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1C r o p Q u e s t P e r s p e c t i v e s
Volume 16 Issue 1 January 2006
Marketing Experts Stress.. .
OFFICIAL PUBLICATION OF CROP QUEST AGRONOMIC SERVICES, INC
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Market Experts Stress ... Continued from Page 1
farmers can consistently and successfully predict and react to
market swings that yield a much greater return vs. those farmers
who do not track the markets at all.
The KSU economist says there is little evidence that supports
the claim that some farmers are better marketers than others.
Dhuyvetter explains, We have looked at 10+ years of data in our
Farm Management Association program
and found that being persistently better (or
worse) than neighboring farms is much
easier to do with management areas other
than marketing. Trends in that data haveindicated which management factors make
producers more money over the long term
it is not outguessing the markets.
Dhuyvetter s data indicate that farmers
who consistently make better money on
their crops tend to be low-cost producers.
This does not necessarily mean they dont
spend more money, but rather they are
willing to spend more to make more, he
states. These same people seem to be faster
adopters of new technology, (specically
no-till practices) and are farming more
intensively (i.e., eliminating fallow in western Kansas and more
double cropping in eastern Kansas). They tend to be bigger
farmers, too, Dhuyvetter adds.
However, when we look at what kind of price they get relative
to the average farmer, we seldom nd any statistical differences
in price received for the crop, he continues. We know that in
any given year, one farmer is going to do a better job of marketing
than another does; but on average, the chance of one farmer
consistently out-gaining another is not evident.
The KSU economist adds, We tell people that if you are hiring
a marketing advisory group because you think they are going to
get you a better price, you are hiring them for the wrong reason.
However, if you are hiring them because you do not want tohandle that responsibility yourself, that is a legitimate expense.
I think a farmers time is best spent making good machinery and
cropping decisions, not watching market trends and thus hiring a
market advisory service might be a good investment.
How to Avoid the Pitfalls of Marketing
It all starts with developing a plan that focuses on how
much you plan to produce and then being able to get ahead of
harvest time to be in position to take advantage of these sales
opportunities.
Dever suggests that farmers divide their marketing window into
four to ve primary periods, not just the one after harvest. Your
marketing plan should be set up to allow you to make sales duringthese various time slots to spread nancial risk, he advises.
Those windows can be broken into, for example, pre-
planting, planting, the growing season, harvest and post-
harvest. A person needs to be in a position to get something
sold in each of those windows or have a good reason
why he does not, Dever explains. Spreading
sales becomes a part of your risk management
plan. It will help producers develop a basic
marketing plan that allows for more market-
selling exibility and the ability to take
advantage of seasonal sale opportunities.
The worst business mistakes are frequently made in the paralysis
and fear of indecisiveness.
Dever adds, Good planning could be the single most
determining factor to the success of a farming operation
planning in terms of setting up a marketing plan, cropping
decisions with your consultants, water planning, nancial
planning, overall tax planning, etc. Largely, farming has become
a nancial planning enterprise, not a work-type enterprise like the
way we use to look at it. It all starts with good market planning.
Plan Your Management Steps in AdvanceAccording to Dever, In January, we should be looking at the
regional, national and global market outlooks for planting to see
what adjustments need to be made. We also need to be prepared
to assess our own production prospects in terms of the new winter
wheat stand in many of our elds. Is it in line from a production
standpoint with your expectations? Do you have a good price
established? If not, are you going to wait until the market dictates
that price to you?
Usually we get some decent spring rallies, particularly with
corn and soybeans, Dever notes. I like to make sure we get
something priced in the pre-planting or planting window of the
2006 harvest. A producer should always look to lay an early
foundation for their marketing program during that time slot.
Dhuyvetter adds, I dont believe there is an easy way of
determining a good time to sell. Make sure that you are doing
the little things right. Haul to the best elevator if there is a few
cents difference in the bid. In the past I would say, Dont sell for
cash-ow reasons. Nowadays though, there may be some value,
especially if it eases the process of loan renewals. Selling for tax
reasons may pick up a little difference, but not a lot. If you store
grain on-farm, know some of the historical patterns that say, do
not store corn past March and do not store wheat past January.
