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March 7, 2011 Agriculture Column

Howdy!!!!!6543!!!

Wow, who would have ever thought that today is March 7th.  Leon Osborne reminded us of a very unseasonably cool next two months with days below zero and it would sure be nice if he could be wrong.  I heard on the radio this morning the average temperature for this time of year is 35 degrees.  Sounds really cold all week, maybe we should all head to the sun.

There has been a lot of talk about spring planting, insurance, what crops to plant and how do we manage our input costs.  Do we contract a commodity not knowing if we can even get the crop planted.  Osborne would suggest that we will have a very late start this year and if you would look at the calendar Easter is as late as it can get.  History would show that an early Easter means early spring and a late Easter would suggest a late spring for our farmers.  Like they say on T.V. “stay tuned”.  Just this morning a producer stopped by and talked about commodity prices.  He thinks prices might move higher towards the spring planting season, mostly looking for buying acres.  For those of you that don’t know what that means it means each commodity has certain needs throughout the marketing year and to supply those needs need a certain amount of acres based on a national average yield.  An example of that would be corn.  The amount of bushels that are thought of extra bushels or a carry in the case of an emergency is at a very low number 5% of the total production.  They would like that number to be more around 10%.  With the need for normal acres and average yield the corn industry has been watching and listening to the market place and also predicted weather.  They have heard planting intentions are likely to be down due to the late spring, across the country.  If that rumor holds true they will need to do something to encourage producers to plants additional corn acres and the best way to accomplish that is to manipulate the market.  If corn would do that for example other crops would follow for the exact same reason as corn does, to meet the world demand.  Struggles across the world also play a very large factor in the market place like wheat in Australia.  Australia could have a very large wheat crop and put pressure on the marketplace or a very poor yield and deliver the opposite message.  With all of this being said what do we do locally not knowing first off the weather conditions this spring, will we get a certain crop planted and what will the weather predict for the summer months?  I am very much in favor of commodity contracting and there are strategies that can protect you from both the weather and planting but you do need to work with a marketing person to accomplish those goals.  Act of God contracts are also available but only on certain commodities like Canola.

 

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