Record corn and soybean production, along with a larger than expected wheat crop, should stretch the nation’s storage capacity to the breaking point this fall. The percentage of the national grain bin filled could be as tight as it’s ever been over the past three decades, according to Farm Futures analysis. But corn basis, often the victim when mountains of grain pile up, is holding up surprisingly well in many areas, despite the approaching avalanche of supply. That’s an indication of strong demand, and the ability of grain merchandisers to manage ever larger crops.
The percentage of storage filled nationwide could set a record, reaching almost 99% of capacity. USDA forecast growers could harvest 15.2 billion bushels of corn this fall, along with 4.1 billion bushels of soybeans. Coupled with a 2.3 billion bushel wheat crop, not to mention other grains and inventories leftover from last year, and 24.3 billion bushels may need to find a home.
As happens most years, that grain pile will be spread unevenly across the country, because weather helped some farmers and hurt others. Storage should be a little easier to find in the far eastern Corn Belt. Yields are down in Michigan, while bad crops in Ohio last fall should make more space available when combines start rolling there soon. Harvest basis in Toledo is a few pennies weaker than average, but significantly stronger than levels experienced in the wake of the big 2014 crop.
Note: Total supplies include estimated 2016 Sept. 1 inventories for oats, wheat and barley, and 2016 production and Sept. 1 inventories for corn, soybeans and sorghum. Storage capacity assumes growth similar to seen last year. Inventories can exceed capacity because some of the Sept. 1 inventory will be moved to make way for fall crops before harvest.
Production and leftover supplies could exceed capacity in Illinois and Indiana, but that often happens, at least in theory. In practice, any surplus exits that part of the country quickly, moving down river into export markets or by train to Southeast pork and poultry operations.
In its Aug. 12 report USDA put the 2016 corn yield in Illinois at 200 bpa, tying the record from 2014. The crop there might not be an all-time high, however, as farmers switched some ground to lower yielding soybeans. Yields in Illinois were only “so-so” last year at 175 bpa, and production in Indiana was off sharply. Less old crop leftover supplies means conditions there may not be quite as tight as they were in other years when elevators also were forced to use temporary storage.
New crop bids in central Indiana and central Illinois aren’t far from average levels. The fast pace of summer shipments likely is making a little bit more room for the fall harvest too. St. Louis new crop basis is four over, even though Missouri’s big crop could stretch grain storage capacity almost as tight as in 2014.
USDA Aug. 12 also reported record yields coming on in Iowa and Nebraska, with a good year forecast for Kansas as well. All three states could be ready for back-to-back bin busters, with ground piles likely. New crop bids in central Kansas, Sioux City, Iowa and Grand Island, Nebraska, were all weaker than average, though not as bad as in 2014, when railroads were too busy shipping crude oil to haul grain. That problem doesn’t exist this year. Shippers added capacity and the fracking boom went bust.
In Kansas growers expanded corn acreage, and harvested a big wheat crop too, in addition to good crops last year. That could stretch storage capacity to a record.
Grain storage in South Dakota again appears to be less than farmers and elevators will have to put in it. That led to very weak basis levels when farmers began selling 2015 crops after the first of the year. Corn yields are down however, which should ease the crunch a little. New crop basis reflects this. Fifty under the board would be a train wreck many places, but that’s an improvement from last fall, when cash was 70 under futures, falling below $2.65 a bushels in some locations.