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Financial Conversations with Fitz #37 - FROST - Now what? - 10/13/2009

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Wow, a little cool this weekend…The number of degree days in Kanawha is at 2,346.  We are still behind about the same amount—300 DGD—as last year at this time.  There won’t be a lot more added that will make much difference this season.  Our TSB staff has been out to some test plots in our area.  One reported 25% to 35% moisture.  The average range was 28 to 33%.  Test weight was between 50 and 53 pounds…Little light.  Yields were good, at 180 to 200.  Some thoughts for drying…If your elevator charges .05/point/moisture plus shrink, and If we do deliver 25% corn at 200 bushels, we would have over $100/acre in drying costs.  We really can’t afford to do that.  Let’s hope for two or three weeks of sun and drying, which will be a challenge during the month of October.  The forecast looks like it will be wet for three days this week.  I guess I would be in favor of checking on some of my fields to see what my crop is doing, when you can walk out into them.  I noticed lots of small ponds starting went to the Buffalo Center area last week for an open house.  Our soil needed the four inches we received, but it didn’t absorb the next three nearly as well.  

Now is a good time while waiting for dry fields to sit down and calculate inputs and expected production.   I have run a couple of AGDM projections for our clients.  Corn on Corn is close to breaking even when you put all the cash in non-cash costs into the formula.  We didn’t put in that much money for drying…only about half.   With the wet corn, we will see more cash sales this fall than usual.  Are you going to sell your corn at 3.00 or 3.75?   Last week in our immediate area, prices were about in the middle.   When you know all your costs and inputs, you can make a wiser marketing decision when there is a jump in the markets.   What do you do when corn goes up 26 cents during the day?    How much do you sell?  The big guys always sell something with a market jump of that size.  If you sell 5,000 bushels at a 26 cent jump that is $1,300 dollars extra than if you would’ve sold before the market jump.   Come on in to TSB, and we can help you go through next four months of cash flow.  You will need to get your figures together for your tax preparer anyway.

A lot of clients deferred grain last year with the higher prices.  Be sure you know the tax implications of your sales by year-end or into January.   There isn’t a lot of carry in the market.   Your quality risk will be higher this year with light weight and lots of moisture.  I am guessing we have quite a variance within the field with our late corn with this frost.   Blending will be important since it the variances will add an extra watch for the grain.

I called to order my energy audit with Black Hills.  I haven’t heard from anyone yet…They must be busy.  I will keep you up to date.

We had a great weekend of high school sports and homecoming.  The “Dance for the Cause” was a big hit.  Great family entertainment for this day and age.  Nate and the Moonlighters is a group to put on your list.  Headed to Lakota/Ledyard area on November 7th.

Remember that you should deal with people in community banks and organizations.  When you work with them, you know that you are working with people you will also see at ball games, church, or community events.  So, if in doubt give us a call.