We are in the month of August 2023 with this newsletter, and we have finalized the first three quarters of fiscal 2023 as of May 31, 2023. We made it through the spring planting season without any significant issues, unless you count the massive amount of snow we received over winter and seemed to stay forever. With the spring starting later than we expected the moisture to start with was welcome. As of this writing, we have experienced some higher temperatures but overall, we are a bit cooler than average. The recent rain has been good, although spotty in most cases. It came at the right time and was beneficial to most crops. The hail has claimed some acres in varying degrees of damage, but overall, normal. Commodity values experienced a lot of volatility with concerns around world events and some weather events.
Planted acres appear to be normal in terms of total crop planted, but with some shifting of acres due to timing and commodity prices at planting time. Our grain handle for the first three quarters of fiscal 2023 is up considerably compared to last year and it is hard to predict what grain quality and production will be considering the variable weather we are experiencing. The winter wheat harvest has progressed into the Dakotas, with reports of good yields in some areas and others that are still in drier, the same varied story as last year. Early reports on the winter wheat quality were good test weights and proteins in the 10.5 to 12.5 range. Lack of rain in the south pushed the wheat harvest along rapidly. The harvest season will be drawn out this year as the planting progress and later start. Crops in general look good.
Ethanol demand has been good, so that is friendly to corn. Soy oil for renewable fuel is in extremely high demand, which is friendly to soybeans and canola. Wheat will maintain ending stocks to use ratios again. The direction the wheat prices go will depend on how the current crop yields turnout and the outcome of the conflict between Russia and Ukraine. The strength of the US dollar has also had an impact to the exports of US grain to the world. There will be a period of continued volatility as the markets figure this out, as the markets always do.
At the end of May (third quarter), SWG is ahead of budget and hoping to finish the fourth quarter of the fiscal year strong. Grain volume is up, and the margins look good, but the input side of the business has had some challenges. These products are up in volume but maintain weaker margins due to the early positioning of fertilizer, and then the markets turning extremely soft into the spring planting season. We have tasked our employees to be very diligent in monitoring grain quality inbound, as there is still a wide range of carryover qualities out there. With a longer and colder winter, the energy business has felt the impact of more demand for diesel and gas and grain drying will be up in the air until we get later in the harvest season. It looks like this year will be a year to find hay as the hay crop is not as good as last year and the colder and longer winter consumed more hay than everyone thought.
The crop inputs values tend to follow the grain markets and were strong coming into the spring season but softened as the planting season progressed. Supply issues were not a problem for the 2023 planting season, although at the time it got tight. Refined energy products are still in adequate supply and demand continues to increase across the nation. Domestic travel is much higher than a year ago and that alone is a good sign that people are trying to get back to normal. This drives some near-term demand for energy products. Inflation affects all of this to some degree too.
Feed and Animal Health sales remained strong even with the better conditions of pastures and hay crop. During good times, it is still important to keep livestock herds maintained and healthy. Check with your nearest SWG Feed Sales rep and help them understand your needs and we will be happy to help. A strong mineral program and water monitoring is always a good management practice when cattle are on grass. Water quality is less of a concern this year but still needs to be considered as we get into the drier time of the year. When and if, nutrition is not the total solution, remember to get your animal health products from your nearest SWG location. If you have a prescription from your vet that needs to be filled, we can accommodate that at our locations that handle animal health Rx products. We have some knowledgeable staff and good working relationships with several of the local veterinarians that allow us to service all your animal health needs. 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. Cattle prices remain strong but with grain being so volatile, it has some impact to the cattle prices as well.
As it relates to Safety and Compliance, we continue to update and maintain our facilities and continue with ongoing training for our employees to create a safety culture that is good for both the company and our owners. We are continually educating our staff on safety and a host of new compliance issues. It seems like when we get one thing covered, another pops up to deal with. Safety and the health of our employees and customers will be an ongoing process for some time to come as we figure out how to continue to work and remain healthy. We have a good group of local Safety Specialists that are working on safety all day, every day, with the intent of becoming more proactive. Thanks to our employees for making Safety and Compliance a part of the culture and for maintaining our level of excellence. Safety at the farm level is something that should not be taken for granted. As we approach harvest and haying season for 2023 everyone needs to pay attention to doing things the safest way possible. Taking chances never really works out well. Working safely should be talked about daily and each one of you should have a plan in place. If you do not have the time to do it right the first time, what makes you think you will have the time to do it over?
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. Age 70 retirements should be submitted as always. As CHS approaches the end of the fiscal year they will review those applications and will retire what they are able. Another question I get frequently is “do I have to request my equity to be retired when I reach age 70?” The answer is no, you can request it any time after age 70, but if you do request at age 70 and continue farming, you can then request it every 5 years thereafter. Estates still come first and remember to contact us if you have questions.
As always, thank you for your continued support of the cooperative system, and for putting your trust in our people and your 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: “There are two ways to be fooled. One is to believe what is not true. The other is to refuse to accept what is true”