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News from the Minnesota Association of Wheat |
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MARKET ADVISOR: MARKETING PLAN FOR THE 2000 WHEAT CROP Developing a marketing plan is probably the single most important management activity
on the farm. A marketing plan for each crop is essential to overall farm financial planning. Key elements include price objectives and time deadlines. Price objectives are matched with time deadlines. About five
objectives and corresponding deadlines are usually specified in a marketing plan. A percentage of the crop is sold when either the first price objective or time deadline is reached, another percentage of the crop is
sold when either the second price objective or second time deadline is reached, and so on. I usually specify that the largest percentage is sold at the middle price objective or time deadline. Time deadlines for
selling a crop can be derived from the seasonal price pattern for that crop. Those times of the year when cash prices are usually the highest would be picked as selling deadlines, recognizing that they may need to be
modified to meet cash flow needs and storage limitations. Seasonal price patterns for many of the crops produced in North Dakota are presented in North Dakota State University Extension Service Bulletin EB-61, Seasonal
Price Patterns for Crops. Price objectives are set relative to price expectations. I make the first three price objectives considerably more achievable than the last two. Minneapolis hard red spring wheat December
futures prices have averaged in the range of $3.44 to $4.07 in November during 10 of the last 12 years. The November average has been above the range only once, when it was $4.92 in 1995. This history implies to me that
at least three of the five price objectives should be set in that range. The situation would be similar for the August average of the September futures. An example marketing plan for wheat produced in 1999 could be
as follows: Sell 10 percent of the anticipated spring wheat crop by April 19 or when the September futures price reaches $3.70 on the Minneapolis Grain Exchange--whichever comes first. Sell an additional 25 percent by
May 17 or when the September futures price reaches $3.80. Sell an additional 30 percent by Nov. 15 or when the price reaches $3.90. Sell another 25 percent by Jan. 24 of the following year or when the price reaches
$4.50. And finally, sell the remaining 10 percent by April 25 of the following year or when the price reaches $5. Beyond August the next nearest futures contract price is the relevant one instead of the September
contract. September futures closed at $3.40 on Dec. 20, which means a substantial rally must occur for the price objectives to be reached. Achieving those price objectives will require a serious threat to the winter
wheat or spring wheat crops. What should you do if the threat does not occur? A common problem for many producers is to ignore the time deadlines for selling when prices fail to reach stated objectives, a serious
blow to the finances and credibility of the farm manager. Even if price objectives have been set unrealistically high relative to outlook information, the time deadlines make the plan realistic. Since the time deadlines
are based on a recognized marketing concept (seasonal price pattern), the plan is acceptable to professional farm managers and those working with them. Producers can feel that they have made a good decision, even when
price objectives are not reached. Marketing plans need to be reviewed and adjusted as new information becomes available. USDA reports generally provide the basic information for updating. This information can be
supplemented by news reports of crop conditions throughout the world, weather reports and so on. A marketing plan can be implemented using a number of marketing tools. The best tool to use depends on the situation.
The use of elevator contracts as part of your marketing strategy makes farm-management sense, especially on that portion of production that can be produced with near certainty, usually the first one-third. Cash
forward contracts, hedged-to-arrive contracts (sometimes called futures fixed contracts) and minimum price contracts are elevator-contract alternatives that should be looked at for making preharvest sales. The best
contract for a producer to use largely depends on current and expected futures prices, basis and cash prices. The put option is an attractive marketing tool because it leaves upside price potential open and does not
require delivery. But, that flexibility costs something which must be paid for at the time of purchase. Consider using put options where uncertainty is the greatest, in effect, where uncertainty involves not only price
uncertainty but production uncertainty, most likely the second one-third of production, and more, sold prior to harvest. Selling one-third of anticipated production using a cash forward contract or a futures fixed
contract and one-third using put options manages an enormous amount of price risk. A floor price is established on two-thirds of anticipated production while the price is still open to the upside on two-thirds.
