Randy Martinson, of Martinson Ag in Fargo, projects economic markets are looking up for farmers after a severe drought in 2021.
Martinson is one of the founders of Martinson Ag, an agricultural risk management company in North Dakota. He advises farmers from North Dakota, South Dakota and Minnesota, helping them find buyers for their crops.
Martinson said South America is now experiencing a drought of its own that gives farmers in the Midwest a chance to gain leverage not only in the national market but the world market as well. In terms of the local market, Martinson is excited at the addition of soybean crushing plants for soy products and the ethanol plants for biofuel.
North Dakota has five biofuel plants, including Dakota Spirit AgEnergy in the Spiritwood Energy Park Association industrial park east of Jamestown.
“It makes it a lot more competitive when we can put products on a semi and send it across the state to another town, rather than sending it on a train to the Pacific Northwest,” Martinson said.
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ADM announced in 2021 that it plans to construct a soybean crushing plant at the site of the former Cargill plant near the Spiritwood Energy Park Association industrial park east of Jamestown. The facility plans to process 150,000 bushels per day of soybeans into oil, meal and fiber, AgWeek reported.
In December, AgWeek reported that Minnesota Soybean Processors announced plans for a partnership with CGB Industries to construct a plant at Casselton, North Dakota. That plant would open in 2024 and process 42.5 million bushels of soybeans in the first year, the companies said.
It is that extra competition that Martinson can really see reviving an industry that was hit so hard by the elements in 2021. Martinson said he is expecting the highest profit and sales margins he has seen in a while in 2022 because of that high number of production and the levels of competition he is seeing from exporters.
“We are seeing a vast amount of overproduction in our area,” Martinson said. “Thirteen to 17 states had record high yields (in corn) this year… we had the largest yield of corn ever and the second-largest corn production ever.”
The soybean fields had an interesting start to their season last year as a hard frost killed a majority of the crop.
“The end of May the hard frost killed a majority of our soy plant, luckily that's covered by (crop) insurance,” Martinson said.
With many farmers having to replant, the critical crop development stage happened after the majority of soy plants did, which increased the yields for soybeans, Martinson said.
If the weather changes back to a more normal pattern, farmers could have better yields, which will lead to “record high levels of products,” Martinson said. Essentially, because of the dramatic loss of product in relation to the drought from 2020-2021, these farms have the ability to alleviate much of the loss because of the amount of production. This creates the opportunity for an “export market” Martinson said, leading farmers to reach a lot more buyers outside state lines as well as in between them.
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The relationship between the markets and farmers is difficult, and Martinson said,“ We have no problem finding buyers, but sellers (farmers) are a little reluctant.” This reluctancy develops based on farmers' expectations of the market.
“Farms don’t sell when prices are going up, but the first drop of a shoe,” Martinson said, “that's when we see crops starting to sell.”
These farms want to get the top dollar for their product, so the emphasis on not wanting to sell is to try and maximize that profit, Martinson said.
Martinson Ag believes that since there is a historic amount of production, these North Dakota farmers will be rewarded.
Martinson will return to Jamestown on March 1 to speak at a farmer meeting and update local farmers on the agricultural markets and projections for the future at 1 p.m. at the Gladstone Inn & Suites.
