November 28, 2022
The mid-term election is history – that’s one thing we can all be thankful for. The Thanksgiving leftovers are still attracting midnight visits to the fridge, but those tasty morsels will also soon fade into memory.
Maybe it’s time to sit back with your favorite cocktail and consider what’s next as we close out what has to be one of the most remarkable years ever for farmers.
When Russia invaded Ukraine it set the commodity world on fire and made many of us ponder: what if it happened here? We enjoy blissful isolation from the terrible things going on in Eastern Europe. Those are real farmers in Ukraine, many of them doing exactly what you do – until their farm fields were booby trapped and export terminals smashed.
The Russian invasion disrupted global food, fuel, and fertilizer trade. It shifted the world order, revealing friends and enemies alike. It made clear who is vulnerable, and who needed to create unseemly alliances for the sake of stability.
That’s the nature of geopolitics. It’s an ugly business.
The ensuing volatility made grain farming more profitable for farmers outside the war zone. Better pricing opportunities nearly always results from uncertainty, and we’ve had uncertainty by the bucketful.
Let’s call this the year of anxiety-fueled profits.
As you look ahead, consider the rapid pace of change. Ukraine grain losses, tight global supplies, Brazil’s drought, and pent up post pandemic demand -- None of these things were on your radar 12 months ago. And these fundamentals will change or go away too. That’s why farming is never dull.
But when times are good, businesses tend to get sloppy. They write checks they shouldn’t. Buy stuff they don’t need just to avoid taxes.
Stay sharp, even if 2023 margins look good. You deserve some down time, but if you’ve been around awhile, you know good times don’t go on forever. In the short term there’s stored grain, not to mention 2023 crop, that needs a marketing plan. There are plenty of headwinds to think about, and many are out of your control: high interest rates, inflation, China’s increasing reluctance to buy U.S. grain, and a potential gangbuster Brazilian crop next spring.
Is a down cycle looming? To get clues monitor our daily marketing reports, as well as the AgMarketingIQ blog. Each day we report on ways to protect upside profit potential, manage unpriced bushels, and track the global fundamentals that could make big impacts on grain prices.
Weather is an uncontrollable fact of life. But maybe we can do something to mitigate the impacts. According to NOAA, heavy precipitation is becoming more intense and more frequent across most of the United States, particularly in the Northeast and Midwest. Can you weather-proof profits and protect soil, either with crop insurance, different hybrids, production changes (reduced tillage or cover crops) or infrastructure (drainage)?
Invest in yourself
One way to navigate through the chaos of farming is to invest in your business skills. The need is only going to grow. Spend a few days at the Farm Futures Business Summit, taking place in Iowa City, Iowa, Jan. 19-20. There are always good ideas flowing out of this event, either from intriguing speakers, farmer panels, or the table-top conversations. We also offer a one-day workshop to help you with money management. I recommend you give both a try. See what we’ve got in store for you at FarmFuturesSummit.com.
This may be a time to regroup on your business, but it’s also a time for personal reflection. Count blessings and hug the ones you love most. I hope 2023 brings more joy for all, less political rancor, and above all, peace to Ukraine. Happy Holidays, everyone.
About the Author(s)
Executive Editor, Farm Futures
Mike Wilson is executive editor and content manager at FarmFutures.com. He grew up on a grain and livestock farm in Ogle County, Ill., and earned a bachelor's degree in agricultural journalism from the University of Illinois. He was twice named Writer of the Year by the American Agricultural Editors’ Association and is a past president of the organization. He is also past president of the International Federation of Agricultural Journalists, a global association of communicators specializing in agriculture. He has covered agriculture in 35 countries.
“At FarmFutures.com our goal is to get readers the facts and help them analyze complicated issues that impact their day-to-day decision-making,” he says.
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