We have some long-term studies that show that there might be
some long-term gains storing grain, but do not be too attached to
it. These are not huge things, but they are things that you can doyear-in/year-out to gain a few pennies more for your crop.
In conclusion, Dhuyvetter adds, We have some consistent
data gathered over the past 30 years that show that people who
do some pre-harvest marketing, have come out fairly well. If you
have not done it in the past, seriously look at selling some feed
grain prior to harvest. Spread your sales,
i.e., sell a third of it in March/April. Be
aware of the long-term patterns and
be ready to pull the trigger on some of
these opportunities.
Kevin Dhuyvetter
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W i n t e r W h e a t P l a n t i n g I n c r e a s e d By:Ron OHanlon,
President
Member, National Alliance
of Independent Crop
Consultants, CPCC-I
Certied
Winter wheat
has been a popular
crop choice for
many farmers this
fall. Due to the
higher fuel prices
and increased fertilizer cost, more acres were planted to wheat
(maybe as much as 10% more) as the farmers response to these
higher input costs.
From an agronomists point of view, wheat is an excellent
crop choice when there is so much uncertainty as to what fuel
and fertilizers are going to do by next spring. Wheat is one
of those crops that requires minimal inputs up-front, but can
still yield well by topdressing nitrogen in the winter or spring.
In addition, wheat can be grazed for additional income if it is
planted early enough to obtain forage growth.
The planting of a wheat crop allows many optionsfor the farmer:
The wheat can be harvested for grain.
The crop can be grazed and harvested for grain.
The wheat crop can be cut for hay or ensilage.
The crop can be grazed out and then double-cropped to
soybeans, sorghum or sunowers.
The wheat can be burned down with an herbicide in
the spring and planted to another crop using a no-till or
strip-tillage planting method.
If and when the economic situation improves next spring,
farmers need to remain exible regarding their wheat acreage
(especially irrigated wheat) and visit with their Crop Quest
agronomist about which option will make the farmer the most
economical sense.
Are Urea Fertilizers Safe To Use Due To Their Potential
Loss From Volatilization?Due to the higher cost of natural gas and the increased
price in anhydrous ammonia, farmers have a tendency to look at
other nitrogen sources for meeting their crops nitrogen needs.
The most common forms of nitrogen fertilizers used today are
anhydrous ammonia - 82% N, urea - 45% N, and UAN solutions
- 28 to 32% N. There are advantages and disadvantages with
each source. Anhydrous ammonia is the least expensive of the
nitrogen fertilizers and the most concentrated, but it must be
injected into the soil to prevent ammonia losses. If anhydrous
is not properly used and applied, there is also a safety hazard
concern.Dry urea is popular as a nitrogen fertilizer because of its
relatively high N content, good storage and handling properties,
and its widespread availability. Another popular source of
nitrogen is the urea-ammonium nitrate (UAN) solutions. UAN
solutions are widely available and are versatile as a liquid source
which can be mixed with other solutions such as herbicides.
Another advantage for urea-based fertilizers is that they can
be broadcast on the surface instead of injected, which is faster
and less expensive. However, the disadvantage is the risk of
nitrogen loss to the atmosphere by ammonia volatilization from
broadcast applications.
There have been a number of experiments conducted at th
various universities to measure this potential loss from the
urea-based fertilizers and to determine the cause for this loss
In a three-year study at the University of Nebraska at Lincol
two years had adequate rain in the rst week after applicatio
to minimize N loss; but in 1992, little rain, coupled with low
humidity, resulted in urea remaining on the soil surface for a
extended period. The soil was relatively moist (74% of eld
capacity) at planting. The rst substantial rain (0.8 inches)
occurred 26 days after fertilization. The grain yield from the
urea treatments was almost one-half the yield from othertreatments and showed little difference from the unfertilized
check. The research report indicated that yield reductions du
to ammonia volatilization of this magnitude are uncommon,
but this shows how much loss is possible with certain climati
conditions.
