Bumper crop: Prices low, storage short

SALEM, Ohio – U.S. growers may be enjoying a bumper corn crop this growing season, but are facing two consequences as a result: low prices and no storage room.
According to the USDA, the nation is seeing more than 11 billion bushels of corn, 15 percent larger than last year’s record.
“All eastern Corn Belt states, except for Minnesota and Wisconsin, are reporting record corn yields this year. The result is lack of adequate storage space,” said Matt Roberts, an Ohio State University agricultural economist.
Location and yield. Farm location matters nearly as much as yield in the storage crunch.
Lee Lipp, a grain merchandiser for Agland Co-op, said the cooperative’s New Philadelphia branch is squeezed more than the Canfield location, but that’s got a lot to do with yields and the number of farms in each area.
Most Mahoning and Columbiana county farmers delivering to Canfield didn’t have the corn crop into the ground until June, and some never got the acreage planted at all, so there’s less grain to store, he said.
In addition, a paltry wheat crop freed extra bin space for corn or soybeans, Lipp said.
Lipp feels the Tuscarawas County branch is where Agland will really struggle to keep grain moving out fast enough.
“We’ve got plenty of sales on the books, and barge markets [at East Liverpool] help get rid of beans,” Lipp said.
Lipp noted Agland has sold more barges of beans out of its river facility this year than ever before. As of presstime, employees were loading a fourth barge, and Lipp has plans to ship a total of six 60,000-bushel loads by the end of November.
“Those barges have really saved us,” he said.
A good problem. At the Deerfield Farms location in New Wilmington, Pa., they’re re-filling grain as fast as they’re taking it out, sometimes twice as fast, said grain manager Jenifer Weaver. It’s a similar trend at the business’ elevators in both Ohio and Pennsylvania, she said.
“We’re just trying to stay on top of it,” Weaver said.
“It’s a good problem to have. This is what we want, to have more grain than we know what to do with.”
Farmers’ storage spaces are also full, she said, which means they’re bringing their excess to the elevator.
Price equation. “What does this mean? One thing we see is a situation where forward prices are significantly higher than nearby prices,” said OSU’s Roberts. “That’s the market’s way of saying ‘don’t give us your corn. Wait and sell it later’.”
National corn prices currently are sitting at about $2 a bushel, while Ohio corn prices are averaging about $1.70 per bushel.
Forward prices in May, for example, are projected to be 15 cents to 16 cents higher than December prices.
The real problem right now at local grain elevators is getting ownership of grain to fill contracts from farmers wary of low prices, Agland’s Lipp said.
“Farmers won’t sell until they see better prices, 50 cents on corn and maybe $1 on beans, but that won’t be until the crop is packed away in the bins in a few weeks,” he said.
Lipp said yield-heavy farmers will be filling every nook and cranny they can find at home and making deals farmer-to-farmer for storage or corn silage to finish the harvest season.
“With lower prices they’ll be packing it everywhere at home and not paying storage rates. The trend is for prices to work back up over the next few weeks,” he said.
Marketing options. Overall, though, farmers dealing with Deerfield Farms sound upbeat, Weaver said, particularly those who locked in higher prices before harvest.
Most locked in at $2.80-$3 a bushel for corn and $7.40 a bushel for soybeans, she said.
For farmers who didn’t lock in, Weaver said the biggest question now is about marketing options.
Most of these farmers are opting for minimum price corn, which is a better deal than straight storage, she said.
“Having a marketing plan pays off,” Weaver said. “Farmers can dictate the markets, not circumstances. They just need to work with their local elevators and find options.”
In the field. Because of lack of grain storage space on and off the farm, growers are opting to leave their corn in the field longer than anticipated.
Agland’s Lee Lipp said leaving the crop in the field until storage space is freed up should only be a last-ditch effort.
“You’ll sacrifice stalk strength, and with the crop planted as late as it was, there will be even more weak stalks to deal with.
“Get it off now while the weather lets you,” Lipp recommended.