Tom Neher Interview: Impact of Weather on Wheat Market  

On the Linder Farm Network, Tom Neher comments on how weather is playing a significant factor in the wheat market. Listen now!

Tom Neher Interview: 5/10 USDA Report 

Tom Neher discusses the active commodity markets prior to the release of the May 10 USDA Report on the Linder Farm Network. Listen now!

Tom Neher - Grain Angles

The spring rains that we have received this year have certainly taken much of the fear of drought out of the market in corn and soybeans. Corn prices continue to struggle, while the soybean market continues to attract more acres to be planted. The winter wheat crop is starting to be harvested in Oklahoma and yields look to be strong. The profit margins on corn verses soybeans are nearly identical when looking at new crop projections. The old crop corn supply continues to be rationed out as the inverse between the May and July contract continues to advance at a staggering rate. This is the type of market environment that can lull one into complacency.

When looking up complacency in the dictionary, you find that it is an adjective that means; self-satisfied and unaware of possible dangers. The thesaurus gives us synonyms such as; smugness, gratification, self-righteousness and anxiety. These synonyms indicate a wide range of emotional response and seem to explain our reactions to the current market environment. How do we manage margins in such an environment?

We are now entering into a market environment that will test the very best of managers. Do we sell now that margins have tightened up, or should we wait until harvest like we should have done the last two years? Many people that I have interviewed over the last month have indicated that they have sold very little new crop corn and a few more soybeans. Have we been lulled into complacency?

Jim Collins in his book Great by Choice, introduces us to a concept that he calls the “20 Mile March.” Collins asks us to imagine that we are standing in San Diego, California and setting out for a three-thousand-mile walk to the tip of Maine. He tells the story of two people who set out on the walk with different tactics. The one, walks 20 miles out of town on the first day and then 20 miles the next day. Twenty miles a day through the heat of the desert and the snow storms of the Rockies. When the weather is nice and the wind is his back, he only walks 20 miles and then rests for the next day. When the weather is nasty, he gets up. He gets dressed. He marches his 20 miles. Eventually he gets to Maine.

Now, the other person who starts out with him on the same day, get all excited by the journey and logs 40 miles the first day. Exhausted from his first gigantic day, he goes to bed and wakes up to 100-degree temperatures in the desert. He decides to hang out until the weather cools, thinking, “I’ll make it up when the conditions improve.” He maintains this pattern of big days with good conditions, whining in his tent on bad days. Just before he gets to the Colorado high mountains, he gets a stretch of great weather and he goes all out, logging 40 to 50 mile days to make up the lost ground. But then he gets hit with a big winter storm and it about kills him. He hunkers down in his tent and waits for spring. By the time spring arrives he emerges from his tent weakened and stumbles off towards Maine. By the time he reaches Kansas City the other hiker has just reached the tip of Maine.

Collins states, “The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions.” He further suggests, that “a good 20 Mile March lies largely within your control to achieve. You shouldn’t need luck to achieve your march…A good 20 Mile March is designed and self-imposed by the ‘enterprise,’ not imposed from the outside or blindly copied from others…A good 20 Mile March must be achieved with great consistency. Good intentions do not count.” He suggest that 20 Mile Marching helps turn the odds in our favor for three reasons. First, it builds our confidence in our ability to perform well in adverse circumstances. Second, it reduces the likelihood of catastrophe when we’re hit by turbulent disruption. Thirdly, it helps us exert self-control in an out-of-control environment.

Margin management is all about “hitting those singles and doubles and not swinging for the homerun.” It is all about marching our 20 miles a day, every year. If we can consistently remained disciplined and capture the profits when the market presents them, we will fulfill our goals. Twenty miles a day is a grain angle that will give us the edge to success. Let’s lace up our boots and get to marching!

