Regional Manager’s Report – Nov 2022 Grain Mill

Delane Thom

We are in the month of November 2022 with this newsletter. We finalized fiscal year 2022, ending August 31, 2022, and now completed the first two months of fiscal year 2023. The wheat harvest finished for a while ago and the quality of the crop was just what we needed. The yields were good in most areas due to the mid-April moisture that carried through most of the growing season. The extreme drought conditions and heat we experienced thru the last years growing season looked like they were going to be repeated until that major weather event in April. In the areas that recieved a little more rain overall, the yields on all crops overall were very good. This shows what another ½ inch of rain can do. If you happened to be just a few miles either side of these small rain events, the results were probably a little different. Global grain supplies remain adequate despite all the turmoil created with the Russia/Ukraine conflict. Export demand is not as strong as expected coming out of the global pandemic from a year ago. Domestic demand is steady but easily covered with the supply available. The speculative markets are pushing futures higher, but the actual cash trade is well supplied at this point. COVID is still a thing, but it appears to be manageable in most cases. Due to the drought of last year, our grain handle for fiscal 2022 was down about 2 million bushels at the end of August 2022. We ended fiscal year 2022 with a handle of around 24.0 million bushels. In the grain markets, volatility will be a common occurrence, creating dramatic swings both directions.

The crop inputs continue to be considerably higher as they followed the grain markets higher. They still seem to have some strength as the supply chain is having problems with getting the right products to the right place at the right time. Who would have thought that the Mississippi River would hit historic low water levels in 2022? This event coupled with the ongoing labor disputes and threatened strikes with the Union Workers of the Class 1 railroads just add fuel to the disruption of the supply chain. A big concern influencing the fertilizer markets going forward is the cost of the raw ingredients, such as natural gas to make nitrogen, and the higher costs of everything related to making those products. There is a lot of talk around the labor shortages and the ongoing fatigue of the workforce as the aftermath of the pandemic which continues to limit improvement of the supply chain issues. As a result of the Russia/Ukraine conflict there is more concern of refined fuels and propane now getting into shorter supply situations both in our local region and globally.

As mentioned above, we have closed fiscal year 2022 (September 1, 2021, thru August 31, 2022). With all the circumstances considered, we will have to say this was a pretty good year. The input side of the business was off in volume due to the drought that persisted thru early spring and soil tests that did not call for much in terms of plant food, specifically nitrogen. The input side of the business contributed good margins to the overall business. The grain side of the business while declining in volume has provided good margins due to improved quality of the spring wheat crop. We did witness a bit of a shift in protein premiums as harvest started, which is something we have not had in several years. Protein for crop year 2022 was lower overall than prior years.

SWG ended fiscal year with a profit that was better than budget and was driven by all product areas contributing well and showing operational improvement. At this time, we anticipate the patronage paid on fiscal year 2022 business to be strong. We do not have final rates though, or how it will be handled in terms of qualified or non-qualified distribution. During fiscal year 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. 

Feed sales decreased in volume because of the moisture, which created a nice crop of grass and hay this year. Watching the cattle sales at local auction barns recently would indicate that calves are moving to market and, so far, the prices are holding good values. It feels like the calves were marketed on time this year due to the good prices. Feed quality testing is still important in good years and in those years where the forage is just about anything that will make a bale. Any hay that is bought should always be checked for quality. Work with our nutrition people to get that in balance for the best use. Also check with your SWG Feed Salespeople for all of you animal health needs. It is that time of year when ranchers are weaning and backgrounding or weaning and selling calves. 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. Our ongoing partnership with West River Vet Clinic in Hettinger will continue to add value to these services. We will fill all VFD prescriptions at all our locations and have the training in place to maintain the necessary records to be in compliance. Let us know what you need, and we will do our best to make it available when you need it.

Related to safety, our ongoing plan is to do what we can to keep ahead of the ever-changing rules and regulations as well as continue with better training for our employees. Our goal is to create a safety culture that is good for both the company and our customers. Safety is something that we take must seriously and continually work on to get better. Safety at the farm level is something that should certainly not be taken for granted. Every year and every day we hear about a farmer that is trapped in a grain bin or caught in a PTO, so please pay attention, and take another few seconds to evaluate what you are doing and do it safely. Our customers are the most important piece of our business. We need to do what is right to keep our businesses open and active to serve the needs of our customers. 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 70, so please plan and get the request submitted. Talk to your relatives, friends, and neighbors, so they are aware of the process. They simply need to call us, and we will check on the equity balance and see if it is eligible and send the necessary forms for the request.

The SWG Annual Meeting is scheduled for Thursday, December 15th at the New Salem Auditorium. We will host a meal at noon Central Time, with registration starting at 11:00 am Central Time and meeting to follow at 1:00 pm Central Time. This will be an in-person meeting, the same as last year in Dickinson ND. Please see the official notice elsewhere in this newsletter for more details.

In the past there has been some questions about how the votes for SWG are carried to the CHS Annual Meeting.  At each of the local SWG annual meetings there is a resolution that is voted on by the membership to allow the votes for District 3 & 4 (ND & SD), to be carried by members of the SWG Producer Board. Every year we vote on this resolution a year in advance, and it allows all the votes from SWG to be carried into the CHS Annual Meeting by delegates from the local Producer Board. This year there will be an in person CHS Annual Meeting, in Minneapolis MN on December 1 – 2, 2022. We have delegates from the local Producer Board registered to carry the votes for SWG in both states. 

Thank You for your continued support of the cooperative system, and for putting your trust in our people and our 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 Safely by Choice”.                       

I will leave you with this quote:“You can’t wait until life isn’t hard anymore to be happy”

Delane Thom, Regional Manager

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