Agriculture
? The big question : to store or not to store
As the corn and soybean harvests
progress, farmers in Perquimans
County and the rest of northeast
North Carolina face some difficult
decisions concerning which crop to
hold in storage.
Crop prices are disastrous! Our
) farmers want to know whether to
leave their wheat in storage, or sell
their wheat and store corn or
Soybeans. Should you store either
J-corn or soybeans?
Ji Let met say that I am not able to
Hell you what will happen in the
!?future. If I could, things would be
JJmuch simpler and I would have made
^many millions on the commodity
? ?market by now. There are no clear
k'-cut answers to the question of what to
.jstore.
;? Demand for domestic grains is
^expected to be higher for the next few
months, but this will not outstrip
^increases in supply. Therefore, we
Ncan expect carryover stocks at the
?und of the 1982-83 marketing season
to be higher.
~ The outlook according to most
v
forecasters is not good.
What should our farmers store:
corn, wheat or soybeans? Dr.
Everett Nichols of Extension
Economics-Grain Marketing has
provided us with the fqllowing in
formation which may help farmers in
making the decision of which crop to
store.
A bit of figuring may help you
make up your mind which is the most
profitable crop to store in 1982.
One way of looking at this is to
figure a breakeven price ? the price
that is needed sometime in the future
that will cover all storage costs and
make you as well off as if you had
sold the grain at harvest and either
paid off the note that you owed or
invested the money in a certificate of
deposit or other interest-bearing
instrument.
Some of the information you will
need in making the calculations
includes: 1) the current market price
of wheat, corn and soybeans, 2) the
(.
number of months you wish to store,
3) the expected price increase in
months ahead and 4) the cost of
storage.
The formula for figuring the cost of
storage is: cost of storage equals
market price times (interest rate
percentage + shrinkage percentage
+ physical storage cost percentage)
times the number of months of
storage divided by 12.
Market price is the current cash
price; interest rate is the opportunity
return rate (either the rate on a note
due or current interest rate);
shrinkage is the weight loss of grain
in storage (two percent for wheat and
corn, one percent for soybeans) and
physical storage cost is the variable
cost associated with storage (24
cents/bushel/year for farm storage
or 36 cents/bushel/year for com
mercial storage).
If we assume an average price of
$5.37 per bushel and a six-month
storage period (mid-September to
mid-March) the cost of storage is as
Farming
The
flattomb
north Carolina
AGRICULTURAL
EXTENSION
SERVICE
By Bill
Eilcmran Chairman
follows.
?Cost of storage ? $5.37 (16 percent
+ 1 percent + 4 percent) x 6/12
equals $1.13 x 6/12 which yields 56
cents.
?Breakeven price ? $5.37 + .56
equals $5.93.
Thus the farmer would need $5.93
from his soybeans next March to
justify storage.
Currently the March soybean
futures in Chicago is $5.83 per bushel.
Adjusting this price for the historical
basis of one to five cents higher per
l[:Farm Bureau opinion
F anners face financial disaster
By JOHN SLEDGE
President
N.C. Farm Bureau
r In 1919, as World War I came to a
close, corn was selling for $2.03 per
*? bushel. Although it was 1947 before it
,? hit the $2 mark again, corn prices in
. ' 1982 have not been averaging much
Jj better. At the same time, production
; costs for corn are at an all time high.
J: Such is the plight of most farmers
'? in North Carolina and the nation in
1982 as they find themsleves caught
*' up in what some observers call the
most severe financial crunch since
; the 1930s.
^ Very few commodities are
? escaping the squeeze. In addition to
j corn, soybeans and wheat, for
?, example, are selling close to and
*' below the costs of production.
Although some improvement in
hog prices has become apparent in
>? recent weeks, prices received by
!'? farmers for both livestock and crops
J have been depressed because of
ki abundant supplies, weakness in the
1 economy, and sluggish consumer
J; demand.
J' However, farm production ex
?? penses ? including interest rates ?
J*. have continued to rise, holding down
j! net farm income.
Interest costs paid by farmers
2 have increased sixfold in the past 11
? years, rising from $3.2 billion in 1970
< . to an estimated $19 billion last year.
Interest expenses now account for 13
percent of farmers' total overall
farm production costs, compared
with about 7Vi percent 10 years ago.
Fortunately, there have been
recent indications that interest rates
may be decreasing somewhat.
However, interest charges are not
the only farm production cost that
has skyrocketed during the past few
years.
Diesel fuel, for example, has
jumped an unbelievable 200 percent
since 1973, the year of the Arab
embargo.
Just a regular row-crop tractor ?
which cost about $10,000 to $20,000 ten
years ago ? now sells for between
$40,000 to $45,000.
A large grain combine that cost the
farmer about $22,000 ten years ago is
priced at between $50,000 and $70,000
today.