FARMERS FILE LAW SUIT AGAINST MONSANTO OVER GMOs
PRECISION FARMING TECHNOLOGY UNEARTHING LEGAL QUESTIONS FOR PRODUCERS, LANDLORDS There's no question that GPS and GIS technologies are allowing agricultural producers to generate vast amounts of site-specific information. But when it comes to rental contracts, an agricultural
law expert at North Dakota State University says there is a basic question that landlords and tenants should be raising: Who owns that information? "The landlord and tenant should begin negotiating
this issue into their lease agreements. Don't assume it away," says David Saxowsky, associate professor of agricultural economics at NDSU. In terms of its adoption by producers in this region, GPS/GIS technology
is still in its infancy, Saxowsky says, and for this reason, there is no market for the information this technology generates. No viable market means no established value, no set price. He adds, "The value of this
information will be whatever people think it's worth, now and in the future." One benefit, or value, to producers from GPS/GIS technology is readily apparent: site- specific yield data, when combined with results
from grid-oriented soil tests, allow pinpoint fertilizer applications based on nutrient type and rate. Other benefits are less obvious. "What we're doing is using the technology to get the
maximum drainage by moving the least amount of dirt," says Gary Wagner, one of the region's early adopters of GPS/GIS technology. He farms near Crookston, Minn., with his brothers Wayne and Daryl. Wagner says
his landlords appreciate the improvements to their land that have resulted from GPS/GIS technology. Many equate these improvements with land stewardship. In fact, one landlord cited the brothers' land-management
practices as the reason she wanted them to farm her land. "One reason I've done as much public speaking about this issue as I have is because the more people you get involved in this technology and the more they
understand it, the more myinformation becomes valuable," Wagner says. Other than putting together framed "micro-topography" maps as Christmas gifts for landlords, Wagner says he's not shared with
landlords any of the site-specific information he's collected. Likewise, the Wagners have not yet used the information as a basis for negotiating the terms of rental agreements. But they have based their decision to
give up some rented land on site-specific information. Besides gaining a better understanding of how their land is being managed, landlords would benefit from GPS/GIS technology because of how they or future tenants
could use the information. In other words, GPS/GIS data could help owners make land-use decisions, such as whether to enroll less-productive acreage in the Conservation Reserve Program. A GPS/GIS database could also
serve as a value-added feature of farmland advertised for rent. The key, Saxowsky says, is to negotiate the issue and establish ownership. "Unless someone is willing to pay me 'x' dollars an acre for
gathering it, that's my information," Wagner concludes. NDSU Agriculture Communication
FINPACK 99 TRAINING TO BE OFFERED IN FARGO The FINPACK 99 workshop is for producers, lenders, educators, and consultants in agriculture, says Andrew Swenson,
extension farm and family resource management specialist at NDSU. The workshop will provide hands-on training and the step-by-step procedure to use FINPACK 99 for farm financial analysis and management. Experienced
FINPACK 99 users will receive an update on the latest features of FINPACK 99 for Windows. FINPACK 99 software can project farm cash flows for up to 10 years and provide monitoring worksheets to gauge a farm's
progress during the year. A year-end analysis gives an accrual income statement and financial performance measures for a whole farm and each farm enterprise. FINPACK 99 also keeps a historical database on each farm to
evaluate the trends of any financial orproduction items such as net farm income, acreage, seed cost per acre and feed cost. FINPACK has been in development since the early 1970s at the University of Minnesota. More
than 100,000 farmers, lenders and ag professionals have used this software in the last 11 years.The personal version of FINPACK 99 costs $395 and the professional version costs $1,195. Attendance in the FINPACK 99
workshop is limited so preregistration is required. The registration fee is $70. To register, either call (701) 231-8642 or mail the $70 fee to Extension Agricultural Economics, NDSU, P.O. Box 5437, Fargo, ND 58105-5437.
