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Josh Grunnet discusses ALCIVIA’s approach of marketing the cooperative’s grain and doing our part to help our members manage their grain marketing opportunities.

If you can figure out these markets, you’re a better man than I, and that’s why on our ALCIVIA co-op talk today we are visiting with Josh Grunett. Josh is the senior grain merchandiser with ALCIVIA down at the main office in Cottage Grove. Josh will tell you the last year or so with everything going on in the world, from supply chain, to Covid, to wars, to weather, you got a tough job.

Yeah, that seems to be almost an understatement some days you hit on all the high points that’s for sure well high points or low points I don’t know what they are.

But Josh, you must look at these through the eye of a merchandiser working for a cooperative like ALCIVIA where farmers best interests have to come into play. How do you do that? What is your business model and your marketing model that you have at ALCIVIA?

Exactly that’s what we look at every day, I try to get the grain through the supply chain to where our destination customers want it and when they want it. To try to provide bids and markets for farmers so they can deliver to our elevators or to whatever market they see fit and deliver when they want it. They often also don’t want to sell it at the current price, and we try to smooth the waters out because as you alluded to with wars, and supply chain issues, and every year we have weather events, which last year was no different, it creates just a lot of choppiness in the marketplace. So, we’re trying to use the co-ops assets, rail, truck, and different supply chain lanes and matching up commodities back and forth to get the farmer the best price and get their grain to where it needs to go trying to think about that first and foremost every day and then navigate all the headwinds that you alluded to.

The challenge isn’t only to identify market trends but get that information down to the farmers so they can make marketing decisions. A good a system is how comfortable are you with a system, at ALCIVIA that you have that contact with the farmers on almost a daily basis with many of them that are active marketers.

You got it, and that’s one thing we pride ourselves on is trying to get that information to the producers through our grain origination team we have here at ALCIVIA.

We’re trying to do that every day with our other divisions, energy, agronomy, to try to understand the big picture for the farmer and try to come to them with answers for all the things they have. You’re spot on with kind of the changes that’s happened in the last couple years starting with some of the pig flu in China, supply chain issues, and then the war. We’re definitely in a high-priced environment and certainly understand these growers which were operating a business three years ago with a certain dollar amount they haven’t changed their acres or their production and all of a sudden, the business that they’re running is as three times the risk or three times the amount of dollars tied up into it just because the price of their commodities that they sell and their inputs have almost tripled.

So, these farmers are trying to manage a little bit riskier business today and we’re trying to help them through that certainly a new time for that but as markets go you look at a historical chart and we have high-price times and low-price times.

That’s one of the things on the horizon is how are we going to manage through a correction in price and how do we not get over our skis there. How do we help our farmers try to navigate that and just keep them up with marketing opportunities, continue to keep them sticking with, their marketing plan, and selling grain out in front, not get caught up in the day-to-day commentary of what’s happening on the news.

Just stick with a good profitable marketing plan and I think the key word there Josh is one of the key words “opportunity.” That’s what ALCIVIA’s grain merchandizing team will give you led by Josh Grunett. Again, Josh is a senior grain merchandiser, stay in contact to make the most of your marketing opportunities Josh granted with us on our ALCIVIA co-op talk program.

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ALCIVIA Grain Provides Diverse Market Access to Members

By Dylan Beaver, Grain Merchandiser

It has been more than a year since ALCIVIA expanded our footprint. That growth has brought your cooperative opportunities including freight management and market development. ALCIVIA has been able to develop truck lanes with our logistics company that were not available prior to the merger. Keeping a truck loaded for all miles of the trip is key to being financially responsible for our producers and business, especially in the current energy market. The changes in the energy market over the last six months in the United States has helped define new markets and lanes. In the earlier parts of 2021, there was a shift in freight lanes for ocean vessels in addition to weather conditions in parts of the United States changing the market dynamic for Wisconsin’s crop. This allowed for ALCIVIA to use several assets to take on large volumes of the Wisconsin crop that would traditionally flow to the river system which then moved to the Pacific Northwest (PNW). It was one of the first times ALCIVIA was able to ship grain to that market.