Prices for fuels and energy have
more than doubled in just the past
five years, while the cost of tractors
and self-propelled machinery has
risen 52 percent.
The farmers' present situation is
apparent when one notes that the
index of prices paid by farmers rose
50 percent between 1977 and 1981,
while the index of prices received for
all farm products rose only 38 per
cent. In fact, North Carolina and the
nation probably have more farmers
in financial straits now than in the
past several decades.
Since the financial health of
production agriculture very clearly
influences economic activity
throughout our state and nation, we
cannot afford for agriculture to
remain in its present condition.
Most farmers feel that time is
running out and, with commodity
prices for this year's production
being especially bleak, disastrous
consequences could lie ahead unless
something is done very soon.
What can be done? One thing we
know for certain. Expanded farm
export sales is essential to help
reverse the decline in farm income.
There is no question that past
embargoes have damaged our
reputation as a reliable supplier of
farm commodities to foreign nations.
It is urgent that our government
realize that selective embargoes are
destructive to American agriculture
and the nation as a whole.
It is time for Congress to start
taking positive trade action. A
properly funded Commodity Credit
Corporation export credit revolving
fund, for example, will do much to
develop new markets, despite
irresponsible Japanese and
European Community trading
practices.
Work Queen contest scheduled
* Wives of the Northeastern Pork
"Council have come up with a great
Z idea to promote pork and give a
? young lady a chance for royalty.
At the Chowan County Fair on
^Tuesday, September 21 at 8:30 p.m.
I % there will be a Northeastern Pork
3Queen Contest.
jS Eligibility is a single female
?tnember of a pork-producing family
*and/or a girl who has completed a
-fcork-related 4-H project (ages 17-22
??s of September 1).
Prizes are $100 cash, trophy and
*? ribbon for being named 1982 Nor
theastern Pork Queen; $75 and
2-ribbon for second place and $50 cash
3!and ribbon for third place. All con
Living
util
with
Livestock
north Carolina
AGRICULTURAL
EXTENSION
SERVICE
By J?H Copelond
111 UwriKl AfHit
testants will receive a gift.
For more information on the
contest or a copy of the entry form,
contact our office at 426-5428. The
deadline for entering is September 8.
It would be nice to have a
representative from Perquimans
County at this event.
Also at the Chowan County Fair
this year there will be a steer show on
Thursday, September 23 at " 30 p.m.
This event is open to exhibitors under
21 years of age as of September 20
living in the Northeast District of
North Carolina.
Deadline for entries is September
3. For additional information, con
tact our office at 426-5428.
Those 4-Hers planning to show in
the 1983 Livestock Show might want
to attend just for the experience.
JVLarket summary
' A total of 8,537 feeder pigs were
??sold on 11 state graded sales during
'week of August 23, according to the
arket News Service of the North
Carolina Department of Agriculture.
Prices were $2.25 to $3 higher on 40-50
id pigs but 50 cents to (5 lower on
pound sixes.
US 1-2 pigs weighing 40-50 pounds
^average $150.84 per hundred pounds
? with No. 3s $140.05; 50-00 pound l-2s
?average $128.82; No. 3> $112.41; 60-70
?)>ound l-2s $110.53, No. 3s $102.
y At nine weekly livestock auctions
{held within the state 7,243 cattle and
$2,294 hogs were sold, f-rices for
slaughter cows were 75 cents to $1
* higher, slaughter calves irregular
? ? and feeder caiVes steady. Utility and
^-Commercial slaughter cows brought
^438 to $45 with Canner and Cutter at
?33 to $41.75.
J Choice daughter calves 350-550
sold from $52.50 to $55.75.
iiighter Bulla above 1000 pounds
$44.75 to $52 per cwt
No. 1
Frame No. Is at $48 to $55. Beef type
Feeder Cows carrying average flesh
brought $38 to $45 with thin flesh at
$35 to $40 per hundred pounds.
Baby calve*- under three weeks of
age brought $27 to $87 per head.
Market hogs 200-240 pounds sold from
$83 to $84.70 with sows 450 pounds up
at $57.10 to $80.10.
Top hogs at daily buying stations
were 25 to 50 cents higher ranging
from $83.50 to $85 per hundred weight
with sows over 500 pounds at $54 to
$58
Corn prices were 8 to 10 cents per
bushel lower and soybean irregular
through Thursdya, Aug. $8 compared
to tke same period of the previous
week. No. 2 yellow shelled corn
ranged mostly $2.23 to $2.37 in the
Eastern part of the state and $2.35 to
$2.48 in the Piedmont.
No. 1 yellow soybeans ranged
mostly $5.80 to $8.0$ in the East and
$5.83 to $5.8< in the Piedmoot; No. 2
red winter wheat $2.88 to $3.05; No. 2
red oats $1.13 to $145. New crop
prices quoted for harvest delivery
ans $5.24 to
The broiler-fryer market is two
cents higher for next week's trading.
