Expectations met and exceeded for two producers

Hi, I'm Paul Yeager, this is the MtoM Show podcast studio at Iowa PBS. And we are part of the Market to Market TV show. Sound familiar? That's what we talked about twice in 2023. As we set up a podcast with two producers, one in Oklahoma, one in Illinois, we talked to them at the beginning of the spring, middle of the summer, and now that the crop was put to bed, or as the case in Oklahoma, in the ground, waiting to spring up, and some of it is sprung up, we're gonna get an update on how things went. For our two producers, we will start with Chad Bell, in Illinois, and he updates us on what his crop is. And expectations are going to be the theme of the two interviews. The second one is with Mike Schulte. He is a producer and also happens to run the Oklahoma Wheat Association. So we'll get his perspective on how the Oklahoma wheat crop is looking. We're also going to get into some global issues about what's impacting trade, who's going to want us wheat, who's growing wheat around the world and what that means for Oklahoma producers in general, also talk some weather there. So he also mentions expectations. So I guess we could just call this episode the expectations game. Hey, in the last episode that we had, go to the end of the episode, I want you to look and watch that tag. Well, if you haven't watched the interview with April Hemmes, go watch it again. But at the end, there's something very specific, and it's about these types of things. Go back and watch that. And you'll explain that'll explain my crazy randomness. But now let's catch up with our two producers for our wrap up of 2023 in the year that was for both of them first. Let's go to Illinois with Mr. Bell. When you look at the pictures behind the chat, I think I asked you this before, do you dream of warmer days? Does it help to see you know, what were the years gone by to make you long for March? April, May? June?

[Chad Bell] Yeah. I mean, I don't like the winter, the winter months anymore. I used to but, you know, as I get older, I tend to agree a lot more with my dad than I used to.

[Yeager]   

And that's where we should just stop right there. Thanks for coming. Life has become full circle, the world has ended, right? 

[Bell] Yep. Absolutely.

[Yeager] You know, I love the pictures. We've talked about them before in previous times. The last time we chatted, it was very green. You had caught a couple of good rains. Yeah, did you, was that enough rain to get you by?

[Bell] So about that time is when we really did start catching some rains throughout the rest of the growing season. We did have another short, a very short kind of dry spell. But the rain that we had been getting. We're still far below normal, but it was enough to get us through the rest of the growing season. And we actually had the best yields that we have ever had on our farm, not by a lot, but it was still the best crop that we've raised.

[Yeager] Did you think that was possible on June one? 

[Bell] Absolutely not. And I could if you would look at how I marketed my grain through the grilling season that would reflect exactly what my sentiment was through the growing season. And that was that we weren't going to have a lot of grain to market. But I hate to be one of those farmers that says I thought we were going to have a disaster. And next thing I'm talking to you today about the record crop that we had. So I mean, I guess I'm a whiny I-state farmer.

[Yeager] Well, April Hemmes was a past guest on this podcast just a couple of weeks ago and she's an I-State farmer. And she was in a 10 mile pocket where you go north south east west. It was not good. But she did sneak in a good crop. Yeah, what do you don't have to be ashamed about that? Because there's other people who've caught it in other years. What's that tell yourself?

[Bell] I mean, I try though, I've done the best that I could agronomically with the weather conditions, ads, and I actually did change. I did not fly fungicide on one farm in particular because it was planted later and and just had a rough start and look terrible, but looking back now, if that was going to be a yield, yield advantage. I should have done that but you know, coulda shoulda woulda.

[Yeager] Do you think it would have been an advantage if he would have flown it on?

[Bell] Ah, probably in this specific case. But it's hard to say without doing any of that. 

[Yeager] Are you finding early season, mid-season, late season there was a difference for you and how things ended up in the fall?

[Bell] So not real I mean, we had pretty well across the board, every field that we had was the best crop we had raised. And it didn't really matter whether the planting date, early, middle or late it was, it was all really good. And it's, and it's kind of hard for me to say year in year out, because we typically plant our best highest yielding fields first, because they're typically dry and ready to go early. And lowest yields are planted typically later, because those are the fields we're always waiting on. So it's hard to say whether the growing season had a lot of contribution to some of those yields, or if it was just the usual kind of plan of attack.

