Pride Ag Resources 4th Quarter Newsletter

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MANAGER’S DESK

Jerald Kemmerer-CEO/GM Pride Ag Resources

Fall is upon us again, and you can definitely see the colors of the landscape change this fall along with the leaves. As we finish up with the fall harvest, it has been a story of good news and bad news with the weather. The occasional moisture has prolonged harvest and has not allowed the milo to dry down as it should be for this time of the year. But our winter wheat is off to one of its best starts in the last several years. I know we never turn down moisture in Southwest Kansas, but it would be nice to get fall harvest finished up.

With the weather being as sporadic as it has been this fall, the employees have done a great job of working hard during the storms, etc to help you maximize your fall harvest

FOURTH QUARTER 2013

days. The employees have worked several weeks in a row including weekends without a day off, and for that I appreciate their commitment to you the customer and to the coop.

As quickly as we finish the fall crops, we will turn our attention to fall fertilizer application. Our agronomy department has been gearing up for a good run and has supplies full with equipment ready to run. If we can get over a decent amount of acres this fall, it will help us take care of your spring planting needs and wheat top dressing. Please get with one of our agronomy sales staff to visit about our fertilizer programs and application needs.

The two projects we are currently working on is a new chemical shed at Ensign and new ACE Hardware store in Great Bend. We have poured most of the foundation and will

be setting tanks soon along with the completion of the outside of the building so we can be working inside this winter.

There are several local contractors doing a good job on this project and appreciate their work.

The ACE Hardware store for Great Bend is ready and is waiting for shelving and product from ACE corporate.

The employees from several locations have been helping to get the store ready as we are waiting for delivery. We have hired a store manager, and the staff will be putting together a small team of employees to open the first part of January.

In conjunction with the CHS Annual Meeting on December 5th and 6th, a specially selected group of top young producers will participate in the CHS New Leader Institute starting the 4th of

Inside This Issue 2 Safety 3 Ace Hardware - Grain 4 Feed 5 Agronomy – Seed 6 AV Energy 7 IT Department - Board of Directors

December. Over the course of four intensive days, participants will examine in-depth issues and challenges facing cooperatives in agriculture and rural America as well as learning ways they can build their leadership skills to benefit their cooperatives and communities. Sessions feature top-notch professional speakers and agribusiness experts. If you have interest to attend, please let me know.

I hope your yields for your fall harvest bushels were better than you expected. We take pride in helping you with all your production agricultural needs. I hope you have a good Thanksgiving and are able to spend it with your families.

We do appreciate your business!

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Safety Division

Skyler Hayes Safety Director

Cold and Flu Prevention Tips Outbreaks of seasonal flu occur every year, usually during the late fall through early spring in the United States. Everyone will agree that the cold and flu

season is fast approaching, but do you know the difference between a cold and the flu? A cold is a milder respiratory illness than the flu. The flu can result in serious health problems such as pneumonia and hospitalization.

Cold symptoms usually begin with a sore throat, and the sore throat usually goes away after a day or two. A runny nose with watery secretions becoming thicker and darker and congestion follow, along with a cough by the fourth or fifth days. A slight fever is possible although uncommon in adults.

Children are more likely to have a fever with a cold. Cold symptoms usually last about a week. During the first three days of a cold you are contagious, so avoid contacting others. Stay home during this time if possible. If the cold symptoms do not improve after a week, you may have a bacterial infection, which means you may need antibiotics. Cold symptoms can also be confused with hay fever (allergic rhinitis). If the symptoms do not seem to be getting better after a week, check with your doctor to see if you have an allergy or sinusitis.

Flu symptoms are usually more severe than cold symptoms.

Symptoms of flu include sore throat, fever, headache, muscle aches and soreness, congestion and cough. Swine flu is also associated with vomiting and diarrhea. Most flu symptoms gradually improve over two to five days, but you may feel run down for a week or even more.

Pneumonia is a common complication of the flu, especially in the young, elderly or with people with heart or lung problems. If you notice shortness of breath, let your

doctor know. Another sign of pneumonia is fever that comes back after having been gone for a day or two.

The most important thing one can do to prevent the flu is to get a yearly flu shot. A flu shot will vaccinate against the three flu viruses most likely to be a problem that flu season. For several groups of people it is especially important to get vaccinated against the flu.

These include young people older than six months of age, pregnant women, and people with chronic health problems such as asthma, heart or lung disease and people 65 years of age or older. Another group of people who should get vaccinated are health care workers and other people who live with or care for high risk people to keep from spreading the flu to those high risk people.

Children younger than six month are a high risk category for serious flu illness, but they are too young to be vaccinated.

That is why it is so important for people who care for them to be vaccinated.

