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