We are in the month of May 2023 with this newsletter, and we have completed six months of operations or the first half of fiscal 2023 (Sept 1, 2022 thru Feb 28, 2023).  Everything was setting up to be what looked like a late spring due to the record, or near record, amounts of snow over the winter and that is exactly what happened.  Very little crop was seeded in April.  This is similar to last year with the back-to-back blizzards we experienced starting April 12, 2022.  The moisture is certainly welcome and will give us a good start on the 2023 crop year.  This is creating a very compressed planting season again this year. We will do what we always do:  Just get it done and move on.

Grain movement is steady with the current commodity markets at higher, but quite volatile, price levels.  This is due to so much uncertainty in the economy, global conflict, speculation, and just supply and demand.  The conflict between Russia and Ukraine still lingers and has created a lot of the volatility in grain markets.  The very dry conditions in the southern plains of North America and some of the same in South America also contribute to this volatility.  Rail freight had a tough go through the long winter in the Northern Tier of the US and Canada but has mostly recovered at this point.  Hopefully, the freight markets will stay caught up as we clean out bins in anticipation of the crop for 2023.

There is still a fair amount what is now “old crop” grain to move in the country.  We need to get a crop in the ground and look for market opportunities or storage space for that volume.  Our grain handle for the first six months of fiscal 2023 will be up a little as compared to last year by about 4,500,000 bushels, or about 18%, year over year.  The bottom line is, the market demand is still adequately supplied, so until demand improves for both exports and domestic mills, we are in a range bound pricing pattern, up one day and down the next two days kind of trading.  Ending stocks of grain will be a bit lower, but still adequate for the short term.  Keep an eye on new crop 2023/2024 values.  There may be some opportunities to lock in some nice sales to cover the high input costs.

The crop inputs are another story.  Prices hit record highs for fertilizers.  This was in part driven by the grain markets and supply and demand.  Maintaining supply on hand is key again this year with the logistics issues that still exist.  There is still some uncertainty as to what crops will be planted in 2023.  The cash flows for all grains are much better than they were a year ago, with most in positive territory.  How well a crop cash flows is highly dependent on yield potential, so doing what is right for the crop will give you the best chance of profits.  Despite the calendar showing May and we are getting in the fields a little later than we first thought, we are still in a good position overall.  There are a lot of buying decisions that have not been made, so actual demand is a little more difficult to predict.  The trade flows are still much different than what a few years ago looked like but the global supply of inputs is finding its way to the end user.  Having the products you need on hand is important in today’s market, and do not forget about looking ahead to next year.

Refined energy products (gas, diesel, propane) are fair on supply in our region and globally.  Energy prices are extremely volatile, like everything else that affects agriculture.  As a result, looking ahead on supply is more important than it has been for a while.  The supply today is impacted by refinery shutdowns for maintenance or repairs.  We have come off the highs that were a result of the Russia/Ukraine conflict from over a year ago.  Recent pricing has actually been lower than expected for this time of year.  Fuel demand has continued to increase as people are traveling more and we learn to live with the aftereffects of the pandemic.  The past winter use of fuel was higher than expected due to a lot of snow removal and colder than normal temperatures.

Our input business is in good shape with a good supply of fertilizer products on hand and on the farm. Employee shortage and the ability to find new hires is a concern no matter what business you are in. Early indications were that supply would be affected and a lot of customers made decisions early and took supply home when it was available.  The Mississippi river system went from too low to move barges last fall to too high to move barges this spring.  Fundamentally the business is sound and feeling fairly good after six months of the new fiscal year under our belt.  Most product in position is as good as it has been.  We just need to figure out how it will move to the farm in a compressed period.  Grain margins are normal to strong and grain volume is good as we continue to move various qualities of wheat, corn, and sunflowers to market.  There is still not much of a premium value to protein.