[Yeager] Has anything that's happened in the last six months altered what you're going to do in the next six months?

[Bell] Yes, for probably a reason, I did gain some acres for this upcoming year. And so I'm gonna have to adjust my marketing plan probably to fit those acres. And so I'll probably forward sell some more grain in spite of these lower prices, but you know, we have lower input costs, for the most part, fuel is obviously not down and rent is obviously not down in most areas. But fertilizer was down and seeds still see to still see it's always going up every year. But some of the other more major inputs are down. So I guess, the marketing plan is changed because of my operational change for next year.

[Yeager] Well, let's go back to your marketing plan, then for this year, you said you wish you would have sold a little more? I think a lot of people always say that same thing. Yep. How are you approaching marketing, this old crop?

[Bell] Well, looking at my numbers, cost of production still and finalizing what my actual yields, were measured the bins and scale tickets to see exactly what I have. And going forward with that. I have most of my commercially stored grain sold. And so what is in the bin for the most part is still unpriced. The plan right now is just kind of to keep my operating loan down. So I'm gonna move, I'll be moving some grain here this winter. But typically, my marketing program depends on the following summer, you know, May/June timeframe to get a boost in the market. So hopefully, that works out well. Again this year, but you know, it's hard to say what tomorrow will bring, let alone three, four months, five months from now.

[Yeager] You've heard the saying the farmer seems to have welded shut the barn door or the bin door? Yep. If yours doesn't sound welded shut. It just sounds bolted shut. Is that right? 

[Bell] Yeah, very loosely there. There might be four bolts and only one old nut and bolt.

[Yeager] So a typical farmer operation I love it. I love it. Chad.

[Bell] Yeah, and if we're going to call it a farm operation, there's probably some duct tape holding, you know, keeping the gap closed in the doorway. Awesome.

[Yeager] So you're open to opening it if the price is right.

[Bell] I mean, absolutely, uh, my, my goal here looking forward this year is my operating loan interest is going to be higher this upcoming year than what it was before. And so I'm really looking at my interest costs considering I have more acres for next year. So I'm going to be borrowing or using more money. So I'm, my goal is to try to keep my interest cost a little more in check than what I've had to in previous years. So that means moving, moving some more grain or being a little more aggressive at making sales.

[Yeager] And that's a topic that we kind of started to get into here in the last two months. So it was that interest. When's the last time you had to really I won't say worry about interest, you always have to worry about it's always a factor but that it actually was maybe your headline in deciding what you were going to sell or not.

[Bell] Yeah, I couldn't even tell you when the last time was that I really, really contemplated my interest costs because it's been next to nothing the last number of years and so now that that's a factor, you really got to watch it and be cognizant of it.

[Yeager] Okay, you mentioned things will be a little bit different next year because of expanded acres. But look at the rain, the rain that fell here around Christmas in a lot of the Midwest did that hit you?

[Bell] Yep. So I think I can't remember the exact days but there was about a three day stretch where we had half an inch, one day and then it dried off the next day and then another half an inch on day three and so on Uh, we're still we're still short of rain and moisture, obviously. But I guess I don't know if it's good or bad that we're not frozen up yet we're able to take this any moisture that we get now and put it into the soil for next spring. So I guess that's a good thing at the moment.

[Yeager] Has that lack of moisture that ended 23 altered at all? You're 24? Are you pretty much locked on an alternate basis or cover crop basis? And you can't really be at the whim of the weather?

[Bell] Yeah, so I'm, I'm pretty much planning for just what I guess we would consider an average year, whatever that means anymore, but just kind of stuck into the stick into the plan not really deviating too far, one way or the other?

[Yeager] And then that's probably what it's always like for you. Yeah,

[Bell] Yeah, I don't, I don't typically follow the crop prices for changing or being heavy corn or heavy soybeans. It's pretty much rotational for me and what typically makes the most sense in my situation.

[Yeager] So I need to take that question out of the Market to Market discussion. standbys of well, you know it because those acres flip, we know what the acres are going to be? 

[Bell] Yeah, pretty much I don't typically do a lot of tillage anyways. And we do have one farm that we tiled last year and had to do some fall tillage on it. And so if anything, that would be one field that I wouldn't necessarily be locked in on. But I'm pretty certain it's going to soybeans, even with the extra tillage pass on it.

