NFO-261 (AV10762): Soybeans: Orderly Marketing

soybeans that's the subject of this week's us farm report recent sales successes by the grain commodity Department of NFO the orderly marketing of soybeans upward price pressures that result from such marketing these are some of the features of today's show so stay tuned [music] hi everybody and welcome to us farm report my special guest this week is John Osler who is assistant to the director of the grain commodity department of the national farmers organization John it's always pleasure to have you on our show thank you Bill I understand that the the great commodity Department has really been making some strides of late in soybean sales tell us about this well we sure have bill started last fall when we made a large sale for export half a million bushels for export combined along with that was a supply contract to a processor in the interior United States at that time beans were selling at harvest time for harvest delivery under the new loan price of two and a quarter and this brought the market price down at harvest time as low as 2.17 to 2.18 here in this area mm-hmm and in some areas down to 2.22 I brought along a chart today bill to show approximately what happened last year at harvest time beans were selling from the combine from 2.18 in this area to around 2.22 or approximately 2.20 overall a loan price basis on number one soybeans of two and a quarter cash price for sale 2.20 per bushel we made a sale for export started delivery in January and as we started the delivery the price continued to move up and all during the delivery the price stayed above our sale price which netted back to the producer 2.48 per bushel stayed above there and as soon as our delivery was completed on the export sale the price came right back now mm-hmm and continued there until again we got back into the market and begin to make sales primarily most of these went to the Gulf a lot of them to interior processors but most of them to the Gulf until we've seen the price top out now at $3 per bushel out to the Gulf back here in Iowa 2.72, 2.75 not to the producer well isn't this a prime example John of what you call upward price pressure definitely is bill would you explain that in a little more detail well I think primarily what's happening in all commodities not only alone in grain but in grain you've got a country elevator who has his trade area from which he buys his product and over the past years he has developed a trade of customers who not only sell to him but by farm supplies from him so this is where the production goes right and he can depend and has been dependent upon that supply of almost automatically coming in to him so there's been very little competition in the buying of farm commodities or buying of grain when we come into the market and we sell this production this moves out of the area and moves away from this buyer who has had a habit or tradition of buying so then he's got to find other sources to replace the supply that we move out and thereby create competition and cause the price to go up as soon as we stop to sell the competition ceases and the price stays or goes down and as soon as we do sell the price moves back up John we have a perfect example of this upward price pressure coming up a little later in our show today in an interview with arts wares of Lenox Iowa who three weeks ago as will be indicated in the interview sold his soybeans at Lenox under NFO the elevator was paying 2.53 that day his price was 2.59 and a half shortly after this particular sale the price of the elevator went up this was upward price pressure again was it not yes the name of the game is to meet or beat the price that NFO can get by the way I'd like to just ask if question now I'm very bad at mathematics but Arch Weres is a farmer who produces five to six thousand bushels of soybeans a year now six and a half cents a bushel doesn't sound very high does it no but when you start multiplying that kind of production by six and a half cents what kind of money are we talking about well we're talking about bill $65 per thousand bushel and we speak in terms of five thousand bushel we're talking about 325 dollars more that Arch is going to realize in the sale his means by selling through and with NFO right in a collective bargaining program in addition to that this is if he only got six and a half cents on all five thousand but we hope that he sold at thousand a six and a half cents probably another thousand and maybe 2.63 and as I say now maybe the last thousand he's going to tell he's going to realize 2.75 where if it hadn't been for NFO he'd have probably had to sell the whole five thousand bushel at 2.53 so we're not only talking about six the six and a half cents a bushel on the five thousand we're talking about eventually maybe 20 to 25 cents a bushel more not necessarily more than he's going to get his local elevator at the time that he makes the sale but more than what his local elevator is paying now and without NFO there is no indication there has never been in the past and there isn't the present time there is no indication that beans would get to 2.75 or that arts local elevator would pay more than 2.53 without NFO well at this time of good sales on the part of the grain