Difficult Choices

Difficult Decisions - Grain Markets and LendingHarvest is here and it is time to assess storage opportunities in corn and soybean markets.  As a lender, here are a few items that should be on your customer’s minds.

Prices are low

In the Northern Plains, producers are looking at cash soybean prices of $7.30/bushel in southern Minnesota, and as low as $6.75/bushel in North Dakota. The last time we saw prices like this was the harvest of 2007. Corn prices are $3.00/bushel, +/- 20 cents in the same areas. $3 corn at harvest is not profitable and, unfortunately, not new. These prices are all too similar to levels seen in each of the last four harvests. [Read more…]

Does Grain Marketing Improve Profitability?

Does Grain Marketing Improve Profitability?By:  Joleen C. Hadrich and C. Robert Holcomb

Farm managers recognize the importance of having a marketing plan to improve their profitability.  And, the title of Ed Usset’s grain marketing book conveys an important truth- “Grain Marketing is Simple-it’s just not easy!”  In the “Top Farmer”[1] survey, crop producers were asked to categorize the percent of their crop marketed across 3 general categories: pre-harvest contracts (cash contracts, futures, and options), post-harvest contracts (cash contracts, futures, and options) and cash sales (harvest and post-harvest).

In order to compare the highest and lowest performing farms, farm profit performance was measured using an adjusted net farm income ratio[2].  Comparison across performance levels was completed for the “Top Farmers” who were in the highest 20% of financial performance, measured by the adjusted NFI ratio, compared to the lowest 20% of farmers.  In 2016, regardless of whether you were in the highest or the lowest 20% of producers, approximately 34-35% of the overall crop was sold using pre-harvest contracts, futures, or options while another 36-37% was sold through harvest or post-harvest cash sales.  The main difference in marketing between these two groups occurred with post-harvest contracts.  The highest performing farms contract approximately 29% of their crop using some combination of post-harvest cash contracts, futures, and options.  The lowest performing farms only contracted 22-23% of their crop with post-harvest contracts, futures, and/or options.  [Read more…]

Take Note

At times it is necessary and desirable to add notes in a FINPACK file.  Notes are a log of important items related to the specific FINPACK tool they are attached to.  Notes are often used to provide additional information related to the customer and the specific FINPACK tool.  Notes can give additional detail and further outline methodology used for FINPACK users.  For example, a Note can be added on a balance sheet to further describe the details of contracted grain.  Or a Note can be added to a cash flow projection to outline the procedure used and thought process behind a loan restructure proposal. [Read more…]

Cash Flow Planning Tools

Cash Flow Planning ToolsPutting together cash flow projections for farm clients can be tedious at times.  What is a reasonable feed expense for dairy operations?  Is the projected cost of production on corn acres in line with peers?  These are a few of the questions lenders and other professionals may ask when putting together projections, especially for new customers.  With that in mind, The Center for Farm Financial Management has put together two different cash flow planning tools.  The Minnesota Price and Cost Summary and the FINPACK Livestock Budget Estimates are two aides FINPACK users may find useful in cash flow planning.  These items and more are found in the FINPACK Knowledge Base.

[Read more…]

Need a Reminder?

FINPACK allows users to set a reminder related to a specific file.  A Reminder in FINPACK consists of a note related to the FINPACK file, as well as a due date for the action.  Reminders assist FINPACK users with completing tasks in a FINPACK file and can help track the progress of a customer file.  Reminders are accessed through the Reminder icon on the toolbar or going to File + Reminders.

Reminders

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FINPACK Training Options

FINPACK Training - Classroom, Online, Custom, and the FINPACK Lenders Conference

There are several training options available to sharpen your FINPACK skills.  Training opportunities are varied to best meet your training needs and schedule. [Read more…]

Mid-Year Monitoring

Cash Flow Monitoring WorksheetSomehow, we are already halfway through the year.  Periodic monitoring of projections that worked earlier this year may prevent surprises or problems later.  Now is a great time to use the cash flow monitoring worksheet to review how the monthly cash flow projection you completed compares to what has actually happened.  This tool is available for both of the monthly projection versions, with or without budgets.  Generating the cash flow monitoring worksheet is done in the cash flow plan that you wish to monitor.  Using this feature allows for timely monitoring of customer progress during the year.  And, if needed, adjustments to the cash flow plan can be made based on the actual data received.   [Read more…]

Sending a File to FINPACK Tech Support

FINPACK Technical SupportThere are times when it becomes necessary to send a problem file to CFFM.  These troublesome files are then analyzed by FINPACK Tech Support, so the issue can be resolved.  FINPACK has the capability for you to send files securely to CFFM (and only CFFM). While in FINPACK, click Tools, then Send File.  This can be accomplished when are either in or out of the file you would like to send.  A window will appear that allows you to select the FINPACK file you want to send. [Read more…]

Using the UCA Cash Flow for Commercial Analysis

UCA Cash FlowAnalyzing a commercial credit can be challenging. Figuring out how a business is doing when you don’t have a good comparison or even figuring out if the core of the business is providing for the other pieces can make it difficult for you to understand how to analyze the business or structure the loan. Fortunately, FINPACK includes a report in the C & I Business Analysis tool that can be used to help you identify where the cash is being used in the business.

The Uniform Credit Analysis, or UCA Cash Flow, is designed to help you identify where the business’s cash is going and how it is being used. Is it being used to purchase additional inventory or is it being used to purchase equipment? [Read more…]