Feed sales have again shown a good and sustainable increase year over year.  We continue to offer and develop new feeding programs and markets for our customers to help them be more efficient and profitable.  Watching the recent cattle sales and bull sales this time of year would indicate that there is a lot of optimism in the cattle industry.  With the recent moisture event, there will be green grass as it warms up and we should have some hay to make in June.  Having a good balanced ration for cows at calving can help offset any of the weather challenges that we get every year.  This winter will go down as a record in terms of inches of snow in most of our trade area.  Not sure that record is one to be too proud of, but it happens.  In the feed area, we have almost completed the renovation of an existing fertilizer plant in Lemmon to accommodate our feed grind and mix business.  That system has been tested recently and appears to be a good addition to our capacity to produce grind and mix feed products.  Once we are comfortable with the function of the new mill setup, we will demolish the old wood elevator in Lemmon that houses that business today.

It is time to think about getting pairs on grass.  Making sure your vaccination and nutrition programs are up to par is critical at this stage of the game.  Check with your nearest SWG Feed Sales rep and work with them to understand your plans and they will help you make the best decisions for your operation.  We can solve a lot of problems with nutrition but if animal health products are needed, we have a full line available at most of our locations.  If you have a prescription from your vet that needs to be filled, we can accommodate that at all our locations that handle animal health products.  We have some knowledgeable staff that is continually training to service your animal health needs.  Our partnership with West River Vet Clinic in Hettinger will prove to be invaluable as we work thru this process.  We will fill all VFD prescriptions at all our locations and have the training in place to maintain the necessary records to comply with the FDA regulations.  Let us know what you need, and we will do our best to make it available when you need it.

There is always work to do in and around safety and compliance.  Thanks to our employees for making safety a part of the culture and for maintaining our level of compliance excellence.  Safety is something that we take seriously and will continually work on to get better.  Safety at the farm level is something that should not be taken for granted.  Take the time to stop and think about what might happen or cause an accident.  These things do not need to happen if you just stop and think about safety first.  During the busiest times of the year especially, it should be talked about daily and each of you should have a plan in place.

The patronage payments were sent out a few weeks ago.  Earlier some were paid electronically for those who signed up for ACH and the balance were sent in a hard copy check.  Patronage rates will cycle with the commodity markets, so it is important to look at them for a longer period to time and not just one year.  This business, like farming and ranching, is not a one-year deal.  We are in this for the long haul.  We will be here to help our customers remain profitable on the farm and ranch, because without that, nothing else really matters.

This is an ongoing reminder related to equity retirement.  Any requests for equity retirement, either for age or estate, require a form to be filled out as these requests are not automatic.  You can contact our central office, and we can help you with the necessary forms to get this done.  Also remember that the age requirement is currently at age 70, so please plan and get the request submitted. Talk to your relatives, friends, and neighbors who are out of the area, so they are aware of the process.  They simply need to call us, and we will check on the equity balance, see if it is eligible, and send the necessary forms for the request.

As always, thank you for your continued support of the cooperative system, and for putting your trust in our people locally and our company.  The cooperative system needs to focus on efficiency and doing what is right for the customer.  The success of your cooperative is not about any one person or event, but a true team effort.  Please feel free to contact us with any questions, suggestions, or concerns.  Sometimes the little things are what matters and communicating those helps us get better.

Remember “Do it Safe by Choice”.

I will leave you with this quote:

“You must find the courage to leave the table if respect is no longer being served”

Delane Thom, Regional Manager

We are in the month of February 2023 with this newsletter, and we have completed four full months of operations for fiscal 2023.  What a difference a year makes, again.  We received a fair amount of winter as compared to the last few years and must learn how to deal with it again.  The snow is good for moisture, as one bright spot with having winter.

Grain movement has been very steady over the past few months.  Rail freight continues to have some velocity issues again because of weather, but recently warmer/better weather has improved that a little.  We continue to be able to keep the facilities fluid with space for grain available most days.  The severe cold weather of late and the massive amounts of snow in the Rockies really had an impact to the train velocity.  The 2022 wheat quality is very good and that is a welcome thing.  Yields for the 2022 crop were good, and the market values have held much higher than what we would have expected.

