In the Agriculture sector, the 2021 year came in bullish. Some might even say the new year came in roaring.
For farmers, the transition into a new year can stack up the January to-do list and add up to what feels like a spending spree very quickly. The planning and financial commitments that need to be made ahead of a new growing season can be mentally and financially stressful. 2021 kicked off with a bullish mentality, as strong demand and season volatility have put the grain markets on an unpredictable, wild ride, leaving many farmers seeking grain marketing strategies for their old and new crop commodities.
Maximizing profitability is the name of the game to achieve your individual farming goals. So, we visited with Al Kluis, Managing Director of Kluis Commodity Publishing, to glean his expert insights on strategies for success in 2021. We asked Al if he had one piece of advice for farmers, what that would be? He says marketing is a year-round job.
“Now is a good time to know your cost of production and to follow the cash prices,” says Kluis. Offering expertise from his 40-years of commodity trading experience, Kluis adds, “Take time to look at your input costs and use what-if scenarios, such as by comparing different percentages of corn and bean acres, etc., in an effort to calculate maximum profitability on your operation.”
The coming of a new year is also a time for reflection on how you got where you are today and to gain an understanding of what may look different in the year ahead. 2020 was a challenging year for farmers, with agricultural demand impacted as a result of a pandemic and international export volatility. Couple that with a reduction in commodity production, due to widespread Derecho storm crop devastation and a drought weather pattern that impacted much of the rural United States. These factors combined, left many farmers wrapping up the 2020 harvest season with a bearish mentality.
Fast forward to today and the agriculture sector looks much different, with 2021 crop prices being at higher levels than they have been in several years. However, this market trend lends to a feeling of cautious optimism, as traditionally an upward trend in commodity prices comes hand in hand with a boost in production costs. “Managing inputs and increased risk factors is critical for farmers in the year ahead,” adds Kluis. “Farmers need to stay spreadsheet disciplined.”
One additional tip for success offered by Al Kluis is to educate yourself. “The long-term key to success in marketing is becoming more knowledgeable about marketing,” Kluis adds. “And if that does not appeal to you, find someone on your farm to help with that aspect of the business. Commit to making an effort to educate the decision-makers on your farm.”
The Drago team could not agree more with this mentality, which is also applicable in all aspects of farm management. Your opportunities for growth or improvement this year might lie in grain marketing, financial management, equipment updates, input purchasing decisions, transition planning, or other aspects of farm management, as every farm is unique and different. Regardless of your area for growth, surround yourself with a team of experts in their respective field(s), who have your goals and your farm’s best interest in mind. We are here to help guide you in your farming journey to success. Lean on us.
At Drago, we understand that every kernel counts. If you are considering trading corn heads, look to the brand that pays you back. With over 70 years of continuous innovation, no other corn head in the field is engineered to capture more yield. Your job is to grow more corn. Count on Drago to put more corn in your bin for more money in your pocket.
The 2021 year in agriculture has kicked off incredibly intense but opportunity lies ahead, and there is so much untapped potential awaiting that will be incredibly rewarding for you and your operation.
Wishing you a healthy and profitable 2021.
The Drago U.S.A team