NDSU Agriculture Communication
LAKE REGION ROUNDUP SET FOR JAN. 11-12 Topics at the opening session on Tuesday morning will include wheat and
durum variety performance, what General Mills needs from production agriculture, thinking and farming globally, and the market outlook for wheat and durum. Following a sponsored lunch, afternoon topics will include
the economic impact of farm programs, options for dormant seeding canola, challenges facing the farm family, herbicide-tolerant canola, fungicide performance in small grains, head and leafdisease tolerance of small
grain varieties, and flax varieties and flax weed control. Concurrent sessions held in the Armory Room on Tuesday will include when the time comes, indoor air quality, storage tips for oilseed crops and dealing with
change. Sessions in the Courthouse Historical Room will include using the World Wide Web efficiently and E- commerce. Presentations in the Courthouse Meeting Room will include fungicide application research,
maintaining personal health, what neighbors are for, markets and world issues in wheat and partnerships to reduce machinery ownership costs. Sessions in the Memorial Building basement will include interagency project
for assistive technology, crop protection product updates from DuPont, ProSeed, Novartis and AgrEvo, multi-peril crop insurance, and the North Dakota Pea and Lentil Assocition. Topics at the Wednesday morning session
in the Memorial Building will include sunflower midge management, Sclerotinia head rot in sunflower, the organic market, how white mold impacts the edible sunflower market, and confection and oil sunflower markets.
Following a sponsored lunch, afternoon topics will include genetically modified crops, dry bean seeding rates, the farm financial situation, winter wheat varieties and production, herbicide update and stored grain
management. Wednesday concurrent sessions in the Armory Room will focus on Power Pay debt- reduction computer program, sunflower midge research, managing white mold and dry bean markets. Sessions in the
Courthouse Historical Room will include the Goldboard Dakota strawboard plant, decision evaluation for the cattle industry, bull selection and managing farm financial resources. Sessions in the Courthouse meeting Room
will include early maturing dwarf corn, rotation studies, feed grain markets, tax considerationswhen leaving farming and finding humor when you need it most. Wednesday sessions in the Memorial Building basement will
include a product update from Dow, an overview of senior health insurance, tree planting, depression and suicide prevention, changes in the confection industry, lifelong learning, use of canola and Nu Sun sunflower
seed, domestic violence, floor warming, miracles in daily life and Roundup Ready canola. There will also be informational exhibits both days in the Memorial Building and the Courthouse. For more detailed information
contact the NDSU Extension Service area office in Devils Lake at (701) 662-1364 or local county extension offices. NDSU Agriculture Communication
ADVANCED CROP ADVISERS WORKSHOP SET FOR FEB. 24-25 IN FARGO This workshop is designed for agricultural professionals who advise
farmers with crop production recommendations. Topics to be covered during the two days include soybean plant development and management; diagnosing customer problems; water management and tile drainage; canola plant
development and management; disease forecasting systems for more accurate fungicide decisions for wheat, canola, and potatoes; and commodity marketing and crop insurance insights. Preregistration is required, and
workshop enrollment is limited. The registration fee of $125 is due by Monday, Feb 14. To receive a workshop brochure or for further information, contact Greg Endres at the NDSU Carrington Research Extension Center,
(701) 652-2951 or NDSU Agriculture Communication
NCI OFFERS INTERNATIONAL PROTOCOL WORKSHOP "Proper protocol is a necessity, whether traveling Robert W. Frye, senior vice-president and chief of protocol for Protocol
International will lead the workshop. As the former
The workshop is designed to assist regional businesses that sell
Frye will combine humor and anecdotes to take participants Cost for the workshop is $100 and includes the four-course The NCI is an international center for meeting and learning about NDSU Agriculture Communication
NDGGA NAMES NEW PRESIDENT, SETS RESOLUTION FOR 2000 CONTACTS: Allan Skogen, Valley City, was named president of the North Dakota Grain Growers Association at the organization's annual meeting held recently in Fargo.