There are easy and common sense things each of us can do to help prevent the spread of colds and flu. One of those things is avoiding contact with sick people. Also, if you suspect you have the flu you should stay home for at least 24 hours after your fever is gone, except to get medical attention.

If you are sick, you should limit your contact with other people as much as possible. Cover your nose and mouth with a tissue if you cough or sneeze, and throw the tissue in the trash when you have used it. Wash your hands with soap and water, and if no soap and water is available use an alcohol based hand rub to help sanitize your 2

hands. Touch your eyes, mouth and nose as little as possible, as that is another way to spread the cold and flu viruses. You should clean and disinfect all surfaces and objects that may be contaminated by cold or flu viruses.

time and energy. I do appreciate it. We would like to invite anyone that is in the Great Bend area to stop in and see the store it is looking great.

All the Ace locations would like to wish everyone a Happy Holiday season and a prosperous new year.

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ACE HARDWARE

GRAIN DIVISION

Jack Lane, Ace Manager

We continue to work on the new Ace Great Bend location.

Most of the inside remodel work is complete. We are expecting product and shelving to arrive the 2nd of December.

We will have a crew there to set all the product and shelves. We are planning a soft opening the 2nd of January and a grand opening the first week in April.

I would like to welcome Mike Fortkamp to the team. He will be the new manager at the Great Bend location. He is training in the Dodge City location so for you that have not met him stop in and get acquainted. I would also like to send out a big thank you to Carl Varner and Rich Lind from the Maize location.

They have been helping me get the Great Bend location ready and have contributed a lot of

Tim Lehman Grain Merchandiser

We saw market action in the wake of the 2012 drought that is unlikely to be repeated any time soon. In 2013 and 2014, the market’s function will transition from rationing to encouraging consumption. First, a look back.

Extreme Markets The four futures contracts linked to the 2012 corn crop (December 2012, March 2013, May 2013 and July 2013) reached highs in August 2012, a classic

illustration of the adage that “short crops have long tails.”

Similar patterns were seen with the drought years of 1983 and 1988. The adage describes a price pattern that shows a sharp move higher, followed by what looks like a long tail, as prices slowly retreat to the level seen before the supply shock . Soybean futures prices generally followed the same pattern, peaking in September 2012 for the November 2012, January 2013, March 2013 and May 2013 contracts. The July 2013 contract didn’t reach its high until the delivery period in the first half of July, although that high was still lower than the November contract traded earlier. While higher futures prices worked to lower overall consumption, cash basis levels helped to allocate consumption across location, and time spreads (price differences between delivery months) helped allocate consumption across time. The allocation across time occurred because higher nearby prices ncentivized delaying consumption.

While the futures prices peaked early, the cash basis (the difference between futures market price and local market price) and intra market spreads (the difference between nearby futures price and the futures price for later delivery) continued to strengthen through the season.

As an example of the strength in cash basis, central Illinois corn basis averaged 29 cents higher than normal from January through mid-July, and soybean basis was 42 cents higher than average over the same time frame.

In time spreads, the July-toDecember spread eclipsed the 3

record set in 1996 by a few cents, topping out on a closing basis near $2. In other words, corn in July was $2 higher than corn for December delivery.

The July-to-November soybean spread reached a settlement price near $3.60, setting a new record by about $1.50.

Looking ahead to 2013 crop futures markets, spreads weakened through the first half of summer as confidence in the 2013 crop grew. For example, the December-to-March corn spread by mid-July was at the level that nearly covers the cost of taking delivery on the December contract — paying for storage and interest — and re-delivering against the higher priced March contract.

As the new-crop marketing year begins, basis levels appear to be on track to be higher than average while users restock and storage fills up.

Closer Look at Corn Demand With production dropping by 13 percent, U.S. corn demand during 2012–2013 was trimmed by 1.3 billion bushels to the lowest level since 2004–2005, an 11 percent decline. How will corn demand rebound from the drought-related rationing?

As of this writing, USDA estimates use will rebound to 12,750 million bushels, which is 14 percent above 2012–2013 and 2 percent above two years ago.

Of course, usage always rebounds to some extent in the year following a short crop when production rebounds, but does the demand base show a lingering effect from drought year rationing?

To find out, we compared total use in the years on either

side of the rationing years. We identified five years with similar or greater declines to 2012 in both U.S. production and use: 1974, 1983, 1988, 1993 and 1995. The results are mixed, but generally show a limited lingering effect.

In three of the years following drought, demand fell short of the pre drought level and in two of those years exceeded it. For example, after the 1988 drought, 1989 total use was 5 percent higher than the pre drought level in 1987, a bigger increase than what’s predicted for 2013–2014.