[Yeager] Let's talk about I think after the last time we chatted you, you had some cover crop or you had a crop and behind that you were anticipating you were kind of sorting through how did that all come out?

[Bell] So pretty good. Actually, this was after the wheat, I'm assuming you're asking. Yes. Yep. So I put in a fairly diverse cover crop mix, and it was pretty, pretty good getting up and going. I did have to wait in the rain for it to get established. But that rain didn't wait too long to come. And got a really good stand of an assortment of cover crops. And I did have sunflowers in that mix. And so about, oh, I think it might have been September. Those sunflowers are late August 1 part of September, those sunflowers bloomed. And so it was really nice to take a drive past that field and take a look at it and pick a few sunflowers to bring home to the wife for a nice little bouquet. So I guess, some extra points there.

[Yeager] Just a reminder of hey, I am working. These are some of the things that I grow. This is for you, honey, right?

[Bell] Absolutely.

[Yeager] How about cover crop in a dry situation. Did you contemplate doing anything differently with cover crop in October / November of 23?

[Bell] Not really. Not. I didn't change anything based on the weather. I did change how I approach cover crops, I had corn. And so I saved a wagon load of wheat from this past summer's wheat harvest and I spread the wheat on acres going to corn instead of using cereal rye like I have in the past and just to hopefully avoid some potential problems. I haven't really had a lot of big problems in years past but I just wanted to reduce that risk even further.

[Yeager] And how do the cover crops look right now given that it's been dry, haven't had the snow cover?

[Bell] Everything looks pretty good. For the most part. My best looking cover crop is my cereal rye and that a lot of my cereal rye was seeded late September, early October. And so I got a pretty good stand with some moisture on that a lot of the wheat after soybean harvest ahead of corn was done a little later than what I was hoping for. But we've had an extended fall since we're not we've only kind of froze up one time and it didn't last too long. So we've we've really had even on these colder days, we're still getting some some cover crop growth activity out of it and we get a stretch of some warmer weather like 40s or even low 50s A lot of the cover crop or even the wheat crop I have out there as a greens backup for a few days and that kind of goes back dormant again.

[Yeager] Are your neighbors struggling to let that tractor sit in the barn? Even though it could probably be out in December - January?

[Bell] So yeah, there I personally have a little bit of anhydrous left to put on and then I made I think tubes, two different attempts at that in some adverse weather conditions and one time was too muddy and the other time was too frozen. So I just kind of decided if I called my ag retailer and told him to come get the bar in the tank, I don't want to look at it anymore, because I'll be tempted to go try it again and probably fail one more time. So I just had him come get it. There's still some opportunities here and there for a little bit of field work to be done. I've seen, actually I followed today, a strip Toolbar From a ag retailer, and it looked like it had been in the field recently, maybe not today, but here in the last week probably.

[Yeager] That's strange, isn't it?

[Bell] Yeah, there's, there's very I know, I've heard, heard some old timers talk about anhydrous being applied pretty much any month of the calendar and, and this past year was almost one of those months where or one of those years that was almost that case where he could apply anhydrous whenever you want to set up a given month.

[Yeager] Let's look at the other one of the other parts that you do. And that's the hogs. I don't know what to say, because looking at that market each and every week gets tougher and tougher to do. What's the life of the hog farmer like right now? 

[Bell] Well, luckily, for me personally, being a production partner, I'm a little more immune to some of those market moves like what we've been seeing, you know, maybe there is a day where that comes to roost in my hands, but at least at this point, it hasn't. But just talking to the, to the people I work with, you know, that's been a struggle, and they've lost a lot of money. But they have made some good decisions and good moves. Yeah, they lost a lot of money, but they could have lost a lot more. But so that's really about all I know about the hog market, from my standpoint is, at least locally, it was bad. But it could have been worse.

[Yeager] Kind of like the crop?

[Bell] Or something like that.

[Yeager] Chad, if you had to put a headline on 2023, from where you sit, what would it be?

[Bell] Oh, I'd say the first thing that kind of popped into my mind was better than expected. And that's, we hear that all the time. And this was one of those deals where I just thought coming in to June, May and June that we're going to have a pretty rough go at it. And I made some marketing decisions based on that. And hindsight 2020 should have just kind of stuck with the program. But better than better than expected yields less than expected crop prices received.

