Avoid Agricultural Acupuncture, SoyRoy Says
The long-anticipated March 31 planting intentions and stock numbers were released Friday morning.
I say long-anticipated with tongue in cheek because I have always considered government reports mostly a waste of time and resources. After all, it is still at least a month before planting is underway full blast. A lot can happen between now and harvest this fall. At this point, I always wonder how much the planted acres ever change based on any one of a wide range of risk management factors.
The first thought that comes to mind is that everyone plants every acre that is available. Few farmers leave fields unplanted because the prospect of getting a profitable crop is very poor. Some marginal acres of poor-quality land might be shifted to hay or pasture. A few acres can rotate back and forth between crops.
For the most part, farmers will choose the crops on which they are most likely to raise a profitable crop. In many cases that means a two-way or three-way rotation.
Considering the above factors, the shift that might take place could be storing crops at home or in commercial storage immediately after harvest as opposed to selling immediately after harvest. I am not opposed to either type of storage.
My experience shows that storing for long periods of time can add to the risk as opposed to improving the profitability of the operation. Short-term storage into the April/May time period may improve the net return somewhat. Storage into the August/September period is almost always a losing venture.
Finally, having a marketing plan and sticking to it can help avoid what I call agricultural acupuncture. That is getting stuck with last year’s crop when you need the bin space for the crop in the field. Storing grain for 10 months before selling it at the previous year’s price is an almost sure strategy for losing money. Selling in increments as the marketing season progresses spreads the risk and ensures that at least part of the crop will be sold at acceptable levels.