October is National Co-op Month and a time to celebrate the cooperative model and the strength it brings to local communities.
“CHS is proud to be part of the cooperative system and we’re driven by our purpose to create connections to empower agriculture,” says Jay Debertin, CHS president and CEO. “Our values of inclusion, integrity, cooperative spirit and safety guide us as we work together for shared success and to strengthen our communities.”
Do you know what a co-op is? Here we break it down.
What is a cooperative? A cooperative is defined by USDA as a user-owned and controlled business from which benefits are derived and distributed equitably on the basis of use or as a business owned and controlled by the people who use its services.
Who determines policy? The CHS Board is made up of 17 member-owners, elected by the members.
How are profits distributed? The business is operated for a profit; it’s how the profit is divided that makes a co-op unique. Unlike most corporations where the profits are distributed to stockholders, co-ops distribute profits to member-owners on a patronage basis. Patronage is a method of sharing profits among the members. It is based on how much they purchase and the profitability of the co-op.
What kind of co-op system is CHS? CHS is a blended federated and centralized cooperative system. CHS is unique in that along with the federated system of member cooperatives, we also have Country Operations, made up of centralized retail locations dedicated to serve member-owners in their respective geographies. Along with member cooperatives, those member-owners of Country Operations locations vote for board members at the CHS annual meeting or are represented by delegates from their business unit at the annual meeting.
Help us celebrate National Co-op Month by joining the conversation on social media using #CoopMonth.
Fertilizer has been a hot topic for nearly a year. Last fall it all started as grain prices soared putting pressure on an already stressed supply chain. On top of that, last fall, an import duty was placed on phosphate products from multiple countries causing the domestic price of all phosphate-based products to skyrocket seemingly overnight. Next comes spring with the largest amount of optimism we have had in agriculture in several years. With optimism comes increased utilization of fertilizers, simple economics tell us that increased demand equates to increased prices. All these outside pressures affected prices for products bought in season this crop year. However, fortunately putting on fall fertilizer and prepaying early for spring products paid off massively this year. The last pressure on the market that really needs to be discussed is the potential duties on nitrogen.
Much like the duties we saw put on phosphates last fall (finalized last winter) there may be some duties on UAN from Russia and the Republic of Trinidad and Tobago. The claim is that product from Russia and the Republic of Trinidad and Tobago have hurt the US market by “dumping” product into the market to force prices down. These claims will go through a series of court hearings to see if there is validity to the claims. Weather or not these claims hold up in court, the uncertainty is being priced into the market. This claim is on UAN but that ultimately affects all nitrogen sources (UAN, Urea, Anhydrous ammonia). If you have more questions on these petitions filed, please reach out to your CHS agronomist.
With all the above pressures still impacting the fertilizer market today, locking in your fertilizer input needs early again and putting as much as possible down in the fall is looking to be the best option. Quite frankly there is some serious sticker shock when you are looking at fertilizer prices for this fall and coming spring compared to what you paid last fall and winter. This should not come as a surprise with the gain in the grain markets as well. I encourage you to sit down with your agronomists and do the math on the bushels of crop needed to cover the fertilizer bill for your crops individually. Even with the increase in prices, in most cases the actual bushels needed to pay for the fertilizer is similar to last year.
Overall, the fertilizer market is incredibly strong, much like the rain markets. Again, I encourage you to sit down and make a plan with your agronomist to get as much as possible out this fall as spring prices are likely going to be significantly higher than fall for P and K. Also, take a few minutes and read the article (linked below) about Levesol products and specifically Trivar for broadcast applications. With the investment you will be making on your farm for fertilizer, specifically phosphorus lets make sure it is protected and able to be utilized by the next crop. We have seen some incredible yield advantages with these products in both high and low yield environments. Talk to your agronomist to find out more on which of the Levesol products would work best for your operation.
Thank you for your continued support and business!
The Kasson and Chatfield retail stores offer a wide range of products to support the farm and rural lifestyle. We lead with bagged feed for almost any kind of livestock and companion animals. But, we have so much more. We carry a full-line of mineral and protein lick tubs. New this year are tubs with garlic for fly control. These have proven very effective bases on customer reports. Loose mineral and blocks are also available.
