Letter from Missouri: good maize yields, but thin margins

This year has been more intense than usual for us. All good really, just busier than I would like.

Our growing year was dry in June, wetter in July and normal in August.

Harvest went quickly – we budget on 33-34 long days to complete our harvest, so if it does not rain then we are finished in a little over a month and that’s great. We would be tired, but we understand that is inevitable when trying to get things done as quick as is possible.

This year we only had four days when rain delayed harvest and we completed harvesting in 33 days. Bear in mind that our harvest is all spring sown maize and soya beans, and ripening trends to overlap for harvest.

Harvest yields

Corn was good and averaged 225 bushels (5.715t) per acre. Soya beans were much more variable and disappointing, with an average of 50.1 bushels (1.36 t/ac). We had some disease issues, which resulted in yields ranging from 25 bushels (0.68 t/ac), where we were hit with an attack of sudden death (a fusarium disease), to 78 bushels (2.12 t/ac) from our good, late-planted crops.

Getting harvest done quickly and efficiently requires both an excellent crew and good management – we had both. The boys managed the plan and I ran the elevators and the dryers during harvest.

Profit

While crop yields (especially corn) were reasonable, low prices mean that margins are very thin this year. As well as this, I fear that we are entering a period of tight margins. Our boys have not experienced this before and all they know about it is my ‘old guy’ stories of low or no profits from farming in the past.

Our son, Nick, ran our current numbers for us recently. Maize cost close to $850 (€780) per acre and soya beans $700 (€650) per acre. Many farmers have much higher numbers than these. I have a few friends that have $1,000 (€925) per acre in maize inputs. It all depends on buying discounts, machinery debt and rents or land repayments costs.

Corn came out OK in 2023 but not as good as the last few years. At the time of writing in early December ,the price was $4.65/bu (€170/t) cash bid, so we hope to make $1/bu profit or better – not a great return, but still a profit.

Soya beans is a whole different story. In early December, the price offered was $13.06/bu (€444/t) – I need to average $14 (€477/t) to break even on our average yield. Some of our fields need $25/bu to break even. A couple of our worst fields will show a $375 (€347) per acre loss, so soya beans will not be holding up on their part of our income plan. Those losses will have to be allocated to the corn numbers. So we are back to a tough year to make things work – such is farming.

Elevator capacity

One weekend during harvest, I set about evaluating the capacity of our elevator system. On the last Saturday of harvest we had two 12-row heads on our combines, two 1,300-bushel (33t) grain carts (chaser bins) and four semi-trucks (articulated trucks) running. That is big harvesting capacity and everyone had to log down-time or wait-times, etc, for the day.

No one sat for more than five minutes and the boys on the combines only logged 15 minutes of downtime for the whole day. So the system worked and not one piece of equipment was left sitting or idle.

On my end, at the south elevator, I received 77,000 bushels (1,956t) of maize and dried it down by 2.5 points of moisture, so the system worked well. The following day, Sunday, we started cutting at 1.00pm and harvested 53,000 bushels (1,346t) that afternoon. So we had a very productive weekend, which gave us the confidence that we can expand acres and not need much in the way of additional infrastructure or equipment.

This performance was helped by the fact that we added another 175,000 bushel (4,500t) bin last summer and we will shortly add another 10,000 bushel per hour (250 t/hr) grain leg to the system and a 42,000 bushel (1,067t) cooling bin to work with the drying system to help speed it up.

This exercise suggests that we will be running 12-row heads (30 ft) on both combines in the near future. Nick bought one last summer which folds on the machine for transport, so we don’t even need a head trailer to move it about. Now we will add another one at some point to help speed things up.

We also added a second chaser bin for last harvest. This helped reduce combine idle hours by 25 on each machine across the harvest, as they were not sitting with full tanks waiting to unload.

Looking towards 2024

Harvesting was finished by the third week in October. Once that was completed, we proceeded to apply dry fertiliser products. We now apply four products with the new Deere spreader – MAP (11-22-0), K (0-0-60), sulphur (90%) and zinc (33.5%). These are all applied according to prescription recommendations. We finished in early November and rolled into fall crop-care spraying.

Right after that we went into incorporate anhydrous ammonia (NH3 and 82% N). We had never applied anhydrous in the fall until last year, when we split it 50:50 with spring. On the ground where I assessed fall application, the anhydrous yielded nine bushels per acre better (230kg), so we went with it again this fall for all our corn area. It was applied in good conditions, so I think we will be OK. The best part is that we will not have to deal with a big application in the spring when we must always worry about compaction issues.

We are currently trying to get lime applied. This has always been a tough challenge. We have three quarries within a 10-mile radius, but they all run out of lime very quickly when the demand comes. Because of this, we began stockpiling all we could in the summer and then fighting to pick up as much as possible in the fall.

All the additional handling makes it more expensive, but that is the only way we can get the lime we need. We now have most of our current needs stockpiled (5,000t), so we’re OK.

However, we only had about 25% of this applied by early December, so there is still a lot to be put out. To do this, we need the ground to be dry or frozen, but then the lime pile also freezes, so we must work around that.

We also want to install more grid tile or pattern tile this winter if we can. Last year we bought a new tile plough to go behind the big quad-track tractor. With that combination we got about 250,000 feet of pipe installed in our lower field. I promised my brother that we would do one of his fields this fall/winter, so there should be another 210,000 feet to install there. However, the rains and snows are not allowing that yet, but we are ready for the opportunity.

We have had two snow falls already -- about five inches in total – and rain for the last two weeks or so of November, so farming is at a standstill for the moment.

Fuel security

Fuel security has been an ongoing concern for us in recent years. While we can now hold about half of our needs in tanks on-farm, we still want to keep our fuel needs secure. We now have enough fuel on hand to get through the winter to early spring. We have forward-contracted 30% of next summer’s needs so far and will be working to secure the balance over the next two months. We can forward-contract fuel up to a year ahead and we have been lucky doing this over the last three years.

Managing fuel stocks and contracts for up to a year ahead has saved us a lot of money. But with the world in turmoil and a range of geopolitical issues playing out, fuel could again be an expensive input. We hope not, but it is outside of our control, so we must play the cards we are dealt.

Land

All our lives we have been chasing land and expansion, always looking for the next piece of farm ground. However, in recent times we have been turning down offers for farms due to the prices. The kind of good land we want is making $12,000-$15,000 (€11,000-€14,000) per acre. I do not see that working long term.

When 100 acres costs $1-1.5m and you hope to get $300 return in net income per acre (either as rent or profit), it is hard to accept a 2% return for farming it when we can put the money in an interest-bearing item at a bank and get 5-6%, with no risk or work.

We got married in 1980 and saw 10 years of declining land values and low profits, so we have decided that we will accumulate cash and save up for the future to be ready for a ‘perfect piece’.

Interest rates

Cost of funds is increasing too. Currently, the lending companies are asking 8-9.5% interest for loans. The upside is that they are now offering 5-6% on savings. So there are better rates of return and safer places for money than farming right now. Experience tells us that this is called ‘cycles’.