Decision Making in a Good Market News Year

[charliep]

Everyone seems to go back to negative factors/beating on the CWB in what is looking like a very positive year. Just curious/hoping to get some discussion going on what impact this will have on decision making.

Start with a scenario on one crop - canola. Black soil zone/feed comfortable with a 1 tonne per acre yield (44 bu/ac). Assuming this to make my math easy. Cash costs to grow - $200/acre. Crop insurance yield - 33 bu/ac or at 70 % coverage 23 bu/acre.

My strategey this year would be to lock in profit/manage risk (with risk also including upside in the market)? Likely hard to talk about given everyone is different but how does a manager approach decision making? Crop insurance decision? Intensity of input use? Cash flow? Forward contracting? Replacement strategies/use of other tools like options?

[charliep]

Might also add in long term decisions/investments?

Example, your neighbors is contemplating retiring. Possibility of rental/purchase of their land. Perfect fit with your current land base. You have seen two of your neighbors pick up trucks in the neighbors yard and you assume the visits are more than social.

[craig]

Charlie
Just wanted to comment re barley( feed) for the new crop Year. I am concerned that with a late spring we may start pushing barley acres up. wanting to price on deferred delivery but not sure I'm happy at $3.00. The barley question also opens up the question of what if grain companies can sell export this fall. Will there be opportunity before Australian crop.

[cottonpicken]

A concern over:
barley acres
corn acres
canola acres
pea acres
mustard acres
wheat acres
soy acres
flax acres
oat acres

Were lovin it theres no way theres going to be enough of anything.

[winwin]

Sell some and hope it goes up.$8 is a profitable level.My motto is"you can't go broke making a profit".

Some think its gonna keep going up.Great ther's 2008 crop not even touched yet.

[kamichel]

Craig how about a malt contract? If you are growing a malt variety then I would think that a malt contract on a portion of production would be better.

[kamichel]

A rep. came over to visit me today and guaranteed 3.6 dollars per bushel delivered on malt tow row new crop so that would get paid out if the final pro is less at the end of the year. Rayglen will offer 4 dollar picked up but no guarantee on when to move so proper storage is essential. I guess most locations would be better price than these. Also another thing to think of is what the open market if we get it will do to prices? Also how many acres are really going to be out there?

[kamichel]

To answer Charlie
My N is up about 10 percent.
Phos. is up 40 percent because last couple years was down. So back to normal.
All other inputs the same.
I am using forward contracting in Canola and CWSW wheat. Still looking for yellow pea contract and more wheat to price. Looking at CWB fixed on CWSW wheat. Had no forward contracting last year. I never use options as they are costly in my opinion. But notice some people made extra money this fall by using some of the SWP canola contracts where they could still take advantage of a higher price.
I gave an attractive bonus to employees for last year at Christmass time.
I don't worry about someone buying my neighbours land because they can have it. I have enough. Rumour has it someone from Alberta just bought 15 quarters from my next door neighbour.
I currently update machinery on a must need basis. Work hard to keep the older stuff working. Will improve equiptment after I see mountains of grain in my yard. Also looking to improve grain storage. Want to pay down debt.