AlB—Lancaster Farming, Saturday, October 31,1981
Bumper crop, sagging prices force tough bean marketing decisions
WASHINGTON, D.C. - This
year’s bumper crop and weak
prices are forcing some tough
marketing decisions for soybean
growers.
While producion costs have
edged higher, soybean prices at
the farm declined steadily from
$7.60 in April to $6.29 in mid-
September, and have weakened
further since. Season average
prices for the marketing year that
began on September I are likely to
range from $5.50 to $7.00. WtiatV
behind those weak prices?
U.S. soybean production is
forecast at 2.11 billion bushels, 18
percent above last year’s drought
reduced crop.
Although wet weather delayed
plantings and reduced yields in the
key producing States of Indiana
and Ohio, record or near-record
yields are currently forecast in
lowa, Kansas, Missouri,
Nebraska, North Dakota, and
Tennessee. Overall, prospects
point to the second largest crop on
record.
Domestic demand for soybeans
and products should be up from
last season, but probably not as
high as m 1979/80.
Soybean meal use will probably
increase as poultry production
continues to expand and hog
producers respond to improved
feeding margins. Use of soybean
oil should also rise a little because
of population growth and an ex
pected improvement in economic
conditions in 1982.
World soybean production could
jump 12 percent, with most of the
increase here in the United States. -
Some gains are likely in major
exporting countries in the Southern
Hemisphere, even though crops
there have not yet been planted.
World oilseed output might be up
by nearly 15 million metric tons to
175 million.
Export demand for U.S.
soybeans and products should
show some improvement. Along
with lower prices for beans, meal,
and oil, a weakening of the dollar
against some major foreign
currencies is expected in 1982. This
would stimulate additional sales of
soybeans. Because economic
growth will continue sluggish in
many importing countries,
demand, though improved, will not
be as strong as in 1979/80.
While price prospects have
deteriorated, variable production
costs have continued to climb.
Biggest gainers from last year
were fuel and lubrication, up 24
percent, and fertilizers and lime,
both up 18 percent.
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Poultry - Hog - Dairy Farmers
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717-738-1718
Answering Service 717-733-1224
While total variable costs in
cluding land increased, improved
yields this year are tempering that
rise so that on a per bushel basis,
total costs including land, show a
slight decline.
Marketing the 1981 soybean crop
successfully will depend on how
well the price outlook is gauged
with costs of production high again
this year, marketing decisions are
more important then ever...profits
depend on them.
Use of any available marketing
alternatives should be a decision
based on specific individual
FCIC announces
crop insurance
WASHINGTON, D.C. - All-risk
crop insurance will be more easily
accessible to farmers by a plan to
localize the sale of crop insurance
to farmers through local crop
insurance agents.
The plan, which should be in
effect in all areas of the country by
spring 1982, was announced today
by Wayne Fletcher, president of
the U.S. Department of
Agriculture’s Federal Crop In
surance Corporation.
Fletcher said the use of local
agents will improve service and be
an added convemence tor tanners
presently served by a multi-county
FCIC office or county office of
USDA’s Agricultural Stabilization
and Conservation Service.
He said farmers who have not
already selected a new agent by
the tune the multi-county FCIC
offices are closed will be provided
with a list of agents from which to
choose.
“The choice of a service office is
up to the farmer,” said Fletcher.
He said FCIC will assign insurance
files to local crop insurance agents
in cases where policyholders fail to
make their own selection. These
policyholders will be informed of
their assigned agent when the file
is transfered. However, fanners
have the option of changing service
agents up to the earliest sales held. For the past year, he has vans > Chester Springs Spring
closing date for their insured fall channeled much ot his work into Aqua Farm.
r ' 1
I the one spreader
THE
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I Ph: 717-285-4538 Sat. 7 to 12:00
requirements Including debt
repayment, costs and availability
of storage, and tax considerations.