A wide range of forage, turf and food plot seeds are available at your CHS stores. We also do seed quotes for CRP projects. Bagged fertilizer and package herbicides are available to keep the homestead green and looking good throughout the growing season.
We have pest control products, quality Cenex lubricants, LP bottle fills, wild bird seeds, farm and home products and so much more to support the country lifestyle.
Stop in to meet our friendly staff and see all that your CHS retail stores have to offer. Let us show you why we should be your first stop for the things you need to make the country life a little more rewarding.
Exciting news in the energy department! We are moving all our fuel delivery and propane bobtails to a new in-truck software called Energy Force. Our old software was good but getting outdated. With this new software, we will be able to tie the tank monitors to the system and that will optimize the routes and plan our deliveries every day.
This will greatly improve our efficiencies and maybe even help the drivers schedule so they are home at night enjoying time with their families. Of course, as with any change, they are some bumps to work through, but it is starting off smoothly. Please be patient with us as we implement this new software but rest assured, we are doing our best to make the transition as smooth and seamless as possible for you, our patrons.
If you have any questions feel free to call our office: 507-289-4086
Plots are looking strong and have been helped by excellent planting conditions and timely rain. Timely rain will need to continue as we are roughly 5 inches of precipitation behind the 30 year average and as plant uptake increases during the reproductive (R) stages. For instance, corn uses 0.25 – 0.32 inches per day at R1 growth stage. Many plots were planted early and have accumulated 150 GDUs (or more) above than the 30 year average. This combination has pushed us a week or two ahead of where we would “normally” be at for corn and soybean growth stages. The most surprising is how far soybeans have come. In some plots, we flowered before the Summer Solstice! Currently, we are in the R3 growth stage in soybeans, which usually occurs late July or early August.
We just applied a foliar fungicide to the corn and soybeans. CHS Acuvant™ was helpful because we were early on the corn. Acuvant is NPE-free; therefore, it will not cause arrested ear syndrome in corn. We are seeing significantly better canopy penetration as well as leaf coverage with Acuvant.
Strongest third-quarter net earnings since 2014; $50 million of additional owner equity redemptions authorized in 2021
CHS Inc. released results for its fiscal third quarter ended May 31, 2021. The company reported net income of $273.6 million compared to $97.6 million in the third quarter of fiscal year 2020, an increase of 180.2%. Significant year-over-year earnings growth in all business segments — Energy, Ag and Nitrogen Production — and Corporate and Other businesses each contributed to the increase.
Reflecting strong company performance, the CHS Board of Directors has approved $50 million in additional equity redemptions to member cooperatives and individual owners since the December 2020 CHS Annual Meeting. The increase is incremental to $33 million in approved equity redemptions announced at the 2020 annual meeting, for a total of $83 million in planned owner equity redemptions in fiscal 2021. A distribution of $30 million in cash patronage was also made to owners in early calendar 2021, based on business transacted with CHS in fiscal 2020.
“Robust performance across CHS resulted in a very strong third quarter,” said Jay Debertin, president and CEO of CHS Inc. “Strong global demand in agricultural markets and the hard work we have been doing to gain efficiencies across our supply chain led to higher volumes in nearly every business area, significantly improving our Ag segment earnings compared to the prior year’s third quarter.
“We also are seeing increasing momentum in pandemic recovery as restrictions ease and vaccination efforts progress, which has had a favorable impact on our Energy segment results and overall performance.”
Fiscal 2021 third-quarter highlights
Revenues of $10.9 billion grew 50.9% from $7.2 billion in the third quarter of fiscal 2020.
Earnings were up by more than 40% across all business segments (and Corporate and Other businesses) compared to both the second quarter of fiscal 2021 and the third quarter of the previous fiscal year.
Energy segment results
Improved refined fuels margins resulted in fiscal 2021 third quarter margin gains, as did the absence of a $42.0 million noncash charge to reduce refined fuels inventories to their market value that impacted the prior year’s third quarter, but did not reoccur in the third quarter of fiscal 2021.