[Yeager] Well, we'll see how much that phone is next to your ear to say sell sell. You're here. The way 24 has started so far, though. It's not exactly a time to sell. But it also gives you pause this could this thing keep going lower? And that's always that worry that you have to have? 

[Bell] Yeah, and so I did, I did have that exact conversation yesterday with my grain merchandiser. I'm still holding on to some commercially stored grain. And I asked him yesterday when the market bean market was down 20 Some cents? Should I just go ahead and dump this? And his simple response was yes. And that was kind of my mindset. I'd been thinking about it for about the last week and just had been watching the market go down, down down and finally decided to jump out. And maybe I guess I'll see what the ramifications of that decision are. But you know, it could be that it could continue to go down and maybe that decision will look great. Maybe it is, who knows?

[Yeager] All we can do. It's all we can do any year. 

[Bell] Yep, The decision has been made to live with it. Yep. 

[Yeager] Chad, I appreciate your time all year and kind of give us an insight and it's always fun for me. And I hope it wasn't too much of oh, here comes Paul again...

[Bell] No, it was a fun year. I'm glad I was somehow selected to be on the show a few times.

[Yeager] All right, Chad Bell, thank you so much. Appreciate it. Thank you.

[Bell] Appreciate it.

[Yeager] Okay, Mike, this is TV radio we have to you which means you have to close the blinds behind you. What's the weather like there?

Mike Schulte: Well, we are fixing to get more rain forecasted this evening. Things look much different than they did a year ago at this time in Central Oklahoma. We've also had nice rains throughout the western part of the state, which is the majority of the wheat belt, even in the panhandle region. So I think that producers are cautiously optimistic that things certainly are going to be much better on the production side for the rest of this year in this region as we go into the late winter months into the spring.

 

[Yeager] A year ago, when we first chatted, it was a dramatically different story. There's no such thing as perfect weather. But are you close to it right now?

[Schulte] I think right now, most producers would say that we're pretty close to it being the best that it can be weather wise. You know, if you look at the Drought Monitor today, 3% of the state is still in severe drought, just very small portions. If you were to look at the Drought Monitor from 2018 to 2022, you would have seen extreme to exceptional drought over large portions of western Oklahoma in all areas. And so it was really challenging during those times, especially last year, when many of the region's maybe had anywhere from an inch to an inch and a half of moisture that they planted the crop on until three weeks before harvest. And so we saw declines, certainly on production levels. But it was really remarkable that we had anything to harvest at all last year, given the amount of rainfall that we had in the wheat regions.

[Yeager] When I just talked to Chad a moment ago about his crop in Illinois, his headline for 2023 was better than expected. What's Mike Schulte's headline for Oklahoma in 2023? 

[Schulte] I think as far as crop considerations, that's probably good. From the standpoint that we did produce something, I think had we had the same wheat varieties that we had been planting in 1996, when we had a severe drought and we didn't have a crop, we would have been in those situations. And I think, you know, that's really a testament to our research programs across the US and what they're doing with drought tolerance and nitrogen deficiency traits. So it really is remarkable that we were able to harvest something, certainly not what we would maybe always want. Of course, as producers, we always want to have been busting crops and then we did not have that this year. But it was still better to have something rather than nothing at all. So maybe it could have been worse. I think from a production side. Absolutely. It could have been much worse. 

[Yeager] Yes. And it certainly could have been better. So I guess we'll just go. Maybe we'll just do that meh? The meh type of a year. 

[Schulte] Yes. I think that's probably the best way to handle it.

[Yeager] All right. You know, I'm trying to keep up with the kids lingo. Mike, as the year went on, the rains happened, the pastures green back up, the cattle feedlots got excited again, because they could take some of those animals back. And just overall, in general, for Oklahoma. How would you say that the year finished there?

