With down markets and uncertain weather in parts of the Midwest, many grain bins are still full.
Rising rivers could present one challenge for moving grain this spring, but Scott Masters, grain merchandiser at Farmers Elevator and Exchange in Wapello, Iowa, said his elevator hasn’t run into issues so far.
“One-hundred percent of our logistics are via truck, so we haven’t really had any logistics problems,” he said. “We might be running into some small ones with the river coming up (in eastern Iowa), with farmers who might want to get their grain sold to the river.”
He said much of the traffic that would be affected by the rising river levels would be soybeans, as most of their corn intake goes to the nearby GPC or Big River Ethanol plants.
Masters said he has noticed slowing of some selling. Normally he would buy from a few farmers each day.
He said that reluctance might cause a pinch later in the year.
“It does happen where guys get reluctant and they end up hanging onto it,” Masters said. “All of a sudden, we haven’t emptied (our space) the way we normally would want to, but they are still going to bring in their crop because they don’t have anywhere to put it.”
Some farmers may be waiting on the hopes of a new U.S.-China trade deal, which would significantly boost demand for U.S. soybeans.
Scott Irwin, the chair of agricultural marketing at the University of Illinois, said that’s a risky proposal.
“You are making one heck of a bet and paying a lot of storage,” Irwin said. “I think that’s an awful lot of risk, and I would recommend you spread your risk. I wouldn’t want, personally, to be speculating on a trade deal quite that heavily in terms of how much I have stored.”
He said the major issue is the carryout numbers the United States is currently seeing. Depending on what estimates people are using, Irwin said the soybean carryout number ranges from 900 million to 1 billion bushels. To draw that down will take luck, poor weather or a very favorable trade deal.
“To get us back down to a 400 million bushel carryout, we would have to drop the U.S. average soybean yield between 7 and 8 bushels an acre to get us back down even to that,” Irwin said. “That would historically be considered relatively plentiful stocks.”
The uncertainty puts more pressure on local elevators as well.
Masters guessed that what is going to be forward contracted for this fall is already baked into the market, and he expects less to be forward contracted this season than in the past.
“The grain market is forcing us, at least here, to look further out into the future to move our grain,” he said. “We are going to be emptying this facility out later than we normally would. Hopefully that shouldn’t really affect guys bringing their grain here during harvest, but it will affect how we handle it post-harvest.”