Improved margins in the company’s refined fuels business were partially offset by significantly higher prices of renewable energy credits that had a negative impact on margins of approximately $82.0 million, less favorable pricing on heavy Canadian crude oil and lower propane margins due to the reversal of hedging gains recognized during the prior year.
Overall, revenues increased by 24.2% and earnings increased by $59.6 million over the fiscal 2021 second quarter, reflecting volume and margin recovery from the effects of the pandemic.
Ag segment results
Strong global demand drove commodity prices higher, and improved trade relations between the United States and foreign trade partners led to continued higher volumes for grain and oilseed, which significantly improved Ag segment earnings compared to the prior year’s third quarter.
Higher overall margins were partially offset by mark-to-market losses for certain processing and food ingredients products, which the company expects to reverse over time.
Lower volumes of feed and farm supplies were partially offset by increased volumes for agronomy products, stemming from stronger demand due to favorable weather conditions, compared with the previous year’s third quarter.
Other focus areas
Nitrogen Production segment earnings increased in the quarter due to higher income attributed to increased sale prices of urea and urea ammonium nitrate.
Favorable market conditions for edible oils and a recovery in sales volumes compared to earlier in the pandemic drove significantly increased income through the company’s investment in Ventura Foods, LLC.
Focused cost-reduction initiatives, launched in fiscal 2021, continued to gain traction in reducing year-to-date marketing, general and administrative expenses.
The company began to bring employees back to its global offices in full or hybrid capacities as pandemic restrictions lifted. The costs of these activities are not expected to be material.
For the nine months ended May 31, 2021, CHS reported net income of $305.0 million versus $401.0 million for the same period in fiscal 2020.
“We are encouraged by overall improvements in the global economy and the positive traction we’re gaining at CHS with initiatives focused on working more efficiently and effectively throughout the enterprise,” said Debertin. “We are optimistic conditions will continue to improve over the next 12 months. The resilience of our employees and their commitment to our owners and customers has been inspiring and we look forward to the future and continued shared success.”
This document and other CHS Inc. publicly available documents contain, and CHS officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the “Risk Factors” discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2020, and Item 1A of Part II of CHS Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2021. These factors may include: changes in commodity prices; the impact of government policies, mandates, regulations and trade agreements; global and regional political, economic, legal and other risks of doing business globally; the impact of the ongoing COVID-19 outbreak or other similar outbreaks; the impact of market acceptance of alternatives to refined petroleum products; consolidation among our suppliers and customers; nonperformance by contractual counterparties; changes in federal income tax laws or our tax status; the impact of compliance or noncompliance with applicable laws and regulations; the impact of any governmental investigations; the impact of environmental liabilities; actual or perceived quality, safety or health risks associated with our products; the impact of seasonality; the effectiveness of our risk management strategies; business interruptions and casualty losses; the impact of workforce factors; our funding needs and financing sources; changes in the method of determining, or the replacement of, LIBOR; technological improvements that decrease the demand for our agronomy and energy products; our ability to complete, integrate and benefit from acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary course-of-business events; security breaches or other disruptions to our information technology systems or assets; the impact of our environmental, social and governance practices; the impairment of long-lived assets; and other factors affecting our businesses generally. Any forward-looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.
June is National Safety Month. CHS and Nationwide are proud to share a partnership focused on safety. The following information is provided by Nationwide, the #1 farm and ranch writer in the U.S.*
Safely navigating large agricultural equipment over rural roads to and from the fields is a challenge for even the best drivers. Nationwide reminds farmers to consider the following rules on the safe operation of equipment to help reduce the risk of motor vehicle collisions.
To say grain markets are volatile right now would be an understatement. Let’s start with corn. In the May WASDE report, we got our first look at the 2021/2022 balance sheet. This first look at the carry out for next year came in a 1.5 billion bushels, 250 million bushels than the current carry out for this fall. This was accomplished by using a trend line yield of 179.5 bushels per acre. Since that report corn futures have lost nearly $0.60 in both old crop and new crop. From a basis perspective, there have been wild moves there as well. Demand for ethanol continues to pick up pace as more driving picks up across the country. On the other hand, river and export facilities have seen their demand slip some as lower priced South American supplies start to fill the global market. Despite the 1.2 billion bushel estimated carry out projected for this fall, the market feels tight, meaning there is potential for the market to recover a portion of the recent losses.