[Schulte] Well, I think planting conditions certainly were much better this fall, we were able to have different options for planting dates. And we were able to get rains at the right time in a lot of areas. So we really had a much better start this year than what we had had specifically given last year. And then maybe the three or four years prior to that. We really know going into this period, we have a lot of forage in the field, probably a lot more wheat growth than what I have seen maybe in the last 10 to 15 years. So I think that that, you know, might present challenges in the future. But I would suspect or you know, I think it's just known overall, as you drive through Western Oklahoma, there's really not any poor looking stands. If they are, they were planted extremely late, and they just don't have the growth that some of the earlier plantings had. But one thing that we are noting just as you go around the state, even though the number of the cattle herd, US cattle has declined over the last four or five years because of the long term drought. It does look like we are turning more cattle out on pasture, something that we haven't really done in the last four or five years. And I suspect now we're going to see those production numbers from a feeder cattle standpoint increase if we continue with this El Nino trend.

[Yeager]  

That is a very interesting change in just a year. How things can go back to we'll call it normal for you or what is true, more traditional, I guess, for the whole circle of agriculture there. You mentioned the word future. What's 24 looking like here in wheat?

[Schulte] Well, you know, I think for us, we certainly are happy that things look better from a production standpoint for us in the southern plains of the United States. And that's really from, I think, Texas all the way through Oklahoma and to western Kansas and eastern Colorado. We certainly do have some challenges, I think, on the marketing side or have had this past year and so I think producers are really having to sharpen their pencils or have had to to be able to try to figure out how they're going to become more intensively managed on their operation. So to make things work, certainly we have had some challenges just from global supplies of wheat being much larger out of the 22-23 year. And I suspect as we go into the 23-24 year, we're going to actually see up production numbers for worldwide production to go down, we're not going to see increases, in fact, we're going to see probably a great large loss in Australia, which they've come off of their three record crop production years, the past three years. But as they go into El Nino, it's going to be a different situation for them, they're going to return more into a drier situation. It looks like they have probably about a third less of the production this year than what they had last year. And then I think if you look at EU and Kazakhstan, and then even in the Ukraine region, they're not going to have as much production as predicted as what they have in the past, you're gonna see us stay on par with our production levels, hopefully be a little bit better out of the US. Russia, again, is going to be a major factor in the market, I think they're going to be on par with their production levels this year, which they have been extremely high on the exports. And so I think we're still going to have to contend with that. But you are seeing some of the gaps narrow on the fob prices, certainly not where we want to be. Right now, maybe overall, but we are being more competitive in the regions that are closer to us. So we are starting to see movement, specifically into Central America and South America for us and we also did see China return to the market this past month in December, where they made a large purchase of soft red winter wheat out of the United States, which certainly has helped movement there. It actually has increased our export market to China over the last year by 256% already. So I suspect that people are going to be returning back to the market. And my hope is that we're going to be able to have some better options for producers as we move into this year.

[Yeager] You have to help me out here in my DNA doesn't quite have the wheat gene in it where I know the huge backstory but has wheat in your career, Mike in lifetime always been this global of a story?

[Schulte] Well, I think we've had challenges in my lifetime when I was a kid of contending or being able to be in the marketplace when Russia really kind of returned 10 to 20 years ago in the marketplace. And it's been a game changer for us because they have expanded their production. And they've been very aggressive in their marketing capabilities. The one thing that we continue to see though is that world consumption still today or as of today is outpacing production in this year. So as we see that and the need for the uses of trying to feed an ever growing population. It really just kind of takes one event. And sometimes we're not happy, maybe where we are on the side of that event. But if you have an extreme drought condition in one part of the world at any given time, it really changes what producers are up against. And I think, for me, just an agricultural producers overall that the challenge is trying to figure out how to market the crop given some of the environmental conditions that we're dealing with today that maybe we weren't dealing with 15 to 20 years ago.

[Yeager] Well, I always think each week on the show, we're always just for the last couple of years has just been two topics. It's been Russia, Ukraine. And then every six to eight weeks Australia is mentioned. And then it's the domestic, you know, first it was the drought story for you. Whereas in the I-States and the corn and soybean belt, they're always just looking strictly Brazil, and Argentina, South America and whatever China does. You mentioned Central America, you didn't necessarily say South America, but what's the South America impact on wheat? That I don't understand here? 

[Schulte] Well, I think absolutely the several other countries in South America also ended up being in our top 10 export markets and probably even in the top five for us here in the southern plains of the United States. I think that you know, we have had some challenges on competitiveness of being competitive with the Canadian wheat market, as well as areas of Russia. But us wheat associates did do crop quality seminars where we actually met with the millers and bakers in South America back in November, and we did have long term discussions and I suspect that based on the return of what we're seeing now from central United States and the return of China coming to the market that they're going to be having those discussions to with us and my hope is is that we will have a better export capabilities with them and this coming year as well.

