Newsroom & Financials

Record Crop Yields Lead to Grain Storage Crunch Higher Profits For US Elevators

Posted 12/7/2016

Exceptional harvests have created a storage capacity crunch at U.S. elevators and are contributing to a brighter economic outlook for elevator operators, according to a new research report from CoBank.

Record yields of corn, soybeans and grain sorghum are competing for storage space with the large wheat inventories harvested earlier this season. At the same time, futures markets are also incentivizing farmers to store crops well into next year. As a result, the value of grain storage space is on the rise, and storage shortages have been widely reported across the Western Corn Belt, and Central and Southern Plains regions.

“This year’s crop abundance is a welcome change for grain elevators that suffered depressed profits last year,” says Tanner Ehmke, a senior economist at CoBank and author of the new report. “With demand for storage being the highest in recent years, elevators will benefit from collecting more on storage fees in addition to capturing substantial carry in the futures market and the ability to buy basis at a much cheaper level than last year.” Read more...

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