Global grain supplies remain adequate, although a little lower than the past few years.  It is still not at critical supply stages by any means though.  Our grain handle for the first four months of fiscal 2023 shows a nice increase in volume, compared to the last couple of years, as demand seems to be picking up.  Spring will be more of a normal time this year as we still have a lot of snow on the ground in most places.  In the end Mother Nature will let us know when the time is right.

The crop inputs are yet another story.  Fertilizers shot higher in the early part of the fall due to higher commodity prices and some supply chain concerns with the Mississippi River system being at historical low water levels.  Spring supply was a hot topic at the time, and it is yet to be determined if the water levels will improve enough in time to ship barges north.  There is a lot of volatility in the crop nutrient markets as they are affected by weather and the cost of the feed stock products that make up fertilizers.  Crop Protection products are a wild card.  Active ingredients are getting held up in supply chain bottlenecks between the countries that make the active ingredients and the US, where the final products are made.  The energy markets settled back slightly, which is welcome relief as energy affects just about everything we do.  The physical supply of energy does not seem to be much of an issue now.  Energy in the form of natural gas influences fertilizer production as well as the logistics to move the final product to market.  Fuel surcharges are still a thing though and they affect most of the grain shipments as well as other products.  The crop yields for the 2022 growing season did not leave a lot of crop nutrients in the soil, so testing is of utmost importance this year to make sure we know what is available and what we need to add.

As of this writing, we closed the first four months of fiscal 2023 (September 1, 2022, thru December 31, 2022).  We are off to a pretty good start with grain volume higher than normal, while input sales slower due to volatility in those markets.  We are still able to hold expenses in check and have a good handle on the expenses we can control.  The input side of the business feels like it is where it should be and will continue to contribute “normal” sales and margins could be tighter due to inventory positioning.  Energy supply (other than the normal issues with #1 winter diesel fuel and propane) has not been much of an issue.  Fundamentally, the business is sound and feeling pretty good after four months of the new fiscal year under our belt.

At this time, we would anticipate patronage being distributed on Fiscal 2022 business but do not have final rates or how it will be handled in terms of qualified or non-qualified distribution.  The patronage distribution should happen in February for those who have signed up for ACH and in early March for those that receive a physical check.  The Patronage will be good based on the close of the fiscal year on August 31, 2022.  During fiscal 2022, all age 70 requests were paid, and new age requests were processed as they were submitted.  All estates continue to be paid as they are requested, and they are the priority during the fiscal year.  In the past 7 years, we have distributed over $16 million back to our owners in estate and age retirements.  This is in addition to the current activity each year.

Feed sales held steady due to the decent hay crop we experienced this past growing season.  The downside is the extreme cold weather has put pressure on the hay and forage supply.  Ranchers have had to feed early and for a longer time in the cold and wet weather.  There has been steady movement of calves throughout the fall and by now many of the calves held over into the new year have been sold.  Prices have held strong and replacement stock is at good values.  Feed quality testing is so important so you can know what you have for forage.  They you are able to work with our nutrition people to get that in balance for the best use.  Coming into calving, nutrition is at a high point of importance to bring the cows thru calving in good shape.  Check with your nearest CHS – SWG Feed Sales rep to help them understand your plans.  Together you can find out what the quality is of the forage you have and how to balance that.

With calving just around the corner, it makes sense to check with your SWG Feed Salespeople for all your animal health needs.  If you have a prescription from your vet that needs to be filled, we can accommodate that at all our locations that handle animal health products.  We have some very knowledgeable staff that are continually training to service your animal health needs.  With the VFD (Veterinary Feed Directive) rules that became effective a couple of years ago, we are working closely with all local area vets to help our customers do the right thing when it comes to feeding antibiotics to cattle.  Our partnership with West River Vet Clinic in Hettinger will continue to prove to be valuable as we work thru this process.  We will fill all VFD prescriptions at all our locations and have the training in place to maintain the necessary records to comply.  Let us know what you need, and we will do our best to make it available when you need it.