commodity Department there's a lot of activity in Corning Iowa with soybeans being brought in out of storage on the NFO farms of this area loaded into boxcars for shipment let's take a minute out and take a look at this activity that's going on okay real fine bill [music] observing the soybean loading operation on a railroad siding at Corning Iowa a group of economists from the University of Minnesota these gentlemen are visiting NFO national headquarters in Corning the soybeans you have just seen in these loadings came from one farm of course to fulfill this order to make this sale soybeans will be loaded from many farms throughout the area but let's take just five minutes to visit with the NFO member from whose farm these soybeans came Albert Hedinger and his brother Russell operate a farm about nine miles southwest of Corning Iowa here two fellows who some ten years ago determined because of the prices they were getting for their commodities that they couldn't do it alone and so ten years ago they joined NFO but let's have Albert tell the story instead of me Albert what first attracted you to NFO do you recall well I guess I wasn't satisfied of the prices mainly and thought maybe they could help out better than anybody else had and has that worked out through the years to your satisfaction we've been marketing practically everything through them I mean our livestock and their grain and apparently we're satisfied or we wouldn't continue doing it how big is your farming operation here with your brother how many acres do you farm oh I believe it's six hundred and sixty acres something like grain farming we get raised quite a few hogs and corn and beans is now of course we're talking today basically about soybeans how many acres of soybeans do you have in this year I believe it's a hundred and eighteen is this more than you usually have or about normal no it's just one way or the other if you acres uh-huh now we have seen today soybeans being taken out of your storage facilities trucked into a Corning and put into boxcars for shipment tell us about these beans now what crop were these beans actually 68 68 we had them stored the government program and we redeemed them and the day I committed them to the NFO I are we did they were giving tents 9 cents more than the elevator is bidding mm-hmm and what was the outcome in your final price for these beans 2.62 and how does this compare with the elevator price well it was 2.53 I believe that mean nine cents as you mentioned earlier now this has a there's a tendency isn't there for NFO to really raise the elevator price and must me because they've gone up since I commendable which I'm not sorry ever that it went down while I was still got my price of that commitment it uh-huh how many head of hog hogs are you running you're on the farm oh each one raised about 400 a year what is your storage capacity total oh it's thirty five or six thousand more than we can raise in one year yeah well I think that yours is a prime example of NFO at work in that you and your brother are storing holding your production and selling your production through NFO for the price that you're getting yeah I'm well satisfied I feel like it's then more good than that nine cents what was your gross income from soybeans last year do you recall last year we delivered them to the government and there was twenty thousand and some odd dollars so in other words you and your brother split a twenty thousand dollars for soybeans now of course you had production costs involved in those beans but that 10,000 I'm sure helped a great deal and you made a little money sure did but of course we should have made more but then that wasn't so bad I guess we hadn't getting crop that year better than we did last year out of the crops look to you this year real good but we need a rain right now now you have rather hilly terrain here and you're growing beans on this hilly terrain is is this normal or not most people grow beans on hilly terrain or or do they prefer to grow them on flat land well they used to didn't say we should but then that extra 10,000 a year make you do some things you don't want to do but I don't think it's too bad we haven't lost much so I'll we contour everything and we should have a few more terraces but we have not too much so I lost well Albert for an extra $10,000 a year gross you'd grow beans on a mountainside wouldn't you well I don't like to do hilly but I might Albert I want to thank you very much for being one of our guests on US farm report thank you well John in NFO's marketing structure and soybeans you talk about orderly marketing and orderly marketing if I interpret it properly means that you market the year-round you don't just mark it at harvest time you market the year-round is this correct this is correct bill if you're going to be a factor in the market you're going to have to act as a source of supply year-round for the buyers and also to keep the competition amongst the buyers year-round zero and have to continue to sell year around and be in the market almost daily offering your supply available for sale and keep it moving to be a factor in the market to create the price pressure upward that we want as a layman I'm forced to ask what perhaps to you John will be a crazy question