Frome the Bismark Tribune
Monday, March 19, 2007
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The relevant quote
Fertilizer in the form of anhydrous ammonia is double the price it was a year ago, now between $450 and $500 a ton.
-------------------------------------------------------------
At the will of markets and weather
SCRANTON - Everyone occasionally dreams they're frozen in place and can't get where they're supposed to go.
The dreams express frustration and frustrated is how many farmers and ranchers feel every waking moment.
Prices across the big board for everything from wheat, to sunflowers, to cattle are as high or higher than they've ever been.
Some have waited a lifetime for prices like these.
But to get there, ah, to get there.
Last year was dry and subsoil moisture going into spring is in extremely short supply across the region.
If market prices continue strong and crops don't do better this year than last, it'll be for farmers like selling widgets for years at $2 and having the widget factory break down just when widgets finally sell for $4.
It'd be enough to make a grown man cry.
Instead, he'll put another crop in the ground starting in just a few short weeks.
He made his planting decisions earlier this year with one eye on the markets and the other eye on the land right there in front of his tractor.
Markets are the "big decider," says Elgin farmer Harlan Klein, also chairman of the North Dakota Wheat Commission. "But it gets back to what works in your area."
Where he's from, wheat works, most years.
Local cash price for a bushel of wheat was around $4.50 at Elgin and the Minneapolis Grain Exchange quoted $4.80 in recent days. That's roughly $1 more a bushel than many years and $2 more a bushel than most years in the past 20.
"Everybody's excited about the markets," Klein said. "I wish I had the bushels."
If he gets a bumper crop and the wheat market stays high or gets higher, Klein said he could pay off what he lost last year, when he brought in an average of 6 puny bushels for every dry, sun-baked acre he'd planted.
Despite good market prices over the winter, auction bills are plastered across the Cenex windows and cafe walls around the area. One popular auctioneer finally had to quit accepting bookings for this spring, Klein said.
Market prices for other crops are high, too.
Corn is at a 10-year high at between $3.72 and $4 a bushel, driven there partly by harvest conditions and a regional demand for corn ethanol production.
Canola with its bright summer flowers and oil-bearing seed is at $13 a hundredweight. Peas are at $4.50, up $1 a bushel from just November. Sunflowers are getting around $17 a hundredweight.
The cattle market after hitting record highs two years ago and then dribbling off, has rebounded in recent weeks, partly because of a slight drop in corn prices.
The big board has good news pretty much from top to bottom.
But it's the bottom line that means everything.
Klein said it's harder to make money even on a good crop, when it costs so much to plant it.
Diesel fuel for those endless passes with the drill seeder took a big price jump this month, to $2.88 at the pump Friday.
Fertilizer in the form of anhydrous ammonia is double the price it was a year ago, now between $450 and $500 a ton.
"The bottom line is really thin," Klein said.
Over at the Scranton Equity Elevator, one of the region's biggest grain clearing stations, assistant manager Cleve Teske, said he's encouraging farmers to be cautious.
He's had some come in, anxious to sell against wheat futures, on what's called "hedge to arrive."
Those hedged prices for wheat are in the range of $5.08 to $5.31 a bushel for new crop durum.
In that kind of deal, the producer pledges to deliver the grain he hasn't yet planted or harvested to the Scranton equity and the elevator pledges to deliver grain it hasn't yet seen to a grain port on the West Coast.
"I think it's going to be a really good year," Teske said.
It isn't the market that makes him cautious. It's the conditions.
After all, a hedge is a gamble and while the pot looks very enticing, Mother Nature holds all the aces just like she always does.
Last year, about half of the large circle around Scranton from which the elevator pulls grain had a 100 percent crop failure. The other half harvested 60 percent or less than average.
"I tell people maybe they want to look at minimizing their loss instead of maximizing their profit,"" he said. "People here did not have a good year (2006). I don't care what the price was, you can't make it on half a crop."
Market-wise, this looks to be one of those magical years for farmers who also run cattle. It could be magic, because he could do well on both sides of the operation, instead of one side supporting the other like most years.
Ted Uecker, of Hettinger, is the third-generation cattle buyer in his family business.
The Ueckers buy cattle off the farm and sell to feeders in Iowa, Minnesota and Nebraska.
In just the past three weeks, Uecker said cattle prices jumped up in response to a softer price for corn.
Steers at 600 weight are back to $1.15 a pound, after dropping off to 95 cents this fall from previous highs of over $1.25.
Not only that, Uecker said future prices on the Chicago board "look more promising for next fall than we thought they would be."
He sees a trend of cattle producers getting bigger, with 300 to 500 head increasingly common.
The trend is buttressed by poor crop conditions and Uecker said, "More people are looking at the possibility of getting out of the business. In the last three to four years, cattle have covered crops, big time."
Producers may, like Klein says, be heading out to the fields with one eye on the markets. While prices for corn, sunflowers, even peas look promising, they have to factor in their land base, equipment, climate and the crop rotation they're cycling.
Like the guy who makes widgets, they're stuck with the factory they have.