[Yeager] In 2023, did your global look from your full time job there. Did it shift to you didn't have to the headlines out of Ukraine and Russia weren't as dominant as they were the year before and 22? 

[Schulte] Oh no, I think I think they were actually maybe more dominant. Because, you know, we saw them really come strong and become aggressive with just some of the situation's they're dealing with, in order to fund some of the things that they're, they're doing in that part of the world. And so I think that that has also made them more competitive in the global wheat market. But, you know, starting from last year, we really kind of had seen a price decline just overall. And we haven't really, we haven't really seen that increase in price even yet today, as we're probably at all time lows over the five year average to date. But my hope is, is that now that we are seeing people return to the US market, and we are seeing larger export markets of wheat that have happened now this past December, that hopefully we will, we will see the benefit of that in the next couple of months, specifically, when we've got a world production actually chart showing that we're most likely going to decline in the 2023 2024 year to be maybe more comparable with where we were during those 2018 to 2020 periods.

[Yeager] You know, I read just not too long before I started talking to you about Russia, with a very large crop. And I think you said earlier to me before we started recording, you expect Russia to be on par with that. What are you hearing about Ukraine, though,

[Schulte] There are going to they're going to have a slight decline from what we are seeing, I think part of that is actually accessibility to be able to put into the export market. I think that certainly right now Russia is kind of controlling how that is all just being distributed from that, that part of the world, you know, it's not going to be maybe a major loss in the global marketplace. Specifically, unless there's just something that happens in that part of the world that's going to really, really change. Even more opportunities to export. I think the biggest thing for us that's going to be beneficial from a marketing standpoint, is the loss that we're going to see in Australia due to the El Nino and effects. 

[Yeager] Alright, Mike, we've talked about weather outlooks. We've talked about geopolitical in the sense of who's buying who's selling who needs crop, but what's that other thing Oklahoma producers of wheat are? Kind of? We don't not necessarily not talk about, but what is that thing we don't know about? Yeah, of course, I need you to predict the future that's out there that producers need to be aware of and just kind of keep an eye on in 24?

[Schulte] Well, you know, I think that certainly here in the southern plains of the United States, we rely a lot on our markets in Mexico and Central America, we did have two rail crossings into Mexico that were closed out at Eagle Pass and the El Paso regions, three days prior to the Christmas holiday, they were they were actually shut down on December 20. And then they were reopened on the afternoon of December 22. But fortunately for us, they were able to open those crossings up within a three day period, which was beneficial, but you know, they were happening to reallocate positions or individuals at the border crossings to other ports or other places where we were having migratory issues and the southern plains of the United States. And, you know, it's really an impact that I think we all are watching as we move forward. But I think as agricultural producers, we're really concerned that we keep those border crossings open for movement of our agricultural exports. You know, we had 10,000 train cars setting on each side of the border that we're not moving. And so if you look at just those two crossings, the impact would have been if they'd be closed all year would be 450,000 Different rail shipments that would not be in the marketplace. And so certainly has an impact on the wheat market. Where Mexico is our largest market, but really a large impact over agricultural products out of the entire United States overall. 

[Yeager] Yeah, I saw the press releases come in and there were those numbers I had. I did not know just the significance of the wheat market. So Well, thanks for getting the crystal ball out there and you know, predicting the unpredictable. Alright, Mike Sheltie from Oklahoma. I appreciate all that you've helped me out with this year and kind of given us a perspective of what's happening. So thank you. Thank you very much. Mike. 

[Schulte] Enjoyed the talk, Paul.

[Yeager] My thanks to both Mike Schulte and Chad Bell. I appreciate it. If you have an item that you think would go well like a coffee mug from your operation, or maybe you have a band or a bobble head that you think we should put in, send it to us at Iowa PBS, PO Box 6450, Johnston, Iowa, 50131. And we might just put it here on the shelf. Whether it's a lard can we have the shelf over here that could use some new accouterments. Next Tuesday, the next episode of this podcast comes out. We will talk to you then. Thank you. Bye bye