Could Storage Problems Loom As Crop Supplies Pile Up?

August 26, 2016 09:24 AM
combine soybeans

With soybeans and corn supplies piling up to record levels for the 2016-17 marketing year, beginning on September 1, could storage be a problem?

Possibly, if wheat storage issues are any indicator, according to Darrell Good, professor emeritus of the University of Illinois, writing in FarmDoc Daily.

The corn supply (production, carryover and imports) is projected at 16.9 billion bu., 1.43 billion bu. more than the record set two years ago, observed Good, citing USDA figures. The soybean supply is forecast at a record 4.346 billion bu., 201 million bu. above last year’s record. And a record wheat supply of 3.417 billion bu. is 299 million bu. more than the last record set in 2012-13.

Producers could be in for a weak basis at harvest time and large spreads in the futures market if corn and soybeans follow in the footsteps of wheat, according to Good.

“This is certainly what has happened in the hard red winter wheat market,” he says. But Good adds that strong demand and plenty of corn storage facilities also are factors to consider.

"The carry in the corn market offers a return to storage, while the soybean market is inverted, offering no return to storage," he says.

Other observers, like DuWayne Bosse of Bolt Marketing in Britton, S.D., say they don’t think the record supplies will cause any long-lasting storage issues.

“If storage issues do start to arise, basis levels will widen out and prices will fall,” Bosse says, noting that basis normally widens out during harvest.

“However, if prices are low, farmers will keep on-farm storage right where it is, and basis should improve relatively quickly to initiate sales,” he says.

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Spell Check

Mitchell, SD
8/26/2016 11:57 AM

  Ya, I think we tried that last year. tried to convince ourselves that all the pre-harvest hype about big crops was over estimated, and if we would just hold on, and markets will improve, and more than a few paid of that false hope......I don't have the answer, but markets are not good, and there is not much carry in any of them, what does one do? Sell out now, be the first to hit the auction market? Beat the rush to the door????? It will get better? Or at least it always has come back around. Now the Fed is talking.....seriously talking about raising rates again?? Could this be the final nail in the coffin?

albany, MN
8/29/2016 05:48 PM

  Really get tired of all your comments!!!! Your comments are worth as much as the price of corn!!!


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