ALCIVIA has 17 grain elevators that provide 35 million bushels of storage capacity plus a growing direct ship program. We look to service all our customers by bringing them multiple markets. ALCIVIA grain has many partners and diverse markets the merchandising team is working with to ensure we are providing the best opportunity for our farmers to get their grains to the right market. ALCIVIA elevators provide a home for many producers’ products where it is stored responsibly to ensure when it is sold to the end-user that it meets quality expectations. With the area that the ALCIVIA elevators span, we must make sure we maintain consistent quality of grain to meet all market expectations whether it is for export, feed, or human consumption. We want to make sure we provide the best quality product so we can return profits to our cooperative members.

The ALCIVIA grain business unit will continue to provide innovative and responsible solutions for all members to ensure the success of our producers and the cooperative as a whole. Finding ways to help our members maximize profits through grain marketing opportunities is our number one goal. Markets have many variables and are always moving faster than one can react. We provide resources for all members to take advantage of to help lock in profit and manage risk. When engaged in the current commodity market it is critical to be confident and comfortable in your decision making.

Reach out to your local Grain Marketing Specialist to discuss your grain marketing opportunities.

All. Together. ALCIVIA.

Connect with ALCIVIA Grain
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Risk Management: The key to profitability

By Beth Helding, Grain Sales Leader

Our mission statement at ALCIVIA is advancing our customers through innovative and responsible solutions. In reflecting on this statement, especially the responsible solutions portion, we understand we must take the emotion out of the market volatility and focus on risk management. This applies to both producer solutions and solutions for the company.

With extreme volatility, the risk for the end user grows exponentially. With the margins on grain being pennies in some cases, ALCIVIA needs to protect our exposure on purchased grain. Here is just one example: our elevator locations are the “middleman” handlers of the grain we purchase. We can only turn around and sell the grain for what an end user finds value in purchasing it for. We can only pay what the Cheez-It manufacturer is willing to pay. We do not physically make the Cheez-Its here at ALCIVIA.

When Russia invaded Ukraine at the end of February, most of the end users that we sell grain to went to a “no-bid” situation. ALCIVIA, we feel, had two choices to respond to this most unusual situation. We could either go with “no-bid” to the producer group, taking away the opportunity to sell into the market rally or, option two, widen the basis in a way that helped to buffer the extreme volatility and risk in owning the grain. ALCIVIA decided to give producers the opportunity to sell the grain and respond with a widened basis. We are not speculators of grain, we are hedgers. We are happy to help producers manage their risk and we have a big job of simultaneously managing the cooperative’s risk. We are proud that we were able to offer a bid during that difficult and uncertain marketing environment. Fast-forward to today and the basis is beginning to shape up in many markets due to the trade settling into a new range; end users are able to more clearly establish the value they are willing to pay.

A responsible solution for risk management we are proud to provide our producers is the availability to visit with our grain marketing specialists. We encourage producers to continue focusing on bottom-line decisions. There is not a single person out there willing to say when a market correction will occur, but as history always repeats itself, we can be certain that it will eventually happen. We would encourage producers to continue focusing on risk management. Recognizing that input costs are at unprecedented levels, we encourage you to put pencil to paper and see that the high cash values for this fall are worth selling into.

Please reach out to us if you would like help with your risk management plan. We are always willing to assist you.

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Connecting Vision with Timely Strategy

By Lacey Seibert, Vice President of Grain

Our vision at ALCIVIA is customer success powered by engaged employees. This can be seen in our grain division’s focus on the talent and technology needed to bring solutions to our members that will allow them to execute intelligent and timely grain marketing plans.

The timeliness of grain marketing is one of the major contributors to a successful bottom line for grain producers. Increased volatility in the grain market can make it more difficult for producers to “pull the trigger” on grain sales. This is especially true when our trigger pull moment is based on a feeling or trying to catch the high in the market. This out-of-control decision making is not the only way. There is an alternative approach that leaves grain producers feeling more in the driver’s seat when they are making grain marketing decisions. The idea is to be prepared, which will lead to calm decision making no matter what the market does. This involves proactively understanding resources, needs, and obstacles. When we have a strong understanding of these, we are in a much better position to execute on opportunities with confidence and reduce risk.


