|
Southern Illinois | There is some much chatter on Market Talk right now it's making my head spin. Everyone has a different interpretation of the MFP announcement, most (if not all) feel there was designed to incentive pushing farmers to plant crops as late as possible and avoid taking PP and finally the lobbying power of Big Ag pushing to make sure inputs get applied and corn gets brought in to the ABCD's. There are undoubtedly other forces influencing this situation and how much those main three impacted the initial announcement remains to be seen. Farmers now feel as though we have been placed in an unwinnable situation. Take PP and lose out on the MFP (which we still aren't sure exactly how that does or does not apply) OR spend the money, time and resources to put out a crop (like the govt wants) only to see it struggle all year long and then not see the market rally as we all feel it should have b/c the MFP artificially suppressed pricing through a number of avenues. The latter results in below APH yields, but by even with a crop insurance payment for not meeting your revenue threshold, your net income ends up being identical or below what the PP payment would have been after all the costs are factored in.
So, what can we do about it? My answer is, if you can plant corn in relatively acceptable conditions by the deadline or a few days after, plant corn as you normally have. I know this is easier for us down south than you guys north of I-80 but I think it's reasonable. This is what most of us would do anyway so it's no big revelation.
Ground that you were intending to plant to soybeans has the same decision making process. Follow the same path. Do your best to plant a crop because it's what we do and it's how we feed our families. Do your best to raise a crop that on a more normal year, you wouldn't give it a second thought. Conditions are right, I am planting.
Now, we get into the two most difficult decisions. If I can't plant Corn by the final planting date or if I can't plant beans by the final planting date, what do I do? Well, my plan is then going to be to fill up my air seeder with as many beans as possible at that point in time, in whatever conditions there are and plant the lowest setting possible on my air seeder and drop 40K beans/acre and don't do anything else to those fields except spray them as much as necessary to keep the clean. If fertilizers are not on, don't apply them. Whatever seed you have leftover (hopefully untreated), send it back to the dealer. The different outcomes are as follows
1. Extremely poor stand, adjuster comes out says you will take a 5 bushel hit on your yield, you fail the field. You still participate in the MFP, you still participate in the Harvest Price option and you still have a higher guarantee than with PP and you go plant a summer cover crop to suppress weeds and eliminate some compaction and you don't contribute to the already oversupply condition that we have with soybeans. You take a hit on your APH for this year but we are only 2 years from 2012 dropping off and then after that 2019 will be your yield exclusion for the next 8. If so inclined, you take the money you get back from pre-paid inputs and put it towards buying a few December Corn futures and try to participate in the corn rally (fingers crossed) in that manner.
2. All 40K seeds come up (hopefully relatively uniform). No adjuster needed, you get to experiment with ULTRA low population soybeans. You will have to spend some extra money on chemicals b/c canopy will be an issue (sorry for you Dicamba guys and the cutoff dates, might be a good time to switch to Liberty beans). Manage weed pressure all summer long with overlapping residuals and then harvest accordingly. Take the MFP and Crop Insurance payments, take a slight hit to your APH and market the smaller bean crop. Once again, if so inclined, buy a few December futures to stay in the game on corn.
I think this strategy (if applied to a lot of the acres that may have went PP corn especially) solves a lot of the farmers problems. It will still allow you to participate in the MFP and markets, it lessens the potential glut of soybeans that we could see and at the same time and allows us to lessen the money we are putting into a crop that could ultimately fail anyway. The downsides are an impact to your APH, some possible compaction to your farms, a higher chemical bill (not terribly higher, maybe just one more late post application, on label of course :) and potentially looking at piss poor stands all year. It will likely keep the markets depressed later in the year b/c the USDA will come out and say the acres got planted and all is well, but if things are as bad as some say they are (including myself), even the USDA wont' be able to sugar coat things for that long and the market will react with or without their concurrence.
Feel free to shoot holes in my thought process and point out things that I have not considered but I can't see a better strategy for the general farming population given the unknowns we have in front of us today. | |
|
Simple Strategy for Navigating These Uncertain Waters
