Iowa Farmer Today
05-20-06
Storage new marketing factor
By Gene Lucht, Iowa Farmer Today
Farmers in Iowa need to face up to one fact this summer — storage and access
to storage will affect just about every part of their marketing plans for corn and
beans.
Builders of grain bins are heavily booked this summer, so farmers who haven’t
signed a contract but who think they may want to build any new storage should
contact those builders quickly, advises Steve Johnson, Iowa State Extension
farm management specialist.
“You better step up,” he says bluntly.
But, just as important is the access to storage.
Many grain elevators are still almost full with 2005 and even 2004 crop grain,
Johnson explains. Those elevators generally need to have ownership to put grain
on the ground.
That means if you plan to deliver grain to a local grain elevator this fall, you may
need to either give up ownership or perhaps to accept a contract to pay a
minimum of a certain number of months of storage.
“We have a tremendous storage crunch,” Johnson says.
It isn’t going away anytime soon because the storage dynamic has changed. A
large part of that change is because of ethanol and the continued push toward
more local value-added efforts.
It wasn’t long ago that a large percentage of the corn and beans grown in Iowa
went through a local elevator and then ended up on a train or a barge out of state
or the country.
Today, more of that corn is headed toward local ethanol plants and other valueadded facilities. But, the ethanol plant owners don’t want to take all the grain at
harvest and then act as an elevator and store it till they need it months later.
That means farmers and elevators need to keep more grain locally longer.
What’s more, if the local elevator isn’t aligned with a specific ethanol plant, the
storage costs may end up making that plant look a lot less attractive.
There is the additional factor of grain quality. If grain is stored in flat storage for
months or even years, there is a greater chance of quality problems. That’s why
bin builders and even builders of metal buildings with concrete floors are very
busy this summer, Johnson says. Everybody is building grain storage.
Access to semi-trucks or other transportation could be an issue for some
farmers. All farmers need to consider what these apparent structural changes will
mean for their marketing plans and on-farm facility and transportation needs.
One factor some farmers may not have considered is the fact storage shortages
may mean a continually wide basis this summer and into the future.
That may be especially true for soybeans as the ending stocks on Sept. 1 are
likely to be record highs, and so far there has been a dearth of old and new crop
sales for beans.