One of the lessons learned in every commodity price boom I've witnessed is those who invest extra profits wisely carry those benefits the longest. To help you think through the best ways to invest current profits, we're kicking off a new series July 2 called "Keep the Good Times Rolling."
Watch for the first story in that series, "Farm Revenue Driven by Chinese Demand, Drought Concerns," in our Top Stories area on most of our products.
Back in the days of high interest rates, any unexpected profits went to paying down debt. In the price boom of the 2010 decade, the push was on buying land, putting up grain storage, and right-sizing the equipment fleet. More than a few houses got a remodel, as well, a nod to investing in the family as well as the business. And woe to anyone thinking of that home remodel right now, given lumber prices.
We're in the middle of another upswing in the grains world and the June 30 USDA Grain Stocks and Acreage report put some gas on that fire. Before Wednesday's futures boost, the DTN Cash Corn Index, at $6.50, was $3.21 higher than late June 2020. The DTN Cash Soybean Index was at $13.32, or $4.96 higher than a year ago. Those indexes will likely call for even more choruses of "We're in the Money" by week's end.
Yes, fertilizer prices jumped this spring, and fuel and other input costs must be factored into any "good times" reveling. And woe be it to anyone thinking of that kitchen remodel right now, given lumber prices. My favorite meme at the moment is a waist-high pile of plywood sheets with the tag "Will trade for 2017 or newer F350 King Ranch. No Lowballers."
Assuming, though, that some of these higher grain and oilseed prices make it to the profit side of the ledger, what should farmers do with that extra income?
The DTN writing team, led in this project by DTN Farm Business Editor Katie Dehlinger, asked and you're answering. We talked to farmers, bankers, crop managers and others, looking for recommendations and goals on where to invest extra dollars. The series, which will feature a number of stories during July, includes: Smart investments in the 2021 crop; how to work through land-rent adjustments; rethinking your commodity marketing strategy to capture the most of current prices; smart equipment buying choices, and more.
Dehlinger walks us through these topics in more detail in a recent "Reporter's Notebook" video, found here:
We realize that "good times" can be a stretch for some, especially as we track areas of the U.S. Corn Belt suffering drought conditions and watch the continually upside-down livestock market.
But as DTN Lead Analyst Todd Hultman has said repeatedly, while daily issues may continue to put volatile swings in the market, China's need for grains and oilseeds apparently isn't going away soon. With U.S. drought issues, and no huge stockpiles of grains anywhere, the bulls have the market for the moment.
Being ready to invest whatever extra dollars hit the bottom line is how we extend the benefits of any market uptick, whether they're "good times" or simply "not so bad" times.
Let us know what you'll do with extra cash, and what it will take to get it. You can send your feedback to email@example.com.
Greg Horstmeier can be reached at firstname.lastname@example.org
Follow him on Twitter @greghorstmeier
(c) Copyright 2021 DTN, LLC. All rights reserved.