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Farmers Prepare For Harvest, Wheat Planting As Fed Raises Rates

Farmers Prepare For Harvest, Wheat Planting As Fed Raises Rates

By Katie Micik Dehlinger

Life doesn't plan itself around the seasons or the chores that need to be done. Sometimes, that means farmers set their toils aside to honor life's big moments.

Both of DTN's View from the Cab farmers stepped away from their businesses in the past week to celebrate family expansions. Colorado farmer Marc Arnusch's son, Brett, and Ohio farmer Luke Garrabrant's sister got married within the past week.

"It was pretty magical," Arnusch said. "They had an absolute perfect day for it. The weather was fantastic. The view was great, and it went off without a hitch."

The Arnusches had another blessing after they returned back to the farm: a gentle, day-long rain. "We actually had an inch of rainfall on our farm, which was a surprise, and an answer to a prayer for sure."

For Garrabrant, he ended a busy week of harvest preparation by picking up a tuxedo.

"To plant a crop that's worth $9.50 a bushel as it goes into the ground is something I've only experienced maybe once in my career," he said. While it's encouraging, the downside is that input prices are significantly higher too. "So, our margins tend to be pretty skinny, but it's nice to see a nine in front of the wheat market, not a four."

He's started to make a few sales for the 2023 season. Even though it's a bit earlier than usual, it's important to take risk off the table. While he's sold some futures, he's also purchased out-of-the-money calls for about a dime a bushel to keep the top side of the market open "in case something crazy in the world happens and the market runs away."

He's also just a few days away from starting to chop silage. The corn was still a touch immature when he spoke to DTN on Friday, but Arnusch said recent moisture should help expedite it. And without a frost on the horizon, he thinks there will be a good window to get the crop out.

"In Keenesburg, we're looking at pretty stable conditions for the next week," DTN ag meteorologist John Baranick said. "There should be plenty of sun and temperatures generally in the upper 70s. There is potential for some showers later next week with a small disturbance moving through, but otherwise it looks like the harvesters should have no weather issues."

With a forecast like that, it's full speed ahead. Arnusch and his team will be harvesting corn silage, drilling wheat and cleaning and conditioning malt barley seed to get ahead of upcoming delivery dates.

"We're going to juggle quite a few chainsaws all at the same time," he joked. "They're not too bad to juggle as long as you catch them by the handle."

One thing he hasn't had to juggle in a long time is interest rates. Arnusch said when he graduated college in the 90s, it wasn't unusual to pay 9% interest on an operating note. "We've almost become low-interest rate drunk here in the last decade" from borrowing operating money at 3.5% to 4%, he said.

Fall is knocking in central Ohio. The leaves have an off-green tint. When DTN spoke with Garrabrant last Thursday, the high temperature was around 65 degrees, down from 80 the day before. The nighttime low was forecast in the 40s.

"It's kind of chilly compared to what it has been," he said. They've had a number of steady little rain showers, and Garrabrant said he's not complaining... yet. "Now if this keeps up for another three weeks, I'll be getting nervous, but so far it's actually helping matters."

Baranick said there's plenty of chaotic weather in the near-term forecast. In addition to a wet pattern for the weekend, "another shot of colder air will be moving through Monday night. That could cause some more showers into Tuesday and bring high temperatures down into the upper 50s or lower 60s for a couple of days. Lows should stay in the 40s so no risk of frost just yet. Temperatures will rise then through the rest of the week and should stay drier after that. Early October is looking good for harvest conditions with limited chances for rain that following week as well."

Garrabrant got a late start to soybean planting this year, so these late rains could benefit plants that are still filling pods. His father has a few fields that are ready to pick, and if it wasn't for this weekend's wedding, they'd probably have spent some time in the combine. He knows some farmers in his areas likely got a start over the weekend.

"It kind of makes me antsy to see what's out there," he said.

The corn crop still has a way to go, and temperatures in the 60s won't help it dry down. Garrabrant estimates he's at least three weeks away from corn harvest.

"I don't get too big of a jump at it because I don't have a dryer or any bin space. The more natural drying I can get, the more it helps my checkbook," he said.

As a younger farmer that relies on an operating line of credit, Garrabrant is working to get a better understanding of how interest rates will affect his checkbook. He's been reaching out to farmers he knows who either experienced the 1980s or who learned a lot about those times from their parents.

He's debating a few different ways to minimize the impact of interest rates on next year's operating line. One of them is tapping into the equity he's built in his equipment. Garrabrant started acquiring equipment early in life, back when he had a manure spreading business.

"Long story short, I got forced out of the business and sold off a good chunk of my equipment and had a good bit of equity in that equipment that I pumped right back into the farm. So fortunately, a lot of my equipment is paid for," he said. While he feels like he might be a little late to the game, he's considering pulling some of that equity out with a fixed-interest loan and converting it into operating money.

"I don't know if it's a good idea or a bad idea, but it's one thing that's on the table for how I might combat this," he said. "The end goal is to get that operating line of credit as low as I possibly can."

If his plan was just to maintain his acreage next year, he could have cut his operating line in half, but plans to double his acreage also means doubling his expenses.

"It's one more thing to navigate and manage. In a perfect world I would operate on cash and what I would have been paying in interest would be what I paid myself at the end of the year. I envy the day when I, hopefully, can accomplish that because it feels like you're working for the bank. It's kind of an overwhelming feeling at times."

While some people may argue his recent equipment trades weren't the best moves, he sees the value in newer equipment that needs fewer repairs. Last spring's planting reinforced the importance of being ready to plant when you get an opportunity.

 

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