February '12 Update

I awoke Sunday morning to find we were blessed with 6 inches of wet snow. I dug out my snow boots, beanie hat, gloves, and headed out side with Sharon’s scoop for some good old fashioned manual labor! The snow had fallen on warm cement so it scooped pretty easy, which was much appreciated. After making my way down the side walk a ways, I must confess I found the snow blower and relieved my back of that manual labor I mentioned. It is true that a lot of the new technology is better than the old technology! I enjoyed the fresh air and winter snow which we need to refill our sub moisture levels.

Most of the TALK the past few days has revolved around weather and changing conditions in our world markets. Changing it is! Crude oil prices are sliding, with demand at 11 year lows. So how do we explain having the highest gas prices in a long time? Beats the heck out of me! Unemployment continues to shrink which is a good thing.

Natural gas was $2.50 this week. This being one on the lowest prices that I can remember in recent times, yet NH3 prices have not fallen to keep in sync. With more serious talk about drought in the U.S. corn and soybean prices have edged up slightly. In the Soviet Union the extremely cold temperatures are hurting the chances of their winter wheat survival. Argentina has reduced their corn production by 17% this past week which will have a direct impact on our summer markets. This will all lead to a spring rally in grain prices. We should sell into these rallies to protect ourselves. If we have a drought this summer prices will rally to new levels. If it rains as it normally does, prices will recede by up to 30%. What would hurt worse, today’s prices, 30% more or 30% less? Our bankers and finance people would advise us not to bet the farm on any one of the 3 choices and to spread our risks out.  A wise man who has counseled me over the years said, “You will never go broke selling for a profit”. Save a little back and then you can have bragging rights on “hitting the big one!”

Livestock prices have been good lately. Most people think these prices will continue through 2012.  We bought feeder pigs for $17 that we are selling into today’s fat market and replacing them with $60 pigs. With $6.50 corn, livestock prices need to stay steady for months ahead and all indications look like they will. Our feed business has been very brisk with big days being Monday’s and Friday’s to keep feeders full in the country.

We continue to spread lime along with dry fertilizer. We have had two dry equipment motors go bad this winter and are replacing with new motors or fresh overhauls. We will be ready for the last of the spring rush.

We are doing staff in house training with heavy concentration on OSHA training. We will spend $20,000 this spring to comply with old and new rules that are being enforced more strictly than in the past. We have contracted with a private firm to keep up with all the rules.

Take time to come to our office to complete your agronomy plans. This is time well spent. You and our team will be in sync when we get really busy. Thanks for your support.

Sincerely,

Max Smith

General Manager