Supplies are light to moderate.
Demand is good. The North Carolina
dock weighted average price is 43.21
cents per pound for less than
truckloads picked up at processing
plants during the week of August 23.
This week 9.0 million birds were
processed in North Carolina with an
average live bird weight of 4.14
pounds per bird on August 25.
Heavy type hens were 3 cents lower
this past week. Supplies were fully
adequate and demand moderate.
Heavy type hen prices 14 cents per
pound at the farm with buyers
loading.
Egg prices were higher on all sizes
with the greatest increase on
mediums compared to those of the
previous week. Supplies were
moderate. Demand was moderate to
good.
The North Carolina weighted
average price quoted on August 28
for small lot tales of cartoned grade
A eggs delivered to (tores was 73.19
cento per dozen for large, medium
KM, and smalls 47.55.
As an organization, Farm Bureau
recently urged the use of Export
Import Bank funds to finance U.S.
farm exports to Mexico, a country
that is in a severe financial crisis.
One hopeful sign in the trade area
is the recent one-year extension of
the U.S.? Soviet Union grain trade
agreement, under which Russia
agrees to take a minimum of six
minion tons of U.S. grain.
Farmers are to be commended for
their efficiency and ability to supply
the food and fiber needs at
reasonable prices for this country, as
well as much of the world. However,
because of present surpluses, some
restraint may be necessary to bring
supply more in line with demand.
In line with this need, Congress
included a paid land diversion
program for wheat, feed grains, and
rice in the 1983 budget reconciliation
measure.
There can be no question that
agriculture in this state and the
nation is in serious trouble. There are
no easy answers, and the solution will
require the best thinking and input of
all farmers.
The time is growing late.
bushel, the expected cash market
price in central North Carolina
markets would be $5.84 to $5.88 per
bushel.
This analysis would suggest that
holding soybeans for later sale
(March 1983) is not profitable under
current price conditions since the
breakeven price would exceed the
expected market price by five to nine
cents per bushel.
I must caution our farmers that the
cost of storage, expected market
prices and length of storage are
constantly changing. Each farmer
should carefully figure his own
storage cost and make his own
projections about expected price
increases in the months ahead.
Using the formulas for storag. cost
and breakeven prices he can then
make better management decisions
whether to store or sell at harvest
and whether to forward price the
grain that is stored or leave it un
priced and speculate that prices next
March will be higher.
The returns from storing wheat are
as follows. Presently, no. 2 red winter
wheat prices range from $2.73 to $3.00
per bushel in North Carolina
markets. If we assume an average
marketing price of $2.86, the cost of
storage from mid-August to mid
March is as follows:
?Cost of storage ? $2.86 (16 percent
+ 2 percent + 8 percent) x 7/12. This
equals .74 x 7/12 which yields
.43/bushel.
?Breakeven price ? market price +
cost of storage equals $2.86 + .43
which yields $3.29.
To be as well off in March 1983 as
selling today and paying off the 16
percent production note, the farmer
would need to get $3.29 for his wheat
next March.
Currently the March wheat futures
is selling for 3.75 in Chicago. Ad
justing this price by the historical
basis (difference between the
Chicago futures and local cash
market) of minus 10 to IS cents per
bushel, the expected cash market
prices in central North Carolina
markets would be about $3. 60- $3. 65
per bushel. This expected market
price would exceed the breakeven
price and yield a return to overhead,
management and risk of 30-35 cents
per bushel.
Now let us figure the returns from
storing corn. Presently no. 2 corn
prices (new crop) range from $1.99 to
$2.27 per bushel in North Carolina
markets. Let's assume an average
price of $2.13 and a seven-month
storage period from mid-August to
mid-March.
?Cost of storage ? $2.13 (16 percent
+ 2 percent + 11 percent) x 7/12
equals .62 x 7/12, which yields 36
cents.
?Breakeven price ? $2.13 + .36
equals $2.49.
Thus the farmer would need to
receive $2.49 for the corn next March
to be as well off as he would have
been by selling it now and paying off
his note.
Currently the March corn futures
in Chicago is selling for $2.44 per
bushel. Adjusting this price by the
historical basis of 12-15 cents per
bushel higher, the expected cash
market price in central North
Carolina markets would be about
$2.56 to $2.59 per bushel.
The expected cash market price
would exceed the breakeven price by
7-10 cents per bushel.
In figuring the returns on soybeans
we should consider that presently no.
2 soybean prices (new crop) range
from $5.14 to $5.60 per bushel in North
Carolina markets.
Harrington Manufacturing Corp.
is pleased to announce
that their newest peanut combine,
The Roanoke Hustler
is available through their
local agent,
Jim "Catfish" Hunter
ANEW
PEANUT
COMBINE
FOR '82 . . .
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