In theory, domestic demand now should have an easier time rebounding due to the higher percentage of use for ethanol, which is not dependent on rebuilding herds like feed use is.

If a demand market develops, a strategy of locking in higher, deferred futures prices and watching for appreciation in basis levels may give growers a nice risk-reward opportunity.

Southern Hemisphere in what was locally the 2011–2012 marketing year and arrived in the Northern Hemisphere in the 2012–2013 marketing year.

Complicated accounting aside, the point is that world corn users found alternative supplies, shrinking the U.S. share of the world export market, but not lowering overall demand.

The continued growth in world demand means opportunities for U.S. farmers to protect profitable production margins should continue, but may be more short lived due to new competition from Ukraine and second-crop Brazilian production.

By Tim Emslie

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FEED DIVISION

Export Competition On the export side, it’s interesting that total world demand did not shrink in the face of the U.S. drought.

USDA’s trade-adjusted balance sheet most commonly cited shows a decline of about 2 percent, but the sum of all use by individual countries shows about a 1 percent increase. The discrepancy lies in reconciliation required to put both Northern and Southern Hemisphere crops into the same 12-month balance sheet.

What happened? Demand in the Northern Hemisphere was satisfied by Southern Hemisphere supplies more than usual, meaning corn left the

Dustin O’Neill Why it is important to supplement your beef cow herd through winter?

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Howdy folks! Winter time is here! Are you prepared to maintain your cow herds’ body condition in your feeding program? What can we do to keep our cows in good body condition?

First off, I would like to properly introduce myself to you, as your new feed salesman at Pride Ag Resources. My name is Dustin O’Neill; I have accepted the position Galen Frick has retired from at Pride Ag Resources in Dodge City, Kansas. To make the long story short, I was raised outside of Spearville, Kansas on a small farm, where we raised variety of show performance livestock. I have recently graduated from Kansas State University with Animal Science production and management degree. Through my education and experience from feeding our own livestock, I have the ability to help you and your livestock to perform at their ultimate in the show arena or grass pasture.

With the August rains, the cows have been maintaining body condition and are now in moderate condition ready for fall. The dry fall has reduced the native grass production and forage intake for winter grazing.

Some cattlemen have weaned calves to minimize cow nutritional requirements and maintain body condition.

OSU research has shown that cows which maintained body weight and therefore energy reserves (body fat) before parturition exhibited estrus sooner than cows that lost weight and had depleted energy reserves. Protein supplementation with adequate forage is designed to maintain the good condition cows achieve from summer grass.

Cows with low condition scores require greater supplementation and management. We like to utilize a 1 – 9 body condition score system as a practical way to monitor the status of beef herds.

For economic stability and beef herd production, cows should be in condition score 5 – 6 at calving.

helping manage body condition through the winter-feeding season.

If you need any information about RangeLand® Protein 30-13 Tubs. Give me a call at 620-338-0591 or e-mail me at doneill@prideag.com. We look forward in assisting you in feeding your beef cow herds.

God bless,

-----------Date

Wheat Corn Milo Soybean

7/5/13

6.52

6.47

5.78 14.28

8/2/13

6.87

6.14

5.32 10.82

8/19/13

6.83

6.31

5.49 12.03

9/24/13

6.85

4.57

4.12 12.08

Last Year –Nov., 2012 AVG.

8.47

7.63

7.07 13.56

AGRONOMY RangeLand® Protein 30-13 Tubs are a free choice supplement designed for beef cattle on forage diets providing less than 8% protein. The low moisture, cooked molasses products in biodegradable fiber or non-returnable plastic containers will enhance intake and utilization of available forages, while reducing labor for producers. Placement of tubs can also influence grazing patterns within a feed source.

Place tubs in under-utilized areas to entice grazing in that area. RangeLand® Protein 3013 Tub provides supplemental protein, energy, vitamins, and trace minerals economically, this product contains no added salt, therefore, supplemental salt should be offered at all times. It is an ideal supplement for

Lawrence Baxa

Sales/Agronomist Planning for profitability! In 2014 As I sat to write this article I pondered what agronomic or crop production topic might be best for this time of the year with it being the fall season and going into winter and then it hit me. When a producer sits down to see where he is at after harvest he is not only figuring 5

what his crop yields were and how his production decisions fared this year, he is also looking at where he came from and thinking about where he wants to go. Both thoughts lead to the same place making a profit. Whether it is to provide a living for his family, upgrade facilities and or equipment or add acres to the operation. It is the bottom line that we all strive to improve.

Improving the bottom line is something that requires a mix of planning and hard work and in some cases a little luck. So many times we get caught up in the individual component of production such as the price per ton or unit of fertilizer and chemical or gallon of fuel or the price for a bushel of a commodity be it corn or wheat or milo etc. Not realizing that what it means in the overall cost per acre might be a small amount, a producer might lose a dime to save a penny. This thought works in livestock profitiliby and production as well.

