Farmers can make wrong decisions in strange timesHigh prices and drought can cause area farmers to make costly mistakes in marketing their crops, a group of marketing experts say.
By: Jonathan Knutson, Agweek
GRAND FORKS — High prices and drought can cause area farmers to make costly mistakes in marketing their crops, a group of marketing experts say.
“It’s a jackpot year for a lot of you. Most of you don’t need the money. That sometimes causes people to really delay making decisions. If you delay too long, you’re going to miss the party,” said Brett Oelke, University of Minnesota Regional Extension educator.
“You can try to gain a few extra cents here and there (by waiting to sell), but what difference does that make when you’re talking of dollars of net (profit) per acre in an unusual year?” he said.
Oelke, along with Andy Shissler, a grain broker with Roach Ag Marketing, and Steve Filipi, grain merchandiser with Mid-Valley Grain Cooperative in Crookston, spoke at the annual Prairie Grains Conference Dec. 13 in Grand Forks. More than 700 farmers and others involved in area agriculture attended the event, sponsored by seven ag organizations in North Dakota and Minnesota.
Shissler, who works in the Chicago area, noted that corn from the Upper Midwest is being brought into Illinois. In a normal year, Illinois is one of the nation’s top corn producing states and exports much of its corn. This year, Illinois needs to import corn because drought hammered yields, and because of disease problems in corn raised in the state.
“I’ve never seen anything like it,” Shissler said.
Corn prices are attractive, and that’s causing farmers in this area to consider growing even more of the crop in 2013, Oelke said.
“The only crop that really gets people excited is corn,” he said.
He estimated that half of the farmers in northwest Minnesota’s Kittson County, an area that traditionally has raised little corn, will grow the crop in 2013.
Early projections call for U.S. farmers to plant 100 million acres of corn in 2013, up from 96.4 million acres last year. The 2012 total was the most in 75 years.
Filipi questioned whether 100 million acres will be planted.
“I just don’t see it,” given the lack of subsoil moisture in major corn producing states, he said.
Too many farmers are making questionable marketing decisions because of drought, Shissler said.
“It’s really tricky to market when you’re looking at this drought. It’s going to make you want to do the wrong thing,” he said. “Stay consistent with what you’ve been doing” in the past.
Thinking about fertilizer
Kevin Kaufman, group vice president of agricultural commodities at Burlington Northern Santa Fe Railway, also spoke at the Prairie Grains Conference.
He said area farmers should ask themselves how they’ll respond to major changes in the availability and cost of nitrogen fertilizer. Currently, the United States imports most of its nitrogen, a widely used fertilizer that’s particularly important for corn.
Plans call for several new fertilizer plants, including a $1.2 billion plant in Spiritwood, N.D., to be built in the United States.
The new plants will reduce the cost of, and increase the availability of, nitrogen fertilizer, Kaufman said.
“It’s a huge game changer,” one that should cause farmers to reevaluate the crops they grow and the farming practices they employ, he said.