When you roll out that combine this fall, you might want to consider rolling some bulkheads and a good temporary aeration system back in place, too. If you were counting on storing grain at the local elevator but haven't arranged it yet, you may be out of luck.
A railcar shortage was blamed for some of the unemptied elevators at harvest last year, but elevator managers in Iowa, Illinois and Nebraska report little problem in getting unit trains this summer. The big problem, they say, is getting farmers to turn over title to the grain so they can ship it out.
With low grain prices and sagging international demand, grain shipments have been down all across the Corn Belt.
"We're making good progress at shipping the grain we can," says Ron Gates, grain marketing manager at Heart of Iowa Cooperative, Roland, IA. "The problem is, most grain remaining in the elevator is on warehouse receipts. Unless prices improve significantly for both corn and soybeans, so growers are encouraged to sell, we're going to go into this harvest with less available space than in recent years."
Much of the grain in elevators is under federal crop loans. Growers who intend to sell when loans mature may want to consider turning over title to the elevator ahead of the maturity dates so shipping can be scheduled.
The storage situation ranges from barely adequate in some areas to as much as 25% short in others. Bob Wisner, Iowa State University extension grain marketing specialist, says just a 4-bu increase in the national average corn yield would create a real storage pinch.
Wisner recommends watching USDA crop condition reports closely for clues as to how big the corn crop might be.
"In late June, USDA said 75% of the U.S. corn crop was in good-to-excellent condition," he points out. "If that percentage is as high in August, we're probably going to have a shortage of storage."
Of course, it's all related to local situations. For example, some growers report as much as 10% of their planted corn drowned out in low spots that weren't replanted. Also, where corn planting was delayed and some growers switched to soybeans, storage will be less of a problem because beans produce less volume.
In the East, where drought has decimated crops, storage should be more than ample, although that isn't necessarily good news. But unless late-season drought cuts yields, grain piled on the ground will likely be a familiar sight all across the Corn Belt.
Having established that storage may be tight, here are some suggestions:
Free up storage space. At this point, emptying your on-farm bins by trucking corn or beans to the elevator where you place it on warehouse receipts may be counterproductive. It will solve your own problem, but could add to an overall storage pinch in your community. Emptying your bins will help, though, if you can get grain into the hands of users.
If you have grain stored at the local elevator and can find a way to help the manager schedule transportation based on what looks to be a reasonable price in the future (using forward pricing), you'll give him the tools he needs to make more room for the new crop.
Wisner cautions against entering into late-summer price-later contracts.
"Price-later contracts are credit sales agreements that increase the farmer's risk in case of elevator failure," he says. "Also, in the period of tight storage there's substantial price and basis risk and price-later contracts expose farmers to both at the same time.
"If the market offers a reasonable price, even if it's a 'deliver now' situation, don't waste any time getting old-crop corn and soybeans moved out," says Wisner. "Ownership of grain can be retained with call purchases at or out of the money."
Mike Turner, University of Nebraska extension grain marketing specialist, recommends staying in touch with your elevator manager about storage availability and the size of your crop.
"Elevators in our area may require that growers sell a quarter or a third of the crop at delivery before they will allow delivery on warehouse receipts," says Turner. "That way, they'll be able to allocate space among all customers. When they get title to the grain, they'll be able to ship it or store it outside in piles with less risk to the customer."
Wisner notes that a common strategy in years when storage is tight is to delay harvest and give the elevator time to ship out some new grain.
"That decision needs to be weighed against crop condition, field losses and how it will affect other fall field operations," Wisner says. "It may be an alternative, but in many cases it's a high-cost one."
He suggests considering temporary storage in machine sheds, unused barns, silos or empty livestock buildings if grain quality can be maintained and structural strength is adequate. A couple of cautions: Check with extension ag engineers or other building specialists regarding reinforcement and aeration needs, and have a plan for emptying the building before you put grain in.
Final note: At press time, Congress was considering a bill to fund a three-year grain-reserve program. It could provide funding for new storage, so stay in touch with your Farm Service Agency office.
"If you have a long-term need for storage, this may be the year to get started on it - if you can find a contractor," Wisner says.