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| First off, one needs to understand USDA methodology for their monthly reports. Crops are not far enough along at the point when the survey is taken to measure anything, and be able to do it with accuracy. Therefore they will stay close to trend until they can actually measure something to determine otherwise even if conditions change from the time they survey until the release date. So the 169.5 probably won't stand till the crop is harvested. Some years it is raised, some years it's lowered. This year probably being lowered. So hold your cards close, no need to get excited about 1 report and trading back to the bottom of a range that has held prices for almost a year.
Build demand. If you think that your end product is priced too low, then you should be constantly working on real projects that will increase demand. If you think that your end product is 'too cheap', then one could say that it should be easy to add value too. If that's not the case, then maybe its pricing is not all that far out of line. The ethanol industry was started on a shoestring with a few plants. when they showed promise, and after many farmers worked long and hard to get gov't assistance, and after years of truly low prices, the boom was underway. Demand was increasing by leaps and bounds for several years running. I know many farmers that actually worked their tails off to get a plant in their area. I know of no one right now doing anything to increase demand in a meaningful way. I have said many times that usage needs to increase 500-700 mb/year in new projects to keep ahead of the supply we can produce.. Good prices for a sustained amount of time are created by demand where supply cannot keep up. Supply reductions either by policy or nature will often just cause a short prices spike which end users adapt to and production shifts around the world to alleviate. Therefore CRP isn't a solid long term answer.
Keep working on costs. Cut overhead, cut custom labor, there is probably a lot of fluff in many operations expense side after the boom years of late. The variables are harder to cut, because many affect production. Decide how much equity you are willing to sacrifice to make it to better times. A tough decision I have repeatedly had to make the last several years trying to keep the feed bill paid. Or let someone else farm it and lose their equity, if you truly believe there is no hope.
Make sure your marketing is not lacking. There can be $100/acre differece, often more from making sales 'toward the top' of the prices offered during the year compared to 'toward the bottom' | |
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Set aside or CRP