Applying this to grain marketing of bushels in the bin, producers should have an active understanding of the following grain marketing factors:

Cost per bushel per month to store the grain on farm
The key is to be realistic: be sure to factor in often overlooked interest cost per bushel and quality risk. Understanding cost of storage allows us to make informed decisions about how long we should hold grain waiting to sell.

Market spread
Understand the futures price today versus the price for a period in the future. This is important because it tells us if the market wants us to bring the grain to town now or store it and bring it later. The greater the positive difference (carry) the greater the incentive the market is paying to store bushels until later. If the difference is negative (inverse) the market is paying more now for bushels than in the future or calling for the bushels to be delivered right now. The spread tells us if the market is paying us to store or deliver.

Per bushel breakeven
When looking at cost of production, be sure to factor in labor and equipment costs. Understanding this will allow us to know the bottom of the pricing range we should be targeting and will allow us to know our profit margin per bushel on all sales.

Cash flow needs
Knowing when we will need to make loan payments, pay bills, and have cash obligations will allow us to proactively sell grain to ensure we have the needed cash on hand. We never want to be forced into sales because a bill is due, we want to make sales because they hit targets and are a part of the grain marketing plan.

Operational challenges
Hauling grain to the elevator can become a challenge during certain seasons when labor is being used in different areas on the farm. For this reason, it is important to be proactive and make sales to be delivered during times of shipment that we have available resources to deliver.

Freight costs per bushel
Knowing the freight cost to deliver from our bins to sales destinations will allow us to accurately evaluate if a price we are seeing meets our targeted goals. We are looking at an incomplete picture if we are not calculating freight costs out of our margin. Be sure to factor in labor and depreciation.

It can feel like a huge undertaking to actively understand all these grain marketing factors. ALCIVIA’s grain marketing specialist team is equipped to help you dig in and create a personalized grain marketing plan that will account for all the grain marketing factors. Give us a call today to get in the driver’s seat with your grain marketing!

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Business card contact info for grain marketing specialist Jes Lantz

Happy Holidays!!! As we have turned the page on harvest and starting to enter the new year, now is a good time to start game planning for what we have in our bins and even looking at some new crop. The markets have been well supported by the ethanol and soybean crush margins. There has been some volatility in the market over the last several weeks, but I don’t expect things to change over the next week. I think it’s important that farmers are aware and monitor the rebalancing of the funds, which typically takes place at the end of the year. A lot of eyes will now turn to Brazil as we will start to see their crops coming off. We also have to start thinking about what U.S. exports for corn and soybeans will look like. With all the unknowns, we advise you not to try and hit the homerun. Instead, I wouldn’t be afraid to make some smaller sales now and then put in some offers.

The next WASDE report will be released on Wednesday, January 12. This WASDE report will cover the final production numbers as well as supply & demand. If you have any questions, make sure to reach out to your Grain Marketing Specialist to help ensure you’re managing your own risk.

Merry Christmas & Happy New Year!
Jens Lantz

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Business card contact info for grain sales leader Beth Helding

As of this writing, today’s high trade for corn was 5.96 ½ and we have to wonder what would justify 6.00 corn. These levels are well supported by the ethanol crush and moderate export demand, but there is a difference between having a bullish stance and being well supported. Locally, the ethanol and rail markets are offering the strong basis and you’ll continue to see the ebb and flow of producer selling, basis backing off due to them rewarding the market and then basis tightening to draw out more bin bushels. This is all to say that the corn market is near 6.00 for old crop and near 5.50 for 2022. We do not want to be complacent in this marketing environment with the high risk involved on the inputs side of the equation. Much of the fund buying as far as inflation is concerned has already been factored into the trade, so pushing above the 6.00 mark is going to take a significantly bullish talking point.

We are neutral the grain market and welcome a sideways trade following the last 12 months of volatility, however we are positive the risk in raising next year’s crop is strong. You are welcome to visit with your ALCIVIA Grain Marketing Specialist at any point throughout the year to set up a personalized marketing plan! Give us a call!

Beth Helding

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Join the Midwest Farm Report program called ALCIVIA Co-op Talk with Pam Jahnke and Bob Bosold. So there’s a pile of money in the middle of the table. What do you spend now versus what you hang on to for future expenses. Sorting that out is exactly what Traci Anderegg does with ALCIVIA. In our ALCIVIA Co-op Talk, she discusses different grain marketing strategies that might help producers keep some of their money.