Let’s look at the alternatives:
• Sell all or part of the crop at
harvest. Remember that sales
tend to be large and prices
relatively low at that time. Over
the last 8 years, more than a third
(34 to 46 percent) was marketed
during September-November.
Also, three season average price
lows occurred in those 3 months.
• Forward cash contract part or
all of your crop. Cash contracting
means fixing an exact amount and
localized
and spring crops, according to
Fletcher.
All-risk crop insurance policies
now are available from agents and
agencies contracted with FCIC and
from private companies reinsured
by FCIC. These policies offer the
same protection and cost.
All-risk policyholders have the
option to buy hail and fire
protection included in the basic
policy or to purchase substitute
protection from private com
panies.
“Farming today is an extremely
risky business,” said Fletcher.
"More and more farmers and
lenders are recognizing the im
portance of all-nsk crop insurance
by farmers has doubled in many
areas.”
MANURE SPREADER
The Scavenger with its unique design and capabilities will show
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R.S. HOLLINGER & SONS
price of beans to be delivered at a
specified time to your local
elevator or buyer.
. This option may be attractive if
you have a sizeable amount of
borrowed fund to repay, and are
particularly interested in pricing
enough of the crop to cover
variable costs and land rent.
As an example, suppose there is
the opportunity to forward con
tract beans for harvesttime
delivery at $6.20 a bushel. If total
variable costs and land rent equal
$135 per acre, and the expected
yield-is 30 bu./acre, to cover total
cash costs, the percent of the crop
to contract would be: total
variable costs and land rent
divided by expected yeild x con
tract prices, or:
$135
30 x $6.20
this
to sell
will be your
contracts.
• Store all or part of this year’s
crop and sell at intervals after
harvest. With this option, weigh
your storage costs and anticipated
returns from delayed sales against
what might be earned by selling at
harvest and putting the receipts in
money markets or other in
vestments earning high interest
rates.'
• Place a storage hedge in the
futures market.
Support the current cash price is
$6.20 a bushel and you are con
sidering storing your beans until
the first week in July. How do you
determine if the market is paying
you to store?
(Continued from Page Al 7)
outstanding work with Hoisleuis. his Holstein, Frisky Acres P.G.
Her junior call collected blue Standout Memory. Anthony, 14, is
ribbons everytune she stepped in the son ot Ben and Janet Heller,
the showring this season, including During the business section ot
the highly competitive All- the evening, members elected
American. April, 18, is the three new directors to step in tor
daughter ot Mr. and Mrs. Kenneth three-year terms.
L. Plumley, Pottslown. The new directors are; Stanley
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Beiler, was honored tor his out- Holstems; Carl Yoder, Elverson
standing achievements in the dairy Kocky-Side Karin; Freeman
for a two spreader farm
=73
srcent
Chester Holstein Club
Determineyour target price. If
in November, the July futures
price is $7.50 and your estimated
basis for'the first week of July is
|0.25, then the target pnce.is $7.25
($7.50 - 0.25).
Determine your asking price: If
the cash pi;ice is $6.20 and the
monthly storage cost is 12 cents a
bushel, your asking price is: $6.20
+ ($.12x9),0r $7.28.
If your target price is less than
your asking price, as in this
example, the market is not paying
you to store.
• Defer pricing. You may want
to consider a no-pnce established
contract that allows you to sell
some of your beans to your local
elevator but defer your pricing
decision. When an NPE contract is
written between the seller and the
elevator, all rights and title to the
beans pass to the elevator. A major
advantage of this option is that it
frees the producer from storage
costs, including interest.
Examine your cash flow
situation closely before you decide
on this alternative because
payment will not be made until the
beans are priced some time in the
future.
Payment'is determined by the
elevator’s spot bid the day you
price your beans. This method
allows you to price your crop when
you think prices are most
favorable.
' Remember, this system does not
offer any downside price protec
tion. Also, there is an opportunity
cost associated with delaying
payment for your crop. This cost
vanes with interest rates and may
be significant at this tune.
MARTIN MEASURES UP