not so bad" zone, and arguably the best economy going globally
• A strong U.S. dollar is a negative factor on agricultural exports
• There are now record world stocks of Soybeans and Wheat

Mastering MarginsPost-Crash (Chris Barron, president, Ag View Solutions)

• It is absolutely necessary to accurately measure all aspects of our business
• Economic survival depends on focus on higher yields and lower cost per unit

Brazil’s Soy Fronteir at Middle Age (Renato Rasmussen, Brazil economic analyst, Rabobank  Guilherme Scheffer, financial risk management director, Grupo Sheffer)

• Brazil has doubled SB production the last 15 years and now exports more than the US
• They have the potential for 3 crops per acre per year—(e.g.:  Soybeans, corn, cattle)
• Their average cost of SB production now is 7.10

Bottom-line on 2016 Market Outlook (Darin Newsom, senior analyst/DTN/The Progressive Farmer)

• The 4 C's (cattle, corn, crude, cotton) have all entered a new paradigm this past year
• The markets we are in now will not change till there is some sort of weather disaster somewhere in the world

Leadership the West Point Way (John Sterling, Lt. General, U.S. Army (Ret.)

• Be-Know-Do
• 3 kinds of leadership--Direct, Organizational, Strategic

Wrap-up/Take-Home Strategies

• Cash burn rate on corn acres next 3 years could be over $400/ACRE
• Get financials in order
• Be a problem solver

Overall, the experience was a bit sobering compared to last few years. Phyllis and I are old enough to remember the 1980s; we feel like this is the next generation learning experience for “Mastering Your Margins” when the going gets tough.

Current prices:

Corn 3.65

Soybeans 8.81

Steve

Giving Thanks

Partners,

We are taking some time this week to pause and give thanks for all the Lord has blessed us with. As we reflect on the past year we truly feel like a blessed people with our family, our community, our business, this nation, and this wonderful creation we are so privileged to live in. We hope you are able to spend time with loved ones and special friends and strengthen and enrich relationships with the people close to you this season. We plan to have all our children and grandchildren in one place on Thanksgiving Day - something we truly cherish - maybe because as we get closer to the finish line we can appreciate the things that will outlive us.

Even now in the midst of tough economic times and the everyday challenges we deal with (like leaking water lines and leaking fuel pumps and adverse weather conditions), I feel so blessed that the second farmers in this country (Native Americans were the first) chose to leave a place of safety and strike out for a place where they could be free to worship the God of their choosing and engage in pursuits that were of their choosing. May we have the courage today to stand up for what we believe and take action to preserve our God-given rights.

Steve

All Done

Partners,

Finished corn last Wednesday - done with harvest on October 14th! We think this is the earliest to ever finish, which is so fitting to follow the earliest ever planting finish date of May 2nd. We started harvest on the 14th of September and completed on the 14th of October; take out 4 Sundays (we did work one half Sunday doing beans) and the one and a half rain days on September 18th and 19th, and that means we averaged 120 acres a day with the combine. We did not handle as many bushels as last year, but overall yields were average - especially considering the wet weather of June. We feel blessed to have such bounty.

We appreciate all the great harvest help: Wayne, Charlie, Derek, Ryan, Mitch, Jordyn, Chuck, John, Dave, Grandpa, Aaron. 

We also appreciate all the combine riders to help keep the operators alert and on task: Oma, Opa, Finley, Abbott, Judah, Justin, Anne, Dustin, Lindsay, Tina, Zack, Truett.

Thanks again for your trust in us, your help in the work we do, and the part you play in production agriculture.

Steve, Phyllis, Marcus