Financial Conversations with Fitz #8 - Crop Margins for 2009 - 1/27/2009
What an exciting week we had last week….New President….Lots of changes….WE had a great turn out for our Resource Fair. Sort of bittersweet that we have that many of our citizens out of work. We will be having another one in May. Be sure to check with TSB on topics covered.
Today we are going to visit about our 2009 crops. I know we have talked a bit about this starting back in July, but the time is here. Have you made your plans and priced them. I have been to several meetings and visited with clients. It looks like the cash flow will work because of carry over from 2008 pricing, but I have yet to figure out a way to get the actual profit to work with 2009. Right now it looks like there is a margin of about $200 for land and living…..Our main objectives are 1—Cost of production, 2-Sizing up the market, 3-Strategies/Tools for managing margins. There is some carry in the corn market currently (about 32 cents)…..not quite as much in the soybeans….(about 18 cents)
We need to get with our agronomists to get our pricing nailed down. The next thing is to develop a marketing plan for 2008 and 2009 crops……Avoid the ‘Five Common Mistakes in Grain Marketing’ according to ISU Extension.
-Reluctance Toward Pre Harvest Marketing, Failure to Understand and Track you Local Basis, Lack of an Exit Strategy, holding Grain in Storage Too long, and Misunderstanding Carrying Charges.
Be sure to work out your income and expenses with us at TSB or with your supplier. I use the Ag Decision Maker from ISU. You can put your own figures in to see how it works for you. It is important that we remember the 79% of the time the best markets are from February thru July. There are many meetings and conferences to present this information. With the different insurance and revenue assurance programs it is safer to do forward pricing then it has been in the past.
One of those is going to be brought to you by TSB next Wednesday February 4th. This is a Commodity Marketing Seminar to provide information that you can use to formulate your 2009 and future crop marketing plans. This is made available to all at no cost to those attending. We are bringing in Ms. Karen Voigts from First Capitol Ag. They are nationally recognized for marketing seminars. This seminar will be held in our Community Room in Forest City in the lower level of the bank. It begins at 1:00 p.m. Give us a call if you plan to attend or you can just drop in to check it out.
Call or stop in to see us if you have any questions in any of our three offices.
Remember that you should deal with people in community banks and organizations. When you work with them, you know that you will also see them sitting with you at ball games, church or community events. So, if in doubt give us a call.