Machinery
If we were handing out medals for declines in this week’s price survey, anhydrous would have come in dead last. All of our fertilizer and fuels are lower this week, but the price relationships between fertilizer products has a lot to say about where we should be, and where we are headed before harvest.
LimelightPlayerUtil.initEmbed(‘limelight_player_432807'); Our first look at fertilizer and farm fuels pricing for the week ended August 12, 2016.
NH3, UAN32% and urea are all priced below one acre of expected new-crop revenue. But UAN28% remains priced about 10 bucks above that figure on an indexed basis.
For farmers, borrowing money has become more of a challenge as the ability to borrow becomes tougher and tougher.
This country was built on capitalism and small business and under the current administration has done everything they can to wipe out the American dream.
Trade makes us better producers because we seize more opportunities. It makes us better consumers because we enjoy more choices. It makes us better competitors because it leads to more innovation.
These two measures are key to understanding your operation’s financial position By: Evan Hahn, Vice President of Credit | Farm Credit Mid-America Farmers know calculating working capital and cash burn rate are crucial components to understanding the financial situation of their operations. Having a good grasp of these two measures can help you prepare for lean years and assist in developing a cohesive risk management plan. If you haven’t done so recently, now is the time to revisit working capital and cash burn rate. Working capital has a very simple definition: current assets minus current liabilities. However, it’s often oversimplified as the cash on hand for an operation. Working capital accounts for much more than just money in the bank: when working through your current assets, take stock of not only your cash on hand, but also any savings, outstanding checks from inventory that has been sold, feed, livestock, grain inventories, supplies and prepaid expenses. Liabilities to account for include all accounts payable, accrued taxes, credit card debt, payments to seed vendors (seed, fertilizer and chemical companies), any accrued interest and the principal portions of debt payment due in the next year. Working capital should function as a cushion for your farm, so understanding your working capital position gives you the knowledge and flexibility to make crucial decisions, while minimizing the risk to your operation. Cash burn rate is calculated after the working capital position has been determined. Take the dollar amount of the working capital your operation has on hand and divide it by projected loss for the year. For example, if your operation has $300,000 of working capital but has an annual projected loss of $100,000, your burn rate is three years. Cash burn rate is a key financial measure because it indicates whether your operation is in a position of strength or a position of challenge. During a challenging ag economy, knowing your cash burn rate aids in making key financial decisions, including whether or not to refinance loans or if any fixed costs need to be better controlled. There are a lot of different ways both working capital and cash burn rate are measured and weighed. Some universities may recommend measuring working capital as a ratio of assets over liabilities. Farm Credit Mid-America generally weighs working capital as a percentage of gross annual income. We consider a minimum working capital position to be approximately 20 percent of an operation’s gross annual income. Ideally, your operation should have enough capital on hand to withstand multiple years of losses. At a bare minimum, your operation should have enough working capital to cover one year of loss. A solid risk management plan that includes crop insurance can help make sure you maintain your working capital position even if the season doesn’t go as expected. Working capital and cash burn rate may have simple definitions, but they carry big implications for your operation. Understanding and calculating these two measures means having a strong grasp on the financial situation of your operation and helps ensure its longevity. For additional financial tips, insights and perspectives, visit the Farm Credit Mid-America website.
While hog producers have to be worried about late-2016 price prospects, they can take considerable comfort from the planned packing industry expansion.
Feel like you’re having a rotten day? You probably aren’t having as bad a day as these folks.
There is certainly a chance that recent pork loin and rib weakness will set up the market for an exaggerated September surge, but the late-2016 hog and pork outlook does not look encouraging.
Our weighted Crop Condition Index for corn rose by 2.25 points from last week and soybeans rose by 1.70 points.
Global potash fundamentals continue to pressure vitamin K as phosphate remains stubbornly overpriced.
Crude oil production factors are weighing on heating oil futures which will pressure farm diesel near-term if the momentum remains downward. Propane is 11 cents below year-ago and may still have another few cents to give before posting the summertime low.
The story of the Belorussian Potash Company continues to unfold and as major global potash importers come to the table, the Former Soviet Union K producers appear to be more than happy to undercut global prices again this year.
Distillate supplies are benefiting from increased refinery capacity and utilization, but, as with crude oil, declines in U.S. distillate supplies are keeping a hard floor under heating oil futures, and farm diesel. The first of July is upon us and we expect to book propane during that month.
This bale wrapper sold on a PurpleWave.com auction June 29
Our weighted Crop Condition Index shows the corn crop declined by 1.72 points and soybeans dropped 2.35 points from last week.
The Quarterly Hogs & Pigs Report, which showed all categories above expectations, puts more focus on demand.
LimelightPlayerUtil.initEmbed(‘limelight_player_796706'); Corn is 1 to 3 cents higher and soybeans are around 30 cents higher. But wheat futures have softened. Cattle are higher and hogs are weaker.
While the number of cattle placed on feed was up sharply from year-ago, May 2015 placements were light, so it makes this year’s number appear artificially big.
Todd “Bubba” Horwitz says one thing every farmer, producer, speculator and trader should be prepared for is that history always repeats.