Weather-related harvest delays recently, coupled with a rapid rate of consumption, may lessen the impact of record-large crops on storage facilities, University of Illinois agricultural economist Darrel Good says.
USDA's September Grain Stocks report showed the inventory of feed grains, wheat and soybeans on Sept. 1, 2014, at 3.528 billion bushels, or 422 million bushels larger than the inventory of the previous year.
Add the estimated grain harvest of 18.806 billion bushels (1.134 billion bushels larger than last year's harvest) and the total fall supply comes to an estimate of 22.334 billion bushels – 1.556 billion bushels larger than the supply of a year earlier.
According to USDA's estimate of on-farm and off-farm grain storage, capacity as of Dec. 1, 2013, was estimated at 23.44 billion bushels.
"Some additional capacity has been added in 2014, but the total fall crop supply this year likely represents about 95% of total storage capacity," Good said. "While overall storage capacity appears to be fully adequate to handle the available crop supply, issues develop because some of that capacity is occupied by other crops and, more important, the location of available storage capacity does not always align with the location of fall-harvested crops.
Still, not all of the supply has to be stored, he says. Because harvest occurs over a relatively long period of time, crops are continually consumed.
Good said that harvest has proceeded more slowly this year than in the recent past due to wet weather in some major producing areas.
As of the Oct. 19, the USDA estimated that 31% of the corn acreage had been harvested, compared to the previous 5-year average of 53%. Soybean harvest has been moving faster, but was estimated at 53% complete as of Oct. 19, compared to the previous 5-year average of 66%.
The slower pace of harvest has allowed for more crops to be consumed as harvest progresses, reducing the overall requirement for storage space, Good said.
Based on USDA weekly export inspection estimates, Good said that the exports of feed grains, wheat, and soybeans from Sept. 1 through Oct. 16 totaled about 625 million bushels.
Based on the USDA's projection of feed and residual use of corn for the 2014-15 marketing year and the recent seasonal pattern of that use, about 1.225 billion bushels of corn were likely used in that category during that same time period.
Similarly, about 800 million bushels of corn were likely used for domestic food and industrial products, mostly ethanol. Feed and residual use of other feed grains and wheat was likely near only 50 million bushels as residual use of wheat is often negative during the fall quarter.
Based on the National Oilseed Processor Association estimate of the domestic soybean crush for September and assuming a normal seasonal increase in October, about 170 million bushels of soybeans were likely processed during that time period.
Based on a typical seasonal pattern, seed, feed, and residual use of soybeans was likely near 150 million bushels, and food and industrial use of wheat and feed grains other than corn would have been near 180 million bushels.
"In total, it is likely that consumption of feed grains, wheat, and soybeans during the period from Sept. 1 through Oct. 16 totaled about 3.2 billion bushels, or about 69.6 million bushels per day," Good said.
That pace of use continues, so based on mentioned figures and week-earlier crop progress results, nearly 16% of the total fall crop supply has already been consumed.
"That magnitude of consumption has substantially reduced the requirement for crop storage capacity, resulting in a modest strengthening of the corn and soybean basis in many areas," Good said.
Good concluded that while overall crop storage issues may be less severe than anticipated, regional issues persist.
"In addition, a more rapid pace of harvest, particularly for corn, is expected to occur [the week of Oct. 20] and beyond as weather conditions remain favorable over much of the production area," Good said. "A rapid pace of harvest would be expected to keep basis levels for corn and soybeans seasonally weak. A typical post-harvest recovery in basis levels, however, is expected."
Source: University of Illinois