Farm Horizons
•
Feb. 8, 2016
•
Page 30
Most corn and soybean crops
are contracted before planted
By Tara Mathews
Raising cash crops can be a big and risky job for the
farmer who decides to take it on, especially for those
who contract out their crops to local feed mills and ethanol plants each year, sometimes before the crop is even
planted.
Fortunately, most farmers now have learned from the
mistakes of their elders, and don’t contract out a large
percentage of their crops ahead of time, according to
Kevin Dahlman, a Cokato farmer.
Dahlman farms corn and soybeans, and only contracts
out a small portion of his crop, because most of his corn
is seed corn, which he packages and sells himself.
“It’s very common to contract out one-quarter of the
projected crop yield or more in our area,” he noted.
“Corn and soybeans make up a large percentage of contracted commodities.”
Most field corn and soybean farmers in the area will
contract through various feed ports, such as Munson
Lakes in Howard Lake, Bushmills Ethanol in Atwater,
or CHS Savage Terminal.
“Farmers like to play the market to find a price they
like,” Dahlman said. “Some will even hold off if they
don’t like any of the prices.”
Typically, farmers don’t contract out 100 percent of
their projected crop, because they are then responsible
to produce it for the terminal, he stated.
“We usually do it in steps,” Dahlman commented.
“We bring in about 10 to 15 percent, and then wait a
little bit, then probably bring in another 10 to 15 percent.”
When farmers bring the commodities in increments,
they can continue to check the market with each load,
and sometimes even find a better price.
“It can be risky to do, also,” he said. “Because, sometimes the market drops, and some farmers don’t have
enough storage to just hold off.”
The farmers who have livestock to feed from their
crop, as well, will contract out a much smaller portion
of their projected crop yield, to save what is needed to
feed their livestock.
“Most animal producers know how much each one
will eat and only contract what is left,” Dahlman noted.
Another risk many farmers take is contracting for the
following year. For example, some can be contracting
out 2017’s crop before the 2016 crop is even planted.
“In those cases, we usually only contract about 20 to
50 bushels an acre if we are confident our field will produce 140 to 200 bushels an acre,” Dahlman said. “Anyone who contracts more than that is really sticking their
neck out.”
The good part about contracting future crops is, most
feed mills will only have the farmer contract an amount
with which they are comfortable.
“Most feed terminals know what they need, and contract accordingly, as well,” Dahlman stated. n
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