Good crop yields ease pain in North Dakota
GRAND FORKS, N.D. -- Good crop yields in much of the Upper Midwest will ease some of the string of poor crop prices, two North Dakota State University extension service economists say.
GRAND FORKS, N.D. - Good crop yields in much of the Upper Midwest will ease some of the string of poor crop prices, two North Dakota State University extension service economists say.
Though parts of North Dakota suffered through poor crop yields, "When you look across the state, the region, most farmers are going to have some very, very good yields. And that will help us, especially in 2016. We're going to need that" to offset poor crop prices, said Frayne Olson, crops economist and marketing specialist with the North Dakota State University extension service.
Grain prices, though important in farm profitability, "don't tell the whole story. Yields are a big part of it, too," as are costs, and good yields in 2016, said Andy Swenson, NDSU farm management specialist.
Swenson and Olson spoke Oct. 24 in Grand Forks, N.D., at the annual NDSU extension service Agricultural Lender Outlook Conference. About 100 ag lenders attended the event, at which seven NDSU officials spoke on a wide variety of ag issues.
NDSU repeated the event Oct. 25 in Minot, N.D., and has scheduled another session Nov. 3 in Fargo, N.D. Registration for the Fargo session is closed.
Generalizing about farm profitability is difficult, Swenson said.
"There are still farms that are doing quite well financially, (but also) farms that doing quite poorly," he said.
The most profitable farms tend to be bigger, enjoy higher yields and sell their crops at higher prices than the least profitable farms, he said, a conclusion supported in part by records of northeast North Dakota and northwest Minnesota farms involved in a farm business management program.
Those same farms generally enjoyed better-than-average yields, and better-than-expected financial results in 2015, too, according to program records.
Soybeans, in particular, fared well last year and again this year, though parts of northeast North Dakota were hurt badly by excess rain, Swenson said.
Olson has four main suggestions for farmers in marketing their 2016 crop:
• Higher yields will reduce the sales price at which farmers break even on their crop.
• Producers should "watch for small price rallies. Don't get greedy."
• Take advantage of post-harvest basis improvement. Basis is the difference between the local cash price paid for grain subtracted from the price of the commodity in the future market
• Don't overlook the carry in the market, or the difference in grains' price now and in the future. "The market is signalling, we have enough grain today. We need some in the future, we're going to give you an incentive to store and deliver it later."