On the soybean balance sheet, very little has changed: soybeans are in very short supply. Just a few weeks ago many domestic soybean users were very concerned with supply for this summer which was reflected in the strongly positive basis values paid throughout the area. However, as the futures market put in new highs in early May, producers rewarded the rally and sold more beans than expected. This resulted in a precipitous drop in basis values as crushers became more comfortable with ownership and have opted to slow their purchases.
In spite of the dramatic loses in futures prices recently, it is worthwhile to remember there is still opportunity to protect a profit in this years crop. There is still time. While it is late May, there is a lot of weather to get through before the crop is in the bin. Bullish markets like we have been experiencing recently often give us more than one chance to participate. There are plenty of tools available to help protect these profitable prices, in many cases for more than one crop year. Contracts such as the CHI Foundation contract can protect a floor price while also participating in upside market movement. Other available compass contracts can allow bushels to be priced at a premium to the current market, provided the market stays above a predetermined trigger value. For more information on any of the available contracts CHS has to offer, and how we can help protect these attractive prices, reach out to your local grain originator. We are here to help you.
Spring season was as fast as it ever has been for us all this year. With little rain and good ground conditions most of the crop went in without much for issues at all! We have seen some replant around the area and a fair amount of crusting issues caused by some driving rain and hail in some places.
As we turn the page to post spraying it is going to be more important than ever to make sure you have a robust herbicide program in place. While there are many perks to an early planting including better yields typically; the down side is a longer window that we need to control weeds. We also need to be aware that in many cases our pre herbicides have already been out for 4+ weeks with little moisture to properly activate them. This means we will likely see ragweed and waterhemp start rearing their ugly heads soon if they haven’t already. This rain we are getting will likely give us a bit of “reachback” activity on small weeds but it will not be 100% at all.
As you are finalizing post emerge herbicide programs consider thinking about a layered residual or a sequential pass plan if you have not already. Another thing to think about is checking your adjuvant program. The efficacy of herbicides is heavily dependent on the adjuvant package in the sprayer tank. Consider adding in a product such as Level Best to assist in water conditioning and to speed up the kill on tough weeds and grasses. We have seen significant benefits from the addition of this product in the tank. Read this article on adjuvants from our LIFT academy. Be sure to consult your agronomist about your herbicide plan to make sure it is still the right plan for the weeds in your fields.
Thank you for your continued support and business!
CHS is excited to Welcome three agronomy sales interns for the summer. Read more about each intern below.
Meet Barrent Herman, from Osseo, MN. He is currently attending UW River Falls. In college he is a part of the DTS Fraternity, intramural softball, and crops & soils club. His favorite class is plant science. He was also a NRCS soil conservationist trainee and has been an agronomy intern for other cooperatives. His ultimate career goal is to become a sales agronomist or crop consultant. He is looking forward to learning all the ins & outs of a sales agronomist position. Barrent will be working from our Grand Meadow location.
Meet Jessie Schwartz, from LeSuer, MN. She is an Agribusiness student at North Dakota State University. She grew up on a hog & crop farm. Her favorite class in college so far was her cooperative’s class. She is involved in agribusiness club, accounting club and NDSU Saddle & Sirloin. She has previously interned at Compeer Financial crop insurance and U of M Extension Brown County 4-H Intern. She hopes to use this internship as an opportunity to explore different options at CHS. Jessie will be working from our Claremont location.
Meet Kaylee Wendt, from Eyota, MN. She is currently attending UW River Falls and studying Ag Business. She also grew up on a crop farm. In college she is involved with showing horses on the UWRF IHSA Western show team and on the POAC breed circuit. Her favorite classes have been Ag Markets & Prices and Ag Policy. Some day she hopes to be working full-time within sales at an agribusiness. This summer she would like to gain sales experience and get insight of an agronomist day-to-day work schedule. Kaylee will be working at our St. Charles location.
As you meet our interns please welcome them to the CHS family.