Let’s start planning, now and take the time to evaluate what worked and didn’t work in 2013. This can be anything from your chemical program, to fertilizer application, hybrid selection, clear through to grain marketing, if we can figure out what the most limiting factor was in your production operation, your Pride Ag staff can help you analyze what your production costs are to help you figure where to make sales to get the kind of profit margin you are looking for. We can plan ahead and do this during the winter months so all that is left when the spring season gets here is to execute the plan.

Actions can already be put in place so when time hits you will be able to do what you do best, getting the work done!

With winter time here and the thanksgiving and Christmas holidays it is a busy time. You can count on your Pride Ag Resources team to have the products, knowledge and support, to help you get the job done and return value to your bottom line.

It will be spring time before you know it! Merry Christmas and Happy New Year!

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AV Energy

will begin our next fill after Thanksgiving.

During our down time we have been busy finishing up our five year safety checks and changing outdated regulators.

For all propane customers we are required by state regulations to not only perform a safety check when you first become a propane customer, but to also do a follow up inspection every five years. We do not charge for the five year inspection, we do them for your benefit as well as ours.

The propane markets have started out quite high this heating season then we have seen the last couple years and it looks as if they will remain higher throughout the season.

There is a couple reasons for the higher prices, one is we are going into the heating season with lower inventories then we normally have this time of year.

The other is the grain drying in the north has used a lot more propane then normal and the availability of product in that area has put on the entire Midwest in a bind with their deliveries.

REFINED FUELS

Chris Klein

As we see Fall go by the wayside it is time to turn our attention to winter and what we have to look forward to in the next couple months. Before I start my rambling about winter fuel and propane safety I would like to wish everyone a happy and safe holiday season.

PROPANE As of the end of October we have finished our fall routes and

As most of you have noticed we began November with some of the lowest prices we have seen in quite some time, which I hope you have been able to take advantage of. Some of our customers have locked in their fuel supply for next summer and I believe they will be very happy with their price when it comes time to take delivery.

What some of you may or may not know is that all the diesel fuel sold through Pride Ag and AV Energy cardtrol 6

locations between November and March is blended with #1 diesel. Blending #2 diesel with #1diesel lowers the cloud point of the fuel making the fuel less likely to freeze in colder temperatures. Most of the fuel we purchase comes from the terminal with a cloud point around 14º, when we add our winterizer package and blend the fuel with at least 30% #1 diesel the cloud point is dropped to around 10º below zero. With the high amount of schools, ambulances, police and fire departments using our fuel we would rather error on the side of caution then to have someone stranded in the middle of a blizzard.

Please feel free to give Terry Summers or myself a call with any question or comments you may have.

Happy Holidays,

IT Department

Richard Broz rbroz@prideag.com Pride Ag Resources IT Manager

Pride Ag Resources would like to invite you to browse our website www.prideag.com.

This site is updated daily with local and national news. We try

to inform you what is happening at our local branch locations.

The website will provide you information on our departments, coop news, and employment opportunities. Use it to look at your local Grain and Overnight cash bids. (These prices reflect a 10 minute delay).

Our feature this month will be Patron Access.

Features: • Access your accounts 24/7, with the ability to view multiple accounts.

• Summary and detail information and the ability to print copies of A/R tickets.

• Grain tickets available when YOU have time (after daily Updates are complete).

Sign up to receive daily cash bids by emails and text messages.

Welcome to Patron Access!

As patrons of Pride Ag Resources, you will now be able to access your accounts receivable balances as well as individual invoices, grain receiving accounts, grain contracts, prepaid and booking balances, And equity balances. You will also be able to pull volume statements for the year.

Patron Access is located in the navigation bar on the left side of our Web site (www.prideag.com). If you are new to Patron Access, please choose “New Account Request.” When the information is completed and sent, an e-mail will be forwarded to the main office. We will set up the accounts you requested and advise via e-mail when this is complete. After that, you simply sign on using your own username and password that you created. Only you have access to your accounts.

BOARD OF DIRECTORS Scott Mac Nair ........................ Chairman Tony Bleumer... .............. Vice-Chairman Clint Hamilton ......... Secretary-Treasurer Jeremy Derstein ........................ Director Butch Irski ................................. Director Jeff Reinert ................................ Director Bruce Giessel ............................ Director Toby Whipple….........Associate Director Jeff Breuer…..……….Associate Director Jerald Kemmerer………………CEO/GM Debby Kennedy….......Newsletter Editor

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Pride Ag Resources 4th Quarter 2013 Published quarterly by the

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