When you farm 35,000 acres in five states, balancing input purchases with crop pricing can boost the bottom line. But a leading indicator to make one of those trades may not keep you from lagging on the other in the decision-making process. That’s Donny DeLine’s attitude. He doesn’t always market the same percentage of corn or soybeans to match production with inputs bought. But if both ends of the spectrum look good, he takes action. In fact, early fertilizer purchases and bulk buys last summer helped him save 20% or more over prices this spring. And by booking corn early, he had almost 50% of it priced at $6 or higher.
DeLine, 42, has farmed on his own about 15 years. He started in the Charleston, Mo., area, where he’s a fourth-generation farmer. He quickly realized the advantages of spreading out. He began putting together more rented land in Missouri; then added farmland in southern Illinois, western Tennessee, eastern Arkansas and northern Mississippi. Always the optimist, he added another 8,000 acres in 2012.
“It helps to spread the risk across a wide area," he says.About half his corn and soybeans are grown in Missouri and Illinois and half in the three southern states. His production also includes wheat, cotton and rice. “We have a diversity of crops in different locations. I don’t have all my eggs in one basket in the event of weather problems.”
The diversity of his north and south farm locations helped him dodge the summer’s drought conditions on much of his production. His Missouri and Illinois crops suffered more than his crops in Arkansas, Mississippi and Tennessee, which received some timely spring and summer rains.
DeLine strives to buy inputs and make sales when both actions likely yield a solid profit margin. Fertilizer buys started slower than normal for 2012.
“We normally start buying a portion of our N, DAP and potash early in the fall if the price is attractive,” he says. “We began locking in a few inputs late last summer. But the prices were too high to lock in large numbers.” That attitude changed in late January, when it was apparent that corn acres would be higher and demand for fertilizer would increase.
“We ended up locking in most of our inputs by mid-February,” DeLine says. “We saw them take off because of the increase in corn acres, so we locked in 85-90% of our needs. That included buying urea at near $400/ton and liquid at $340/ton. Both were substantially higher in early summer.”