Financial Conversations with Fitz #61 - Spring is Here - 04/19/2010
Well, Spring is here. The equipment is going full bore this weekend. Ground seems to be working up on the better soils. Some of our real black stuff is a bit tough yet. Ground temp is about 56 yesterday. Markets have been quite erratic as of late. WE can’t seem to decide how much inventory we really have. Depends on which reporting service you listen to. Acres seem to be up in the air also. Now that planting has started maybe we will decide how much we are planting. Things are getting stirred up in China so they are not a sure buyer like we thought. Even the volcano is causing some long term concerns in Europe. So as busy as you are tilling be sure to watch the markets. For today they will probably open down quite a bit. So many factors other than the commodity itself effect what we the farmer get for it. The DOW opened lower this morning because of the Goldman factor. So it will probably be bouncing around this morning.
So today I am going to visit a minute about the cash flow for the 2010 crop. Of course we should be sold on the 2009 crop of about 65 plus per cent. Who knows when and if we have seen the high for that product. WE are trading in the mid $3.00 market at this point. A little strength for July, but is it enough to carry the product with holding costs and an 80 degree temperature outside. I figured my break even last week with AG Decision Maker. I had to go to 189 bushel/acre to hit breakeven. If I used 160, I lost about $45/acre without govt payment. I was using rent of about $200. So many variables in coming up with that decision. Most of our operators have all ready locked in all their input costs. So now they just need to decide when to trip the trigger for sales. WE have passed the Federal Crop insurance deadline. Now we need to worry about the June deadline for signing up with FSA. That won’t be extended this year like it was last year. So if you want to discuss different situations, stop in when you get a break and we can play with the figures.
We have a Women , Land & Legacy gathering in Winnebago and Worth county Tuesday night at 5:30. Our topic is “Who gets Grandma’s yellow Pie Plate”. This will be presented by Brenda Schmitt of ISU Extension. A great program on what to do with Personal property in grandma’s estate. Most of the emphasis is usually on the land, but quite often the personal property causes the biggest problem. You don’t want an estate plan that will cause the entire family to come home for Thanksgiving and Christmas. Earth Day this week, so help your local church or community clean up.
Remember that you should deal with people in community banks and organizations that when they put something together for you that they will be sitting with them at ball games, church or community events. So, if in doubt give us a call.