Tom Neher Interview: Early Spring Planting
On the Linder Farm Network, Tom Neher discusses the commodity market reaction to the early spring planting occurring throughout the region.Listen to the interview.
Tom Neher - Grain Angles
The planting season is upon us and we are ready to put the seed into the ground. The cool, rainy weather that we have experienced the last couple of weeks has been a blessing. The cooler temperatures kept us from planting too early, giving us a better chance of avoiding a late freeze. The rain will get the young plants off to good start. For these blessings, we are thankful!


Since moving to Minnesota from Kansas nearly 6 years ago, I have been known to question the conventional wisdom. I grant that I grew up and farmed in an area where we did everything possible to save soil moisture. We terraced the land to try and keep as much water from running off our fields as possible. Our tillage implement of choice was called a “stubble mulch plow” that kept the maximum amount of soil residue on the surface. This shaded the soil to lower evaporation and helped to control wind and water erosion.

Today in that part of the country, you will rarely see a “stubble mulch plow” being used in the fields. Rather you will see large sprayers and planters with heavy coulters or “trash whippers.” No-till farming has revolutionized crop production on the High Plains. Grain producers are able to farm more acres with less machinery, labor, fuel and time. Corn and soybeans are able to be grown, where they had to be irrigated to produce a crop 20 years ago.

My father-in-law farms in North Central Iowa and he has successfully used no-till practices for the last 20 years, with outstanding results. So, when I moved to Minnesota, I asked the question: “why aren’t no-till practices being used?” I looked up the Minnesota statistics on no-till acres and found that only 10-12% of the acres were planted using these practices. When I would ask this question as I travelled around and visited with grain producers, I would get this blank stare that indicated I must be insane. Then the answer would be, “no-till will not work in Minnesota…it has to be ‘black’…the soil is too cold in the spring.” The last few years, I have asked that question less often. Yet, the subject kept gnawing at my curiosity.

I conducted a literature review to see what research has been conducted on no-till practices in the Midwest and specifically the Upper Midwest. The Corn & Soybean Digest has some great articles on this subject. The experts say that tillage has three purposes in the Upper Midwest. They are to warm up the soil, dry the soil for earlier planting and to make a better rooting and seed-placement zone. University of Minnesota regional Extension educator, Jodi DeJong-Hughes is quoted as saying, “tillage is to undo the compaction from the previous tillage…tillage begets more tillage.”

Research conducted at Iowa State University’s Mahdj Al-Kaisi, Extention soil management specialist suggests that using no-till saves $25-30/acre in corn, and $18-20/acre for soybeans in input cost of production compared to conventional tillage. He is quoted, “These savings result from reducing field-operation passes from eight passes in conventional tillage per growing season to five per year with no-till in corn production.” University of Minnesota-Morris research spanning four years pegs strip-till savings at $32/year over moldboard and deep ripping, says De Jong- Hughes. The strip-till trials found an average of 12 yield advantage of strip-till trials over full-width tillage.

Tony Vyn, Purdue University agronomist, says that conventional tillage is not essential for high corn yields. He has conducted research on no-till corn for 33 years. He states, “Your tillage system has less consequence for high yields than hybrid selection, optimum plant density and fertility levels.” “Strip-till truly is the system of choice for continuous corn,” says Vyn. “Even in continuous corn when no-till yields are somewhat lower, strip-till usually yields equal to chisel plowing while providing superior erosion protection.”

Extension Engineer Paul Jasa, University of Nebraska-Lincoln has studied continuous no-till corn production for over 30 years. Jasa says, “Don’t focus on making the spring planting conditions warmer and drier, but focus on making the summer growing conditions cooler and wetter. Cool, wet spring soils may slow growth some early in the season, but it’s your best friend in the heat of June, July and August.”

I interviewed a no-till producer in Wisconsin and he said, “It took me 3-4 years before my land recovered from tillage. I had to give it time to heal…now my yields are better than they were before, when I burned up all that fuel and wore out my equipment…a farmer shouldn’t switch all at once…just try it with a field and see what happens.” I am sure that I have not convinced many of you that these will become the best practices in the Upper Midwest. Yet in this era of high volatility, the challenge will be to find methods to capture a grain angle.

