Home > Regional Manager’s Report 

Regional Manager’s Report 

Delane Thom, Regional Manager

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”

Cash Bids & Weather –How to Use