News

Check your bins and check them often, and remember this is coming from an agronomy guy. Seriously, the moisture levels that this crop came in at will struggle to stay in condition once we hit a warm stretch. Don’t over-estimate your aeration capacity to keep up with wetter than normal grain that got little or no chance to air dry with the late harvest. Grain quality is also significantly lower than we have seen in quite a while, so pockets of FM may start more hot spots than we are accustomed to. And as I alluded to earlier, some of this crop may need to move sooner than normal. This will require some planning on marketing and logistics. The prices still might not move as fast and as high as we would like, but the paper won’t go out of condition.

The late harvest and early freeze-up also abbreviated an already anemic season for fall anhydrous. We only got about 25% of the typical amount of anhydrous out the door. The same holds for most everyone North of I-80. Areas further North have even less done, and areas South of I-80 are anywhere from 1/2 to 2/3’s done. In a nutshell, that means significantly more NH3 needs to move this spring than can possibly happen. No dealer has enough tanks or toolbars and more importantly, no terminal has enough capacity or trucks. It’s a square peg that needs to go through a round hole. I’m sure we will drive it through there, but it’s not all going to make it.

The way we are planning to handle the limited NH3 capacity is to prioritize the fall contracts that were rolled to spring first followed by the spring contracts. We certainly don’t want to limit how much goes into the ground, but we all need to be realistic about how much can happen before planting. Once the equipment is in the field, it will ultimately come down to allocations from the terminals and waiting on trucks to show up so we can refill nurse tanks.

What doesn’t go out as NH3 will end up going out as 32% or urea. I am confident that HOIC has unmatched capacity to get either 32% or urea on the ground as timely as possible. We have the most experienced and capable agronomy team that I know of. Your veteran application crew averages over 15 years of experience in your fields. That means timely, efficient, accurate and professional application. Our number one priority in the spring is to get your crop planted under the best conditions possible.

Many of you are aware that the market free-fall that has occurred in every sector of the economy has also occurred in crop nutrients. Heart of Iowa has been securing fertilizer throughout this past spring and summer to take care of your operational needs just as we do every year. Unfortunately, the market has dropped after much of this product was purchased. There is currently a lot of press urging the retail sector to write down their inventory costs to bring crop nutrient pricing in line with the current spot markets. This would be the same logic as telling you to bail out of the stock market while it is at or likely near the bottom. Lock in the loss and start over. That would have a catastrophic effect on you just as it would on us. Virtually every crop nutrient dealer in the business is in the same position. The few that aren’t were definitely not thinking about your needs when they sat on the sidelines throughout last spring and summer. The other compelling reason for them to stay out of the market during traditional buying periods is that they didn’t have the financial strength to participate.

To overreact to the current marketing conditions would put us in the same type of debacle the financial industry is facing. I am fairly certain we don’t have much chance of receiving a government bailout either. We are committed to maintaining our financial strength during these volatile times. We must continue to provide the membership with a secure place to transact business, to purchase inputs, and to sell grain, while maintaining the people, facilities and equipment necessary to service your operational needs in a timely manner.

We will continue to take a long term approach to the business. We will continue to do everything we can to make the most profitable decisions possible for your operation. In the end, your success is our success. I can’t stress enough the importance of continuously working through your cropping plans with your agronomist. Working closely together through these volatile times will ensure the best results possible for the 2009 crop.