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Farming and marketing in retirement

When I became eligible for Social Security, in 2004, I made the decision to continue to farm the land Sharon and I owned or had interest in. This meant giving up several rented farms and liquidating all of the machinery, except for what it would take to farm the 220 acres I kept farming. This meant a dramatic reduction in fixed expenses. It also meant that sometimes I would be doing repairs or performing maintenance when I would have been planting. Continuing to farm past retirement ended up being one of the best decisions I made in 44 years of farming. Some of my most profitable years have been after I turned 65. 

Every year is a little different. This year corn planting went very quickly. I began planting corn on April 26 and finished on April 31. April 31 was the last nice day in two weeks. I was the first one in my community to finish the corn. This gave me the opportunity to get the planter home and converted to planting soybeans. It appeared that May 13 would be the day I started on soybeans. At that rate, I should be finishing up in about four days. It was a good thought that did not materialize.

I spent Monday and half of a day Tuesday trying to figure out why my planter monitor was giving me uneven population counts. I finally concluded that the beans really were not dropping at the desired rate. After one trip to the implement dealer and numerous trips to the seed supplier, I finally concluded that the brush-type seed meters were not dropping the treated seed. I cleaned out the units and filled them with untreated seed. From that minute on, the seeds dropped at a very consistent 153,000 beans per acre. I am still trying to figure out why the planter I have used for 22 years decided this year to cause so much trouble.  

I was about half done with the soy beans, when I noticed an oil leak coming from the front of the engine on the planting tractor. A quick call to the mechanic drew the response, “I told you this was going to happen”. He was right, I was warned! Today, the tractor is in the shop. I hope that it is about fixed and that I can resume planting this afternoon. I spent Thursday afternoon filling some holes where new tile waterways were installed about a month ago. I was going to have to do that dirt work prior to planting the field. So, the afternoon was not exactly wasted. 

On the marketing front, the average date, for the spring high in the soybean futures is May 9. That date came and went. I got the last few bushels of 2002 beans sold for $14.72. That is almost equal to the 'dead cat bounce' high from December 2012. Of course, the beans sold this week had about 35 cents storage subtracted from the gross price. Nonetheless, netting over $14 looks pretty good from a cash flow standpoint.   

The psychology of the markets has changed for the short term. The extreme tightness of cash supplies for both grains is indicated by the extremely good basis. For a couple of days, it appeared that there was going to be a squeeze on May futures contracts. While May contracts went to several cents over the July contracts for a while, at the end of the delivery day all was resolved without the fireworks some expected. In other years, when there was threat of a squeeze, the end result was action by the CFTC which might have caused a huge wash out in the price of all futures contracts. Thankfully, that did not happen this time. 

My hope now is that the strength in old crop futures and cash bids will carry over into new crop. That has not happened very much, yet. At some point, there will probably be a weather scare that will offer forward pricing opportunities. It happens almost every year.  Maybe the strength, currently seen in the soybean market, is the first hint of opportunities ahead.

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