As we look forward to another planting season, we would like to talk about an important part of our business – SAFETY. In today’s agribusiness, the safety of our employees and our customers has become a huge part of our culture. In an effort to focus on being compliant with OSHA standards and regulations from the MN Department of Agriculture, CHS feels communication is the best avenue.
Anhydrous ammonia has long been a great fertility tool for many producers, while also presenting the greatest of scrutiny and risk to those of us handling the product. We continue to see tougher restrictions and penalties for those who do not follow proper protocol when it comes to the safety of handling NH3. OSHA rulings state that we as a retailer must operate under the same regulations as a manufacturer. Along with this letter is a checklist from the Department of Agriculture that our business must follow when evaluating NH3 equipment and tanks at our locations. We will not be able to fill tanks that do not meet the standards on the checklist. Our employees will be very diligent in making sure we are compliant with these standards. The hope is that you, our valued grower can use this list when evaluating your NH3 equipment for this spring. Our staff will be happy to provide resources to help you in getting your tanks up to code. CHS is dedicated to everyone’s safety, and if we work together, we can succeed in keeping NH3 a viable resource now and in the future.
Grain markets since the beginning of the year have been on a tear. Opportunity has been abundant to retain profits, forward contract new crop for profitable values, and to manage risk. The recent planting intentions report from March 31st paints the picture of continued tight stocks for the 21/22 growing season. Both domestic and export demand continues to be strong for corn and soybeans as we enter the planting season. All signs point to steady/ firmer markets. But also keep in mind a good growing season should bring quality yields. With the recent rally we may see the planting report on June 30th show larger planted acres of corn and soybeans than were noted on the March 31st report which might bring pressure to markets come late June into July.
The next big wild card is weather. A lot of conversation of drought pressure and warmer temps throughout the summer which could put pressure on pollination. As we can’t predict the future, one thing we can do is protect profits. There are certainly contracts available to protect profitable values as well as leave room for further improvement. Our Compass programs can bring added value like the foundation, price builder, and daily price contracts. Min price contracts could be used to open up participation in any rally to come. Min/max offers a floor to protect profitability today, but allows room for further participation in any rally. Bullish markets are exciting and fun. Don’t let the party end and be left without a way home. Sales in the next 60 days should be considered as we begin to finalize some unknowns like planting progress, export demand strength, feed usage, and early growing season moisture levels.
You can contact our grain team to help you decide what contracts would fit best for you!
Over the last year, we have all seen and almost become accustomed to disruptions in the supply chains for goods and services. Because of this we want to inform our customers on some of the challenges we are facing in the supply chains of the products we use each day in your fields.
It comes as no surprise that agricultural products are not immune to supply challenges. There are several reasons for these delays, and they all compile into a domino effect of sorts. Here we’ll highlight some of the main challenges, but please keep in mind CHS is in a good position on most of these products today and are continually sourcing more with the help of our teammates at CHS Agronomy.
Zinc 9%
Many of the ingredients needed for this product are made at a factory in Texas. The cold snap Texas had caused severe plant damage and ultimately product loss. Most wholesale companies have removed this product from their price sheets and retailers are not able to order any.
Remedy – We are fortunate that as CHS we have access to our own branded Levesol Zinc and have ample supply of this superior product.
A factory that makes large quantities of these products had a massive fire late in February. This put pressure on other manufactures of these products late in the production season.
Remedy – CHS took early positions on BASF Liberty 280SL late last summer and have enough on hand to cover prepays. We also are fortunate to partner with CHS Agronomy for our Clethodim needs (Gatlin). We also have access to Fusilade DX from Syngenta that is an excellent volunteer corn herbicide.
In-Furrow Insecticides
Many brands are running out of supply of these products. A decrease in demand over the past 5-7 years has reduced production. Crop prices and insect pressure have increased significantly combined with delayed logistics have caused a severe bottleneck in the system.
