ELY, Iowa — Lower prices could cause issues at grain elevators this harvest season.
At one elevator in eastern Iowa, the concern comes with emptying last year’s crop in preparation for the 2018 harvest.
“We are trying to get our bins as empty as possible,” said Mark Krob, manager of FJ Krob and Company in Ely, Iowa. “With the prices being as low as they are, we aren’t in as good of shape as we’d like to be. People aren’t selling their corn and beans out of storage, so there is more carryover from last year.
“A couple of weeks ago, we had about twice as much in storage as we did last year. Hopefully we’ve moved some of that, but that’s going to be a challenge.”
If worse comes to worst and the bins start to overflow, Krob said he has plans to deal with it.
“We will be pushing the concept of minimum price a little harder,” Krob said. “They (farmers) sell their corn, but that gives them the option of taking advantage of a higher price later on in the year. It’s about the same amount as storage, so as long as they are paying for storage, they might as well be buying one of these contracts that puts a floor on their price and they can pick up any benefit in the market should there be any.”
These contracts are important for Krob as well, as they allow him to plan for space. He won’t turn people away, but if storage is full, he may have to tell farmers they will have to sell right away.
Grain elevators have seen the increasing need to handle more bushels quicker, says Chris Klenklen, Missouri Department of Agriculture’s division director for grain inspection and warehouse.
“This year may be an exception, but we’ve seen increasing yields,” he says.
Klenklen says about a dozen grain elevators in his state have rail lines to help keep the grain moving and clear space for new arriving crops. The Central Missouri Agri Service grain elevator in Marshall recently added a railroad loop at their facility, and MFA opened its Hamilton Rail facility in northwest Missouri in 2017.
Klenklen says trains give elevators the ability to move as much as 450,000 bushels at a time.
“They’ve made the investment in the grain leg, so they want to keep it busy,” he says. “(Having a rail line) has been very helpful.”
But the cost of commercial storage can be out of reach for some farmers, said eastern Iowa farmer Robb Ewoldt.
“Most of the time for commercial storage, (the cost) is pretty high and you can’t justify having it,” he said. That’s why he invested in his own storage.
“It’s definitely paying for us to store beans on our own. They want you to pay a premium for storage on beans, so we don’t want to do that.”
Farmers who store on-farm are also emptying bins.
“This time of year, I call it the tin-can harvest, meaning we are emptying all the bins in the country and the bins here,” Krob said. “Everyone who didn’t do something sooner, they want to do something now. It’s almost like a pre-harvest harvest.”
With harvest kicking into full swing across the Midwest, things will get busy for the elevators. However, that’s business as usual for these groups.
“I expect things will get pretty heavy within a month,” Krob said. “A lot depends on rain. A nice thing (for us) about rain breaks is it gives us a chance to catch our breath and move stuff into town to processors or terminals. If it doesn’t rain, we just go-go-go. At this point, we are looking like we’ll be done by Halloween.”
With additional reporting by Benjamin Herrold.