Monday, March 19, 2007
---------------------------------------------------------------
The relevant quote
Fertilizer in the form of anhydrous ammonia is double the price it was a year ago, now between $450 and $500 a ton.
-------------------------------------------------------------
At the will of markets and weather
SCRANTON - Everyone occasionally dreams they're frozen in place and can't get where they're supposed to go.
The dreams express frustration and frustrated is how many farmers and ranchers feel every waking moment.
Prices across the big board for everything from wheat, to sunflowers, to cattle are as high or higher than they've ever been.
Some have waited a lifetime for prices like these.
But to get there, ah, to get there.
Last year was dry and subsoil moisture going into spring is in extremely short supply across the region.
If market prices continue strong and crops don't do better this year than last, it'll be for farmers like selling widgets for years at $2 and having the widget factory break down just when widgets finally sell for $4.
It'd be enough to make a grown man cry.
Instead, he'll put another crop in the ground starting in just a few short weeks.
He made his planting decisions earlier this year with one eye on the markets and the other eye on the land right there in front of his tractor.
Markets are the "big decider," says Elgin farmer Harlan Klein, also chairman of the North Dakota Wheat Commission. "But it gets back to what works in your area."
Where he's from, wheat works, most years.
Local cash price for a bushel of wheat was around $4.50 at Elgin and the Minneapolis Grain Exchange quoted $4.80 in recent days. That's roughly $1 more a bushel than many years and $2 more a bushel than most years in the past 20.
"Everybody's excited about the markets," Klein said. "I wish I had the bushels."
If he gets a bumper crop and the wheat market stays high or gets higher, Klein said he could pay off what he lost last year, when he brought in an average of 6 puny bushels for every dry, sun-baked acre he'd planted.
Despite good market prices over the winter, auction bills are plastered across the Cenex windows and cafe walls around the area. One popular auctioneer finally had to quit accepting bookings for this spring, Klein said.
Market prices for other crops are high, too.
Corn is at a 10-year high at between $3.72 and $4 a bushel, driven there partly by harvest conditions and a regional demand for corn ethanol production.
Canola with its bright summer flowers and oil-bearing seed is at $13 a hundredweight. Peas are at $4.50, up $1 a bushel from just November. Sunflowers are getting around $17 a hundredweight.
The cattle market after hitting record highs two years ago and then dribbling off, has rebounded in recent weeks, partly because of a slight drop in corn prices.
The big board has good news pretty much from top to bottom.
But it's the bottom line that means everything.
Klein said it's harder to make money even on a good crop, when it costs so much to plant it.
Diesel fuel for those endless passes with the drill seeder took a big price jump this month, to $2.88 at the pump Friday.
Fertilizer in the form of anhydrous ammonia is double the price it was a year ago, now between $450 and $500 a ton.
"The bottom line is really thin," Klein said.
Over at the Scranton Equity Elevator, one of the region's biggest grain clearing stations, assistant manager Cleve Teske, said he's encouraging farmers to be cautious.
He's had some come in, anxious to sell against wheat futures, on what's called "hedge to arrive."
Those hedged prices for wheat are in the range of $5.08 to $5.31 a bushel for new crop durum.
In that kind of deal, the producer pledges to deliver the grain he hasn't yet planted or harvested to the Scranton equity and the elevator pledges to deliver grain it hasn't yet seen to a grain port on the West Coast.
"I think it's going to be a really good year," Teske said.
It isn't the market that makes him cautious. It's the conditions.
After all, a hedge is a gamble and while the pot looks very enticing, Mother Nature holds all the aces just like she always does.
Last year, about half of the large circle around Scranton from which the elevator pulls grain had a 100 percent crop failure. The other half harvested 60 percent or less than average.
"I tell people maybe they want to look at minimizing their loss instead of maximizing their profit,"" he said. "People here did not have a good year (2006). I don't care what the price was, you can't make it on half a crop."
Market-wise, this looks to be one of those magical years for farmers who also run cattle. It could be magic, because he could do well on both sides of the operation, instead of one side supporting the other like most years.
Ted Uecker, of Hettinger, is the third-generation cattle buyer in his family business.
The Ueckers buy cattle off the farm and sell to feeders in Iowa, Minnesota and Nebraska.
In just the past three weeks, Uecker said cattle prices jumped up in response to a softer price for corn.
Steers at 600 weight are back to $1.15 a pound, after dropping off to 95 cents this fall from previous highs of over $1.25.
Not only that, Uecker said future prices on the Chicago board "look more promising for next fall than we thought they would be."
He sees a trend of cattle producers getting bigger, with 300 to 500 head increasingly common.
The trend is buttressed by poor crop conditions and Uecker said, "More people are looking at the possibility of getting out of the business. In the last three to four years, cattle have covered crops, big time."
Producers may, like Klein says, be heading out to the fields with one eye on the markets. While prices for corn, sunflowers, even peas look promising, they have to factor in their land base, equipment, climate and the crop rotation they're cycling.
Like the guy who makes widgets, they're stuck with the factory they have.
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