but let's go back to this elevator situation where the elevator was 2.53 and NFO sold it 2.59 and a half John why should I buy soy beans from NFO primarily bill because NFO has got the largest source to supply a vending group in the nation today and the only group that can furnish the volume of supply that the buyers need both for domestic processing and also for export shipments and we talk in terms of a processors processing a hundred thousands of bushels of soybeans a week he needs a source supply that he can depend on but delivery to be there when he needs him also for the exporter he wants to buy his larger quantity from one seller as he possibly can in order to cut down his overhead call here and meet his commitments that he has in the foreign country in other words NFO has the merchandise we've got the product bill that's it that's the important that's the important thing and the more farmers that join NFO the more production that we can lock together really bill there is no limit as to what farmers can do they could enjoy full fair prices almost immediately if enough farmers would join and block their production together and simply put a price tag on it and this is what all our efforts are about creating this competition in the market demanding that we get better prices for the product we have and also the volume that we have is worth a premium over and above a thousand bushel sale for example it's much more Canadian for the buyer if he can buy a hundred thousand bushels at one time rather than go out and purchase a thousand bushels from a hundred thousand different buyers John you've had some recent good successes too and grain sorghum savaging yes we have bill real pleased with those we went down to Texas and May I believe it was and tried to make a sale to the port buyers along the Gulf there at Houston Corpus Christi and Brownsville and the price they were offering was 2.05 this was delivered to Houston and at that time we were still delivering old crop for export in the neighborhood of 2.28 to 2.30 a 100 and asked the buyers why then are they buying a new crop at 2.05 and of course there [unclear] answer was as always we get well if we don't come down in our price then we're going to sell it to Australia I think what most farmers should realize is that the buyers that are buying a product today and especially for export are not very much interested in what they pay farmers and getting fair prices for farmers because they handle the merchandise on volume yes and the more volume they handle of course the more money they make so they're not interested in price but recently we had an inquiry from an export buyer wanting to buy twenty five thousand long ton of grain sorghum we made the sale this particular sale is going to met back to the farmers back in Texas around San Antonio on up to Waco in that area I went back to them from 10 to 14 cents a hundred more than what their local buyers are paying or more than what the port elevators are paying and yesterday I sold another sale which is going to be well over a million bushel and it was five cents one hundred higher we will blend the two prices out now so that all the producers will get the benefit of the increase in price and it's wonderful so we're real pleased with it and so are the farmers in Texas and we're looking forward to making some more sales yet to these export buyers not necessarily this one but two other ones for better prices yet well John the grain commodity Department is to be congratulated thank you Bill as well as these good NFO members they're to be congratulated for having the good judgment to be NFO members and to block their production and sell their production with NFO and get this extra price this is the backbone if the farmers put their production together there's no limit to what we can do in terms of creating better price we met a wonderful NFO member and I know he's a friend of yours Arch Schweers yes and we're going right now to his farm at Lenox Iowa and have our us farm report viewers also meet Arch Schweers real good bill Arch you know on us farm report we talked a great deal about the family farm and certainly yours qualifies as a family farm in as much as you have 11 children how old are they oh they range from 28 down to 10 well then you have some married children we've got four all right well we got three married one will be married in August I start counting her already married [laughing] it's hard to keep track isn't it yeah it is they're all girls that are married well I can see where you have to stay a little busy man on this farm to to keep food on the table keeps you young how many acres are you farming or a farm an eight hundred and twenty acres well are you growing mainly corn and soybeans oh we're about half crop corn and beans and the other half is grass and hay mmm now you're running some cattle yeah we're running right at a hundred cows you have been in the hog business but you're not in the hog business now well that's right I was out couple of years getting back in again now why are you getting back in Arch this is looking better to you yeah it looks better horse I suppose I'm like I am too often a one step too late but I've got confidence enough in our organization that I think these guys that are talking $17, $18 hogs are gonna be surprised again we surprised him quite a few times in the last four or five years and I think we're gonna surprise him again if I didn't think that I wouldn't be having hogs again and I've got 55 gilts so I'm gonna be in her deep enough to she's got over you're gonna give it a good day right well how's the crop situation they're they're looking good yours crops looked good as we came came to your place today they're looking real good they looked a lot better a week ago but we had to turn much right next to hundred degree weather in here and it hurt us or I think it hurt us it rolled the leaves awful tight our corn is just starting to tassel and they're very very few silks yet so from what I know about it it's the silk that hurts worse than the tasseling so if if this is right by now it's cool this week maybe we're back in the money again beans looking okay beans are looking real good yeah just starting to bloom just about knee-high I'm just starting to bloom well now you mentioned a little while ago as we were visiting art that you dig down a foot or so and you've got some moisture yeah but you do need rain though we do need rain yeah you can you can still bring up moisture with the cultivator or I could the poor part of the lighter part last week but so it it's close but it's just not terrific heat makes it roll on the corn well now we're talking about soybeans on this week's us farm report you're a soybean man in fact three weeks ago you sold saw soybeans at Lenox what did you get for your beans we got 2.59 and a half that day well now tell us about this what was the elevator offering of that day well there's quite a little variation around and that's that's a little hard to understand it run from 2.50 up to 2.53 was the top price I could find and we got 2.59 of course that were delivered to the rail but the other price also was delivered so there was no no variation there well you had a little conversation with your elevator man about this would you like to repeat that for our audience well he gets a little irritated with us and I'm sorry about that too I like the man I like to do business with him but he he buys our product he aims to make his profit off of it and I can't quite understand why he don't want us to have a fair profit as well mm-hmm and after all that's all we're asking is a fair profit Arch three weeks ago you received at Lenox six and a half cents above elevator price now exactly what happened in the price structure at the elevator after that well price started coming up and all this last week beans got up to 2.67 or 68 I'm not really sure which but they were they really got up there well in the marketing structure of NFO this is referred to I think as upward price pressure and it seems to happen every time doesn't it sure does never fails well now as you're aware NFO tripled its dues to its members this past year now on this price advantage on the beans you sold three weeks ago you more than paid for your year's membership in NFO didn't you yeah that'd be right yeah I would put forth at a hundred percent ride for the increase I'm I believe it had to be done don't won't any organization run without being properly finding this like again can't run my farm without that and if I didn't have a good banker I couldn't do that let's talk just a minute about the old days you've been farming most of your life what was the marketing system in the old days before NFO came along in soybeans for example well I know in our case we didn't have any storage at all for for anything other than ear corn and when when we got done harvesting or we harvested beans it went to town load by load and it was a matter of take what you could get oh yeah the old story what will you give me right well now with NFO's marketing structure it's a bit different these days isn't it yes it is and tell us about that well we're we're on a deal see that bug? it's bad right here yeah they are well it's it's a deal of where we're gonna have our beans sold we're gonna know what we're gonna get for beans on some of them and on the rest of them we're gonna try to have storage enough to accommodate the rest of them and I hope we're gonna be able to go through a ceiling program to if we need money to pay the bills in the fall you get money and then be able to set our beans and hold them until such time as we can read well you have the storage capabilities you you hold together right sell together right and you sell in a in a manner that is called orderly marketing right soybeans are sold throughout the year instead of all dumped on the market at the same time and that's about it in a nutshell isn't that's that's the main story right there yeah well now looking at the overall farming picture it seems a little simple to me that the way to whip this thing and get price for the farmer is for all of the farmers to get together as NFO members are doing and get this job done would you agree with that oh 100 percent John I want to thank you very much for being my guest today on US farm report been my pleasure bill it's always nice to have you with us thank you it's always nice to have you with us too u.s. farm report is seen each week at this same time on this same station until we meet again so long everybody [music]