Western Corn Belt faces grain storage crunch
GRAND ISLAND, Neb. — Storage is at a premium in the western Corn Belt this harvest with a record crop, low grain prices and poor basis due to the ongoing trade war.
Basis normally runs 70 cents to $1 per bushel for soybeans in Nebraska, but it is now historically wide and expected to get worse at harvest. Basis refers to the difference between the nearby futures price and the cash price.
Mike Korth, who farms near Randolph, Neb., says the soybean basis in his area has ranged from 80 cents to $1 per bushel in the past, but this year it is the widest he's ever seen.
"Bad — bad as it's ever been. $1.40 for me on new crop, which I think my worst before that was $1.20," he says.
Bart Ruth of Rising City, Neb., is seeing similar basis levels.
"I think my local market basis is $1.22, so $7 beans are not going to pay too many bills," he says.
Since most of the soybeans in Nebraska are sold to China, some elevators aren't even bidding because of the uncertainty of the trade war.
"They can bid, but I don't think anybody's selling. You know, I've heard of a few taking bids away," says Trumbull, Neb., farmer Doug Saathoff.
Meanwhile, other elevators have stopped writing deferred pricing contracts.
"I guess I understand why. They tie up a lot of storage, and they're going to make as much as they can on this basis, too, " Korth says.
So, farmers like Saathoff have no choice but to store the 2018 crop, when the past few years most of the soybeans have been sold at harvest.
"We're just going to tuck it away in our bins as best as we can," he says.
Brad Lubben, Extension ag policy specialist with the University of Nebraska-Lincoln says "We're already utilizing storage. This market says store and deliver later."
Ruth says farmers are confirming they will be storing more this fall, especially soybeans.
"You keep reading about more interest in marketing loans this year than you've seen in decades, and unfortunately, those prices the loans are based on were established ... almost 20 years ago," he says.
As a result, farmers have put up more long-term storage and are even trying to get bins put up yet this fall.
"We've put up 100,000 bushels storage here this fall, late summer," Ruth says. "Not enough obviously."
Grain bin companies have been busy taking orders at farm shows like Husker Harvest Days, as they guarantee a four-week turnaround for a bin.
Al Arndt with Brock Grain Systems said demand is up about 50 percent from last year at this time because so much corn is already being stored already.
Other farmers are looking at piling corn on the ground or using temporary storage, and that's why bagging units have been so hot at farm shows. Nick Platt, with Sioux Steel and Koyker Manufacturing, says they can't keep up on the demand for bags.
"Very very popular," he says. "It doesn't seem like we can keep them enough around. A lot of interest in here today at Husker Harvest and all the other shows. People are looking for alternative storage."
He says the price is also less than a bin which is attractive.
Grain storage will be at a premium until something changes to improve grain prices.
"Every year has its challenges. This is another challenge we're not necessarily used to, but we're going to have to find a way to work around it," says Terry Horky, a Sargent, Neb., farmer.
Says Nebraska Ag Commissioner Steve Wellman, "It looks like soybeans are the crop to store this year and hope for a ... trade agreement that'll help bring some more certainty back to the marketplace and narrow that basis up and create some demand for us."