Thanks to our employees for making safety a part of the culture and for maintaining our level of compliance excellence.  Safety is something that we take seriously and continually work on to get better.  It is evident that compliance is something that will never, ever be “done” and is constantly changing at the regulator level.  Safety at the farm level is something that should not be taken for granted.  Our customers are the most important piece of our business, and we need to help protect them daily.  These things do not need to happen if you just stop and think about safety first.  During the busiest times of the year, it should be talked about and each of you should have a plan in place.

Another ongoing reminder related to equity retirement; Any requests for equity retirement either for age or estate require a form to be filled out.  You can contact our main office and we can help you with the necessary forms to get this done.  Also, remember that the age requirement is currently at age 70, so please plan and get the request submitted.  Talk to your relatives, friends, and neighbors who are out of the area, so they are aware of the process.  They simply need to call us, and we will check on the equity balance, see if it is eligible, and send the necessary forms for the request.  

As always, thank you for your continued support of the cooperative system, and for putting your trust in our people, and our piece of the company.  The success of your cooperative is not about any one person or event, but a true team effort.  Please feel free to contact us with any questions, suggestions, or concerns.

Remember “Do it Safe by Choice”.

I will leave you with this quote:

“Your life does not get better by chance; It gets better by change ”

Delane Thom, Regional Manager

Good morning to all our fellow producers and ranchers of SWG!  February is here!  If you did not know it, just ask a tax accountant or your spouse, as here we are working on bookwork and digging out receipts to finish before the end of the month.  As we get older, we get more excited trying to understand what all the expenses were for 2022… or should I say anxious?!  Who doesn’t “love “tax” February… haha!  Think of those busy bookkeepers that keep track of records to show their losses and gains.

It is also the start of longer days and nights for ranchers as calving season is upon us as well.  This may be only the beginning of calving, as I write this, but the next one you get to read may be close to the end of the 2023 calving season, and everyone will be readying equipment for planting and spring fieldwork.  Good luck to all those calving and we pray it will be better weather than spring 2022 was.  Do not hesitate to ask SWG for their help and expertise with all your caving and vet needs as we try to have supplies on hand at all locations.

Spring is just around the corner and the planning of your input needs are getting finalized with seed and fertilizer needs, as well as chemical requirements to get the 2023 planting season off to a great start.  Thankfully, fertilizer prices are moving in the right direction, helping to cut some input costs.  This should help you feel a bit more excited to replenish the soil health after taking so much out in the 2022 crop year.  Your SWG agronomists are here to help you decide on all your needs with the moisture we received to get the maximum yield out of your fields.

As we move closer to starting another year in agriculture, we pray Mother Nature will be kind to us!  I hope I did not jinx it now by bringing up the subject… with all that fog we experienced all winter!  If you follow the old wives’ tales, it would be predicting lots of moisture in 90 days.  Local meteorologists say there is no truth to that, but we all know they are known to miss the mark some days.  So, we wait and see if we get some significant rain or snow.  I will report on that old folklore in the next article!  We have been blessed with some very nice temperatures lately.  These helped melt away some of that November snow, especially in SW ND.  There is a lot of water running through everyone’s yards!

It was a busy fall and winter in the SWG board room.  CHS was busy educating the board on proposed changes happening in the by-laws that we will vote on at the next fall annual meeting (Fall 2023).  I will try to give you a short explanation.  On your patronage statement you receive each year, you will see that CHS withholds 10% into unallocated reserve.  This has been done for many years.  The unallocated funds are used for capital improvements & for future growth of CHS.  The management team & the CHS board would like to have the ability to increase the unallocated funds up to 45% to help pay on capital, as a large group of members (the baby-boomers) are nearing the age of 70 and their full patronage will be paid.  Please contact your area board member or me with any questions.

In closing, I would like to thank you once again for choosing SWG for all of your farming and ranching needs.  I would also like to thank Michelle Barnhart for all her years of service to the patrons of SWG and the petroleum office in Dickinson.  We appreciate all of her knowledge and willingness to help everyone!  We wish her all the best!

Have a safe spring with calving and planting.  Stay healthy and grateful, and take care of each other!

Shane Sickler, SWG Producer Board President