Crop outlook under three weather scenarios 
With weather top of mind this growing season, how might supplies of corn, soybeans and wheat be impacted? Find out in a few scenarios provided by AgProfessional.
Tom Neher - Soybean Markets and USDA Report

Tom Neher interviews on the Linder Farm Network and discusses soybean markets under pressure – is a correction coming? He also talks about the USDA release of the corn planting report. Listen now!

Announcing "AgIQ"

As part of our efforts to bring market insight to our external stakeholders, we’re excited to launch a pilot “AgIQ,” a quarterly industry outlook. Our first report focuses on the grain industry and includes insight from our grain, financial and legislative experts. View the report here.

The outlook is designed to provide a comprehensive longer-term outlook on the industry and know "what to watch" in the months ahead. Based on the feedback we receive, we’ll look to potentially extend this concept to other industries including swine, dairy and renewable fuels in the months ahead.

We’re excited to help leverage the expertise of AgStar’s team to share with our clients and the greater ag industry. Your feedback on this report is greatly appreciated – please send any comments you may have to AgStar-Communication@AgStar.com.

Tom Neher: Reaction to USDA Report

During an interview on the Linder Farm Network, Tom Neher discusses the commodity market reaction to the recent USDA report. Listen now!

Tom Neher - Grain Angles

Last week was spring break for my wife, who is a first grade teacher and our youngest daughter who is a junior in high school.  I have gradually recognized the value of taking a winter or early spring vacation since moving to Minnesota.  Over the years, I have also learned the value of taking a break from the markets.  It is helpful to disengage from the day-to-day focus on all of the latest news, theories or rumors about the markets.  I have also found it helpful to travel outside of my local growing area to be reminded that the world grain markets do not revolve around what I see out my back door.

I will grant that I generally never fully disengage from studying the agricultural activity of the locations of my travels.  This year we traveled to Georgia, South Carolina and North Carolina.  The wheat and oats were all headed out and in the “filling” stages.  As these crops mature, soybeans likely will be planted into the stubble after harvest.  The corn was twelve to sixteen inches tall and being sprayed with herbicides.  The life of a farmer is similar no matter where you live.  Risk, volatility and opportunity do not have geographical boundaries.

Upon returning and catching up on my mail, e-mail, market news or other sources of information; I saw a wide range of reactions to the latest USDA report.  They ranged from rants, “I don’t trust the USDA numbers,” conspiratorial innuendo, international espionage, to “96 million acres of corn and 164 bushels per acre trend line, corn will have a 4 (price) in front of it.”  All of this said, with less than 5% of the U.S. crop being planted.  It is very common to “talk” our own position in the market.  As humans, we want to find some rationalization for our emotions in relation to the market place.

My experience with the USDA research methodology is that they have a very structured and disciplined process that they use to gather data.  They use various research methods or models to gather and analyze the data.  Many of these still rely on some human interaction or judgment.  For example, the projected planted acres estimate relies on surveys with farmers.  The crops have not been planted yet, so it relies on the farmer’s response or estimate.  The accuracy of the report relies on a human estimate.  It is impossible to see into the future with great accuracy.

Later reports rely on surveys with elevator managers and field sampling.  Again, it relies on human involvement.  Do the elevator managers really know, down to the last 10,000 acres how many acres have been planted?  In field sampling, a fixed process and formula is used to determine the estimated yields.  Again, humans gather the data by counting and measuring samples of plant population, ear size or pod count.  There are limits to the precision of the human effort to collect this data in a scientific, rational manner.

In an effort to look at this matter in a different manner, some have attempted to use satellite imagery and “green density” mapping to determine acres planted and yield estimates.  This methodology is still relatively new and its’ accuracy is still being refined.  We seem to be looking for a “silver bullet” that will magically give us an edge in the market place.  These genuine efforts to find answers to our questions are a worthy cause, even if they are not perfect.  Until they become perfect, let us continue working to find the grain angles to help us manage our margins. 

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May 15, 2012

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May 15, 2012

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