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Grain exchange manager Judy Uhlenhake

With 2021 harvest complete, it’s time to focus on bin bushels and 2022 marketing strategies. Grains have traded a lot of volatility this fall. That is why it is important to have a marketing plan and offers in place to capture your target prices. A marketing plan will enable you to manage the unpredictability of grain prices and their associated risks.

A marketing plan can be broken down into 5 easy steps:

  1. Break the total amount you must sell into smaller units
    • Post-Harvest: you can only sell the grain that is unpriced in the grain bin.
    • Pre-Harvest: Do not sell more than you have insured.

  2. Set price targets
    • Be realistic with your target price. Setting prices too high or too low is detrimental to your plan.
    • When setting pre-harvest targets you want to price grain above the cost of production.

  3. Set deadlines
    • If prices do not rise enough to meet your target, you need to set sales deadlines to ensure you are proactive about pricing.
    • Prices typically have a seasonal price pattern. Setting deadlines that correspond with periods when prices are traditionally highest will make marketing easier.
    • Cash flow needs also need to be considered when selecting deadlines. Plan ahead and have cash ready by setting sales deadlines ahead of payment dates.

  4. Know your marketing tools
    • ALCIVIA offers several types of contracts you can use to sell grain.
    • You can work with your grain marketing specialist on what tools you should be using to achieve your targets and sales deadlines.

  5. Share your plan
    • Sharing your plan will keep you accountable to your marketing goals.

The goal of a marketing plan is to keep you on track with the targets you set. A plan promotes the use of logical, orderly marketing techniques, and our ALCIVIA team is ready to help you put a plan in place.

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Have a great day!
Judy

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Business card contact info for grain marketing specialist Melisa Schmidt

Happy Thanksgiving! We at ALCIVIA are thankful for all our customers! Harvest is wrapping up with corn and beans both coming in at 95%. The fireworks continue in wheat while corn and beans keep a tight trading range. A reminder that markets take a break Thursday and Friday are only open 8:30 am to 12:05 pm. Make sure to have offers in and working, we have seen crazy trading in the past.

Soybean planting in Brazil is 86% planted, ahead of last year at 81%. Corn planting there is at 91%, same as last year. Ukraine’s corn production increased to a record 40.0 million metric tons from 37.1 with harvest only completed at 80%. Russia exports have dropped 23% over last year at this same time. Australia is seeing heavy rains and effecting the wheat quality there.

While you finish up fall field work and putting equipment away, don’t forget to figure your cost of production for next year. This next year you need to make offers and have a plan with all the volatility in the market. It is never too early to make a marketing plan for bin grain or next fall. Please reach out to Grain Marketing Specialist to set a meeting up very soon.

Happy Thanksgiving to you and your family!
Melisa

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Business card contact info for grain marketing specialist Jes Lantz

By no means are we finished with harvest, but we have reached the home stretch as we look to be about 90% finished around the U.S. Most people have concluded their bean harvest and are winding down with their corn harvest. Over the weekend we have experienced a few delays with some rain and snow… Yes, you heard me right, snow.

Since the WASDE report came out on November 9th we have seen both corn and beans rally; Corn is up $0.25, and beans are up $0.70. For the most part, people were fairly bearish going into the report, but with the USDA pushing bean yields from 51.5 to 51.2 and decreasing U.S. exports, we actually saw an increase in ending stocks. If you have beans in the bin, don’t be afraid to start letting them go as there seems to be more downside risk than upside. On the other hand, the corn market stayed fairly neutral, but we did see a slight increase in our yields, bumping the national average to 177 bu/acre. However, we did see ending stocks decline by about 7 million with a large volume of that being the increase of corn use in ethanol. With all this being said, it’s a good time to start thinking about forward contracting for 2022.

As we continue to navigate through all the different reports thrown our way and the high input prices, I advise you to start thinking about next year and your profit per acre. If you have any questions, make sure to reach out to your Grain Marketing Specialist to help ensure you’re managing your own risk.

Have a great day!
Jens Lantz