Skogen replaces immediate past president Mark Gage, who will continue to serve on the NDGGA board and as the organization's second vice president. Bruce Freitag, Scranton, was named first vice president, and Keith
Neshem, Berthold, secretary-treasurer. New to the NDGGA board of directors is Mark Anderson, Regent. He replaces Larry Stang, also of Regent, who stepped off the board. Others who serve on the NDGGA
board are Tom DeKrey, Steele; Jim Ostlie, Northwood; Dennis Stromme, Zahl; Louis Arnold, Esmond; Robert Ferebee, Halliday; Tim Johnson, Stanley; and Randy Schaley, Niagara. The NDGGA held its annual meeting during the
Prairie Grains Conference, a joint event involving the NDGGA, the Minnesota Barley Growers Association, and the Minnesota Association of Wheat Growers. At the meeting, NDGGA members approved farm policy resolutions
for 2000, addressing issues related to domestic farm programs, marketing and trade, value-added agriculture, research and grain quality, taxes, and grain transportation. Among the NDGGA's resolutions:
During the meeting, three North Dakotans were recognized with Kernel Awards, given by the NDGGA to individuals who have made significant contributions to the wheat industry. Richard Haugeberg, Max, N.D., was recognized for his accomplishments as a producer, and longtime North Dakota State University spring wheat breeder Richard Frohberg was recognized in the industry category. Larry Brown of AGSCO, Grand Forks, was recognized for accomplishments his company has made in the safety and innovation of agricultural inputs.
MN WHEAT GROWERS NAME NEW PRESIDENT, DISCUSS TRADE Ron Anderson, MAWG President, ph. 218-843-3367 Ron Anderson, Hallock, Minn., was named president of the Minnesota Association of
Wheat Growers at the organization's annual meeting held recently in Fargo, N.D. Anderson replaces immediate past president Pete Kappes, Ada, Minn. Kappes steps down as a MAWG director after serving on the
board for nine years. During that tenure, Kappes also was active in the National Association of Wheat Growers, serving as an officer of the National Association of Wheat Growers Foundation, which oversees many of
the educational and leadership programs offered through the NAWG. Mike Bruer, Alberta, was named first vice president of the MAWG board. Richard Magnusson, Roseau, was named second vice president. Gaylen
Affield, Fergus Falls, was named secretary-treasurer. Also serving on the MAWG board are Tim Dufault and Donna Ulseth, both of Crookston. At the MAWG annual meeting, members approved farm policy
resolutions for 2000, addressing issues related to domestic farm programs, trade, value-added agriculture, research, taxes and grain transportation. Among the resolutions, MAWG members voted to The MAWG held its meeting during the Prairie Grains Conference, a joint event involving the
MAWG, the Minnesota Barley Growers Association, and the North Dakota Grain Growers Association. Among the speakers at the meeting was Chris Shaffer, a Washington state wheat producer who serves as a spokesman
of the U.S. wheat industry at the World Trade Organization negotiations. Shaffer, who also serves as chairman of U.S. Wheat Associates (USW), the export development arm of U.S. wheat producers, briefed conference
attendees about U.S. wheat industry involvement in the opening WTO ministerial meeting in Seattle, and objectives for when the negotiations continue next month in Geneva. USW positions on five trade issues important to U.S. wheat—economic barriers, export subsidies, state trading export monopolies, unilateral sanctions, and biotechnology—are explained on USW's website: http://www.uswheat.org.
MN WHEAT COUNCIL MEETING SCHEDULED
FARM BUSINESS MANAGEMENT CLASSES NORTHLAND COLLEGE-MOORHEAD Rick Morgan – Greg Tullis, Farm Business Mgt Instructors
INTRODUCTION TO FARM COMMODITY MARKETING Classes will begin at 9:00 am on Wednesday, January 12,
2000 at Hendrum, MN and Thursday, January 13, 2000 at Moorhead. MN. =============== QUICKBOOKS FOR FARM ACCOUNTING Classes
will begin at 9:30 am – 4:00 pm on Monday, December 27, 1999 and at 9:30 am – 12:00 noon on Wednesday, December 29, 1999, at Moorhead, MN. (2 management semester credits) FBMT 2205 Special Topics – General Farm
Mgt. =============== QUICKEN FOR FARM ACCOUNTING Classes will begin at 9:30 am – 4:00 pm on Tuesday, December 28, 1999 and at 1:00 pm – 4:00 pm on Wednesday, December 29, 1999, at
Moorhead, MN. (2 management semester credits) FBMT 2205 Special Topics-General Farm Mgt. =============== Two people from the same farm unit can share a class for one cost! Lunch is on your own.
For more details, call or email: Our offices are at: Townsite Center, 810 4th Ave. S., Moorhead, MN 56560 (old high
school, downtown Moorhead, south of McDonalds) Also check our website at: |
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