Summit

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Partners, 

Meeting season has begun, and Phyllis and I attended the DTN Summit this past week in Chicago. Here is a brief summary:

Global Outlook
Look for inflation and interest to gradually rise
Under Obama regulations were implemented at the rate of 1-2 per day--rate now is 0
Oil prices relatively flat

Landslide or Landrise?
Land values predicted to soften 2-4% in 2018
Farmers are struggling to pay for land (rent or principal payments) or capital investments (equipment)
Today's rent implies 4.23/bushel corn price

Your Farm, Their Food (General Mills, Kellogg's)
Food transparency is vital today--where did this food come from?
Safety and quality of products is a priority company decision
People are interested in progress toward the goal of food sustainability--not necessarily perfection

Do You Need a CFO?
How are growing operations keeping a grasp on financials during periods of expansion?
Outside eyes on business operations can be very objective and beneficial

Over The Wall: Think Like an Athlete by Andy Papathanassiou
Racers must be safe and conservative to stay in the race but also aggressive to win
We must look for new ways of thinking and solving problems
1. Iteration
2. Coaching
3. Overcoming distraction
4. Do the impossible

How Will Technology Producers Compete
There will be increased cooperation between ag tech suppliers to make farm data more accessible and useable
Data will become easier to collect and more useable
Sustainability is doing more with less, something farmers do all the time

Market Outlook
Huge stocks of corn, beans, wheat
Strong carry in market now--near 70% in corn
In pattern of lower highs and lower lows

Social Media Tips
Riverview Farms, Wild Farms--Education strategy; why are we doing what we're doing
Silent Schade Planting Co
Bryant Agricultural Enterprises, Ohio--community outreach, history and future
Tom Farms, Indiana--clear up misunderstandings, engage followers, not everything needs to be positive--post things happening right now

Weather
La Nina with ocean cooling now predicts some weather patterns in Midwest
Winter colder than normal with above average snowfall
Spring time above normal temps and rainfall
SA weather--rainfall returning to normal--predicted normal weather ahead

Fine Tune your Financials, Rabo and Farm Credit 
Recovery still 3 years out--production costs still average above farm gate prices
Planting discipline--reduce seeds per acre to lower costs
Cost of debt is increasing
Debt coverage ratios are expected to continue negatively
Cost of land has adjusted--needs to adjust lower over next two years
Diversify, Peer benchmarking, Data Management, Analysis, Cost levers

 

On the farm we are working on many projects--tiling, tree clearing, grain delivery, equipment cleanup and major year-end office tasks. The weather has been great--clear and dry--and the forecast is for no precipitation for the next two weeks (looks like no white Christmas).  We are in the process of breeding about 80 heifers this month which puts them calving next fall. 

Farmers are watching our president's handling of our various trade agreements with some major trading partners. We understand it is a global economy today and we cannot wall ourselves off from the rest of the world and have a very vigorous economy. The tax bill in Congress is not even a step toward simplification, as very few loopholes are being addressed. Our children and grandchildren will be dealing with these huge deficits and not eager to make sacrifices to live on a balanced budget.

The family is doing well and looking forward to Christmas break with some down time from school and studies. Looks like we will be spending a quiet day on the 25th and will get everyone together after the holiday week.

Current prices:

Corn 3.29

Soybeans 9.49

Keep in touch and any questions welcome!

Steve