by Karl Plume and Tom Polansek
U.S. grain warehouses are filling up so fast with a bumper harvest that they are storing soybeans and corn out in the open despite the risk of damage and even refusing crops from farmers without binding contracts.
The scramble shows that even in the third year of a global supply glut the exceptional yields and weaker than expected U.S. exports still wrong footed some farmers, storage operators and traders, meaning the outlook for farm incomes and prices might get even bleaker than now painted by official forecasts.
Growers, still hoping to wait out the downswing, want to store as much of their crops as possible, but warehouses are rejecting spot deliveries because of a lack of space, in some cases for longer than farmers can remember.
“We're out of storage,” said Richard Guse, a Minnesota farmer who also co-owns a grain elevator. “Our next best option is to find a place to sell it, so you get that harvest pressure.”
Minnesota, Iowa and Nebraska, which account for a third of U.S. corn and a quarter of soybean output, have produced record yields thanks to near-perfect conditions after some bad weather early in the growing season suggested yields could drop.
As a result, farmers in Southwestern Minnesota, for example, are getting paid about 15 cents less per bushel for their corn and soybeans than they would if there was enough space, estimates Ed Usset, grain marketing economist for the Center for Farm Financial Management at the University of Minnesota.
That means an even deeper dent in farm incomes given the cash price for corn in the area is about $3.25 a bushel, already well below the estimated $4 production cost, Usset said.
The squeeze caused by storage bottlenecks comes against a backdrop of South American farmers planting massive crops this fall, adding to record global soy inventories and near-record corn stocks. With the strong dollar weighing on U.S. exports and crop prices already down 50 percent from their 2012 peaks, farm incomes are under pressure, already expected to drop 36 percent this year, according to the U.S. Agriculture Department.
Poor returns could prompt farmers to idle some of their less-productive farmland next spring or devote more to crops that are cheaper to sow like sorghum. They may also cut back on fertilizer or premium seeds, which could drag down yields.
CLICK HERE to read the full article