Remedy – CHS Agronomy planned for some of this and does have supply of a couple brands, but they are selling quickly. If you have not already planned your needs for these products please do so with your agronomist, we have only two types available.
All other products
Raw ingredients are challenged for multiple reasons, some because of Covid shutdowns, some do to freight logistics and others do to consumer products commanding a larger portion of the shipping availabilities. We are also seeing some issues in the availability of packaging products. So, once the herbicides/insecticides are manufactured they are being held up because there aren’t enough plastic jugs or even cardboard boxes available.
I do not write this with intention of using scare tactics to make you run out and buy more products just to have. My goal is to inform you of the supply challenges we are working with and through. My ask is if you have concerns please contact your agronomist and make sure you have a plan in place. Please know and understand that we are working with our vendors to make sure we minimize the impact of these challenges.
Thank you for your continued business and support!
Written by Jordan Thiel, CHS Agronomy Sales Manager
CHS Inc., the nation’s leading agribusiness cooperative, today released results for its fiscal second quarter ended Feb. 28, 2021. The company reported a net loss of $38.2 million versus net income of $125.4 million in the same quarter in fiscal 2020. Significant year-over-year earnings increases in Ag and Nitrogen Production segments and Corporate and Other businesses were offset primarily by ongoing COVID-19 pandemic-related impacts in Energy.
“Improved trade relations between the United States and foreign trade partners combined with our operating efficiency initiatives led to record grain and oilseed volume increases and continued price gains, significantly improving our Ag segment earnings over the prior year,” said Jay Debertin, president and CEO of CHS Inc. “Additionally, favorable growing conditions and overall strength in agriculture, helped drive demand for crop inputs, including crop nutrients and crop protection products and services.
“Our Energy segment, while showing improvement over the previous quarter, continues to experience unfavorable refined fuels market conditions related to the COVID-19 pandemic and exceptionally higher costs for renewable energy credits. These factors resulted in volume and margin declines that significantly reduced earnings compared to the prior year.”
Fiscal 2021 second-quarter results reflect:
Revenues of $8.3 billion versus $6.6 billion in fiscal 2020 second quarter, a 26.1% increase.
Energy segment impacts that include:
Continued low refining margins stemming from COVID-19-impacts on global energy demand.
Exceptionally high costs of renewable energy credits, which decreased margins.
Decreased propane margins and volumes due to warm winter weather conditions across the CHS trade territory during most of the fiscal 2021 second quarter.
Modest improvements over fiscal 2021 first quarter as volumes and margins began to rebound.
Ag segment impacts that include:
Favorable weather conditions and improved relations between the U.S. and foreign trade partners, including China, that increased volumes of grain and oilseed commodities as well as feed and farm supplies.
Higher margins for certain agricultural products, including processing and food ingredients, which improved because of soybean crush strength.
Enterprisewide initiatives that include:
Focused cost-reduction initiatives launched in fiscal 2021 that helped reduce marketing, general and administrative costs.
COVID-19-related working arrangements and increased hygiene and infection-control processes to mitigate risk and support business continuity – all CHS operations were deemed to be essential infrastructure industries by federal and state governments.
For the six-month period ending Feb. 28, 2021, CHS reported net income of $31.4 million versus $303.3 million for the same period in fiscal 2020. Revenues for the first six months of fiscal 2021 rose to $17.0 billion, a $2.8 billion, or 19.8%, increase from $14.2 billion in the same period the previous year.
“I am encouraged by the resilience of our employees and their commitment to owners in what continues to be a challenging operating environment,” said Debertin. “We are cautiously optimistic about the rollout of COVID-19 vaccines and other progress being made in response to the pandemic in the U.S. and around the world and the potential impact on our domestic and global businesses.
“As we look ahead to the second half of fiscal 2021, we remain committed to protecting the financial health of CHS, adding efficiency throughout our enterprise to benefit owners and customers, and caring for those who depend on us as we continue creating connections to empower agriculture.”
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 Report 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, 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. 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.
