Freeze Warnings & Market Burns
Dancing Through Winter's Edge
Polar Vortex Returns
Winter arrived last week, not just for us in the Red River Valley but for the country's majority. Snow piled up in the nation’s midsection and northeast before frigid air swooped in, making us all forget about El Nino for five minutes.
Fortunately, we’ve only got a few days of this polar vortex business before temps are forecasted to bounce back to a more inhabitable level.
We’ve been pretty spoiled this winter on the Northern tier, so a short cold snap isn’t the end of the world.
Head colds and flu bugs swept through our home this weekend, so newsletter production is behind our scheduled broadcast. I hope you all stay healthy and warm while winter smacks us in the jaw.
WASDE Doozy
On Friday, the January WASDE (World Agricultural Supply and Demand Report) smashed expectations, further depressing grain markets.
I won’t delve into the numbers because plenty of people much brighter than me do a fine job covering grain markets. If you’d like a deeper dive into commodities,
publishes here on Substack, and does a fantastic job keeping readers up to speed every weekday. You won’t find a better bargain for the amount of information they provide. I highly recommend checking it out.Angie doesn’t tell you when to buy or sell (if anybody’s doing that, you should be suspect cause nobody knows if corn, fuel, orange juice, or Snickers bars will go up, down, sideways, or in circles). Still, she does a fabulous job of showing the big picture in the main grains.
If you would like to dig into the numbers, you can access the full WASDE PDF report by clicking this link:
https://www.usda.gov/oce/commodity/wasde/wasde0124.pdf
I’m no market wizard, but I can usually read the writing on the wall, and right now, it’s saying, we have plenty of grains, thanks.
Cash corn is back below four bucks, soybeans are well under twelve, and you can no longer give wheat away at a charitable silent auction. All of these crops are now priced below the cost of production. Farms will have to get creative to pencil things out.
Booms and busts. That’s the way she goes.
If history repeats, as shown in the long-term spring wheat chart above, it could be a spell before we find ourselves with higher prices again. This is why we’re taught to sock a few bucks under the mattress so we’re not caught off-guard when the lean times arrive.
Looks like those lean times have indeed returned.
If there’s a silver lining to this bloodbath, it’s possible that machinery prices will find their way back down from the clouds, and land prices may slow their upward march.
Still, it blows the proverbial bag. Profitable farming is good for rural communities. Most small towns don’t have a lot of industry to fall back upon, so when the farmer has some extra cash in his pocket, it trickles down into the local economy, and we all do better.
Whattaya gonna do?
We can’t change it. All we can do is buckle down and make the best of it. Know your cost of production, focus on tightening up the crop budgets and being more efficient with inputs like fertilizer, and bear down until the storm passes.
That’s all we can do.
Price collapses bring the conspiracy crows out in full force. Folks on X claim the USDA manipulated the data in the name of price suppression. We all want a reason for why things suck, so to get things to make sense, many of us find somebody to blame and throw the USDA under the bus.
A few weeks ago, at Betsy Jensen’s grain marketing discussion, the majority of grower questions were either about what was causing the decline in commodity prices or what would be the catalyst that jump-started a rally.
Occam’s Razor suggests that the simplest explanation is often the correct one. Therefore, I’m not buying the USDA manipulation theory. I believe it’s much simpler than that. There’s more supply out there than demand right now, hence, lower prices.
History Repeats
When crop prices are high, we produce boatloads of commodities until the market is flooded with grains and oilseeds, and then prices retreat until supply either comes down or some type of existential shock like the Russia/Ukraine war comes along to trigger the process again. It’s been happening since Moby Dick was a minnow.
One must wonder how the latest downturn's knock-on effects will manifest in the coming years. The average farmer age in America is over fifty-seven years old. Many have considered retirement but have held off because the economic conditions have been too lucrative to quit.
It’s not easy to do, but if you look back at the last fifty years, most of that time has been spent with crop prices in the doldrums, so we know how to make it work.
As always, the strongest survive.
The best action is to tighten up and closely monitor your crop budget. Technology supports our national commodity production, which continues to trend higher and shows no signs of stopping, so the best we can do is keep up and produce the best crops we can.
It’s not ideal and can suck the fun out of farming if you let it, but finding ways to make it work is what we do. Hang in there, kids. Things will turn around in time.
In the meantime, keep your ear to the grindstone.
NDAWN (Daryl and His Merry Band of Weather Stations)
Speaking of weather and technology, now and then, I like to highlight helpful tech and tools that people may not be aware of.
This week is a handy tool I’ve used for almost two decades. NDAWN (North Dakota Agricultural Weather Network) has been around since its inception in 1989 and has grown ever since, especially since local weather legend Daryl Ritchison took the reigns.
The NDAWN Mesonet now has 155 weather stations spread across North Dakota and has begun to expand further into Montana and Minnesota.
Now that (just about) every county in North Dakota is equipped with a station, Ritchision has plans to take the network into every agricultural county in Minnesota.
These weather stations collect data every five minutes and offer tools for irrigation scheduling, crop water use estimation, temperature, wind speed, and precipitation information.
You can see historical data from multiple years, estimate approximately when your soybeans will mature using the Soybean Growing Degree Day calculator (I can confirm it’s shockingly accurate), help you time your sugar beet spray applications, and so much more.
It’s incredible and valuable to have a robust application at our fingertips.
NDAWN is funded through gifts and grants from various federal and state agencies, commodity organizations, agricultural clubs, producers, businesses, and individuals, and it is one of the handiest free tools in agriculture.
You can check out the whole site at https://ndawn.ndsu.nodak.edu/, or if the mobile-friendly version is more your jam, head over to https://ndawn.info/ for all the weather things.
Thank you kindly for reading this week’s edition of Farming Full-Time!
Bundle up, hunker down, and I’ll catch up with you next week.
What keeps you sane when it’s too cold to go outside?
Are you staying healthy this winter?
Do you have any idea where the price of OJ is headed?
Is the USDA manipulating markets to keep us all poor?
What crop inputs do you cut first in an economic downturn?