Inputs Monitor Editor Davis Michaelsen adds his perspective into the happenings of the inputs markets.
Miles & Miles of Monitor -- Lessons From the Road
Dec 13, 2012
Your Inputs Monitor is a part of this year's Pro Farmer Profit Briefing stable of presenters, and as I have traveled to meet with growers, a number of important lessons have been learned. The Monitor is a brand new offering from Pro Farmer and is steadily growing in knowledge, and finding it's value on the road. The Profit Briefing series has given me, your Inputs Monitor Editor, a chance to speak face-to-face with Monitor subscribers, and Pro Farmer members, and find out just what the Monitor can do for growers in the soil.
Our first stop was in Lincoln, Nebraska where a great group of growers turned out to hear Pro Farmer staple speakers including Mike Walsten, Roger Bernard and Brian Grete -- may I say how humbled and proud I was to be along with these great ag thinkers. I arrived in Lincoln with high hopes of guiding the subscribing public through the Monitor and showing its use. As it turned out, the opposite happened, and it was I who was educated -- gratefully.
"It ain't your grandad's fertilizer anymore," a grower from central Nebraska started. "Grandad would just pull up to the elevator, load up, apply liberally and hope for the best. But it don't work that way no more. The game has changed."
Fertilizer has attached itself to the price of corn in a way that hasn't been seen before, and the result is a decline in stocks on hand at local co-ops, and wild pricing swings. Fertilizer got the taste of corn money in its mouth and has since been like a Tiger who has tasted blood, and can't get enough.
When new-crop corn prices run to the upside, fertilizer prices follow to capture expected new-crop revenue. But once nutrient pricing moves above 18% of expected new-crop revenue, it finds resistance as total nutrient package costs near one-fifth of potential revenue per acre. That is when prices fall to establish fresh support -- which is typically around 16% of expected per-acre new-crop revenue. Then farmers again become willing buyers of nutrients.
This became even more clear as we rolled into Ankeny, Iowa on our next stop and with a new appreciation for fertilizer's teeth in the market. With the Inputs Monitor's weekly updated pricing data coupled with Pro Farmer's coverage of futures markets, one can watch the movement of futures and fertilizer pricing and book purchases based on solid information.
A lot of growers will save in a bullish nutrient market by cutting back on P&K, and that can help save a little money in the short-term. But if that practice continues, over time, the nutrient profile can lose its balance, and suddenly, P&K are 'gotta have it now' items, regardless of the price.
While grandad had the luxury of stable nutrient pricing and ample supply in co-op storehouses, the stability of the good-old-days is gone along with retailer inventories. This makes it vitally important for the grower to know how and when to pull the trigger and book a purchase.
Pro Farmer's mission has always been to level the information playing field and give the modern farmer the power of information and education. The Monitor proved its worth in Lincoln and Ankeny by putting the power of updated pricing and weekly analysis of price movements in the hands of subscribers.
I am grateful for the opportunity I had to interact directly with farmers in Lincoln and Ankeny. Thank you to all who came out. The lessons these fellas taught me will help the Monitor continue to be a friend to the farmer into the future. In return, the Monitor is better equipped to level the information playing field, and maybe even tip it in favor of the American grower.
This year's Pro Farmer Profit Briefing series has a lot more stops coming up, and the Monitor will be there for all of them. Consider joining the Pro Farmer presenters you already know like Chip Flory, Jim Wiesemeyer, Mike Walsten -- and me, your Inputs Monitor Editor, at a stop near you. See you there.