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Amid lower-than-average corn prices and a strong U.S. dollar affecting exports, farmers in the U.S. Corn Belt are making their final planting decisions and, as farmers tend to do, remaining generally optimistic about the upcoming crop year.
In this week’s U.S. Grains Council’s (USCG’s) Global Update, three U.S. farmers share what factors are helping them make decisions for the upcoming planting season and what they are seeing in their areas now.
South Dakota farmer Ryan Wagner is the third generation farming through his family corporation that was established in 1977 between his grandfather, dad and uncles. They raise corn, soybeans and spring wheat in northeast South Dakota and offer custom farming. Wagner is also a commodity broker working with other farmers to help manage risk via futures and options trading.
When it comes to planting decisions, the Wagners are dedicated to their no-till rotation of approximately 40 percent corn, 40 percent soybean and 20 percent spring wheat. The top factor that goes into their planting decisions is agronomy and what is in the best interest of the land over the long term. Their reasons for staying with their rotation include soil health, weed control, diversification and spreading out their own workload.
“The strong U.S. dollar has definitely had an impact on our ability to compete in the export market, but I wouldn’t say it’s something most farmers think of every day or has much of an impact on planting decisions,” Wagner said. “Margins are tight to non-existent in pretty much every crop at the moment, so farmers will be looking to cut costs and closely examine every input that goes into production.”
In past years, weather has affected the Wagners’ efforts to get their crops in the ground.
“Typically, the planting seasons [corn and soybeans] overlap some depending on the weather because in our northern climate, we often deal with a cold, wet spring that will delay planting until as late as mid-June on soybeans,” he said. “We have been very fortunate to have had a mild winter so far this year, so hopefully we can get an early start this planting season.”
Technology is a big driver in helping the Wagners stay efficient. They use precision planting monitoring systems to monitor and record corn planter functions in real time. All of the information they gather from the planter is uploaded to an Internet cloud-based server and is then available at harvest to do comparative analysis.
With the high cost of production relative to commodity prices, Wagner said managing expenses is the greatest challenge farmers face today.
“As a farmer, knowing your cost of production and doing everything it takes to be a least-cost producer while not hurting yield is more important than ever,” he said.
Braden Gruhlkey raises corn, sorghum, wheat and cotton with his two brothers and father on their farm in the Texas Panhandle.
In their area, farmers are particularly careful to conserve water and manage irrigated acres prudently.
“In fields where we have the most water available, we will grow corn and some sorghum,” Gruhlkey said, “But in fields where we have less water, we’ll be planting more cotton.”
With the irrigated acres, Gruhlkey said that cost is a big factor in deciding what to plant, but they also change crops based on rotation and will try to stay with their planned rotation for this year.
Using modern technology is important to their farm, including GPS and swath control on their planter and sprayer. With their irrigation pivots, they use mobile device control, which is programed to set speed and rotation.
Even with the use of modern equipment and technology, farming does not come without challenges. One of those is the task of expanding their operation, which includes his father and two brothers.
“For us to be profitable, we have to find ways to grow and support our farm,” Gruhlkey said. “We also have to have enough capital to take on growth.”
Gruhlkey said there is not a clear choice among farmers in his area about how to change their planting decisions, if at all. They are producing abundant amounts of high-quality corn even though prices are low, and some Texas Panhandle farmers are not planting as much cotton because of the expense of the harvest.
“Farming is all I’ve ever wanted to do,” says Gruhlkey. “It’s in my blood, and I would like to provide for my kids and my brothers’ kids for them to have the opportunity to do what I’m able to do.”
Dennis Vennekotter farms in northwest Ohio and raises corn, soybeans and wheat, as well as finishes 5,000 hogs per year.
“When it comes to planting decision factors, crop rotation is the biggest factor,” Vennekotter said.
His planting intentions tend to stay consistent year-after-year because of rotation planting. However, Vennekotter intends to plant a few fewer corn acres this year because of price and the way his rotation works out.
Looking at area farmers, Vennekotter said he is seeing a shift in the area to soybeans because the cost of production is lower, with some farmers changing rotations to plant soybeans after the same field being planted to soybeans the previous year.
At the moment, his local market is still looking advantageous for corn.
“Right now, I market my corn at a local market, and I can still make more on corn than soybeans,” Vennekotter said. “There are two ethanol plants in a 15-mile radius near me as well as a lot of livestock production. So markets are good in my area, as well as a good, strong basis.”
Another factor important is weather, yet Vennekotter says that weather predictions will come and go. And his area receives consistent moisture.
“While last year many areas in the U.S. were too wet, our crop growing area was steadier with rainfall,” Vennekotter recalled. “Even in past drought years, the weather in our area was really stable.”
As margins are getting tighter, farmers like Vennekotter are also looking to efficiency. On his farm, he uses GPS technology in his tractor, combine and sprayer, as well as using swath control to be as efficient as they can.
Although Vennekotter markets his grain locally, he understands the foreign markets for corn. Three years ago, he hosted a USGC trade team from Korea on his farm. The following year, he had the opportunity to visit Japan and Korea with a Council program where he met with some of the same end-users who had visited his farm.
“On my trade mission, I realized our grain buyers are all about quality and that having a good, personal connection is just as important in promoting U.S. grains as the planting decisions I am making,” he said.
Click here to learn more about U.S. corn exports.