Ammonia volatilization from urea can be minimized by
incorporating the fertilizer, either mechanically or by sprink
irrigation, or by attempting to anticipate when rains may
occur and fertilize just ahead of them. Refrain from applying
urea (especially dry urea) to moist soils during low humidity
conditions.
By: Ron OHanlon
President
A
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Mission StatementCrop Quest is an employee-owned company dedicated to providing the highest quality agricultural services for each customer. The quest of our network of
professionals is to practice integrity and innovation to ensure our services are economically and environmentally sound.
PRSRT STD
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DODGE CITY KS
PERMIT NO. 433
Employee-Owned & Customer DrivenCrop Quest Agronomic Services, Inc.
Main Ofce: Phone 620.225.2233
Fax 620.225.3199Internet: www.cropquest.com
Crop Quest Board of Directors President: Ron OHanlon
Director: Jim Gleason
Director: Dwight Koops
Director: Cort Minor
Director: Chris McInteer
Director: Rob Meyer
High Fertil izer Prices
The high energy prices that we are
experiencing are signicantly impacting
fertilizer prices. In many areas, we have
observed anhydrous ammonia well over $500/
ton, and phosphorus and potassium prices
have also shown dramatic increases.
These prices will change cropping plans across the country. In
the Midwest, farmers will look towards planting more soybeans
than corn, since soybeans require much less nitrogen. Where corn
is planted, the trend will most likely be to reduce fertilizer amounts.
Over the High Plains, we can expect similar trends, except we may
substitute a variety of crops rather than soybeans.
These macro trends will denitely impact overall production of
feed grains.
Fertilizer is the one input that you can show a direct correlation
between yield and amount applied, so you can determine the return
on the dollar of fertilizer applied. Nitrogen probably has the best
correlation, and if you decide to cut back on nitrogen use, you can
expect a direct yield loss. For most crops, for each 1 to 2 lbs. of
nitrogen reduction, you can expect a one-bushel decrease in yield.
A producer needs to evaluate whether a reduction in fertilizer use
is really the proper management choice, and many decisions go intothis. A good soil sampling program is the rst and largest step
towards helping producers make the right decision on fertilizer
use. This is also the year to consider ne-tuning soil sampling with
Grid Soil Sampling. Proper placement of fertilizer will have as
great of an impact on your fertilizer dollar as any management
practice you can employ. If proper levels of nutrients are alread
in the soil, we can take advantage of those areas and apply fertili
to only the areas that require additional amounts. This program w
allow a much higher return on the fertilizer dollar.
We encourage our producers to take full advantage of this
program this year.
Higher commercial fertilizer costs also make manure a mo
viable fertilizer source over a larger area. The cost of manure
is related to hauling and spreading charges. In the past, the highe
hauling and spreading costs have made manure less economical commercial fertilizer. This gap has narrowed signicantly and m
producers are taking advantage of the benets of manure this yea
With the possibility of fewer corn acres and lower average yie
due to high input costs, producers need to be aware of opportuni
that may present themselves. There is a good chance that traders
will try to buy corn acres
on the board this winter and
spring. Producers need to be in
a position to take advantage of
these marketing opportunities. In
turn, traders may also compete
for soybean acres, and marketing
opportunities may show up in the
soybean pit.
The agronomists at Crop Quest
encourage their producers to think
twice about reducing fertilizer
inputs, if they are required. That
fertilizer dollar may be the best
dollar spent, even under these
high prices. Sometimes acting
contrary to the trend is the right
decision. Taking advantage of
marketing opportunities will improve the bottom line much bette
than trying to save a few bucks on inputs such as fertilizer expenThis is the year to look at crop rotation and spreading out risk.
regardless of the crop that is planted, make sure that you properl
fertilize that crop to ensure the best return on the dollar spent.
By: Dwight Koops
Regional Vice President
Ulysses, Kan.
Have Large ImpactOn Farm Plans