There are a lot of bushels headed for the bin: With combines already rolling in some areas, more than 50% of producers answering a poll on TopProducer-Online.com said they had less than one-quarter of their 2009 crops sold.
In mid-September, the corn futures market offered about 15¢/bu. to store from December until March and 35¢/bu. to store until next July. March soybean futures, on the other hand, were only 10¢ higher than November and July was 22¢ higher (see graphs below).
The question is whether those spreads will widen (for example, if the crop is smaller than expected) or shrink (we bring in a record crop and South America does too), and just how much basis improves.
You may be able to add some return if storing helps you avoid sitting in line at an elevator during harvest. One grower uses 3¢ to 10¢/bu.
Even if your bins are fully depreciated, be sure to consider the costs at left (based on several operations). For some producers, the returns offered right now, are not compelling. One told us he needs a minimum of 20¢ to make storing corn worthwhile; another was double that.
Top Producer, October 2009
- OCTOBER 2009