Thursday, October 29, 2015

U.S. Farmers Running Out Of Storage Space for Giant Corn Crop

Chicago corn 378-6 up 2-6.
From Reuters, Oct. 27:

Who wants my corn? US farmers grapple with another super crop
U.s, grain warehouses are filling up so fast with a bumper harvest that they are storing soybeans and corn out in the open despite the risk of damage and even refusing crops from farmers without binding contracts. 
The scramble shows that even in the third year of a global supply glut the exceptional yields and weaker than expected U.S. exports still wrong footed some farmers, storage operators and traders, meaning the outlook for farm incomes and prices might get even bleaker than now painted by official forecasts.

Growers, still hoping to wait out the downswing, want to store as much of their crops as possible, but warehouses are rejecting spot deliveries because of a lack of space, in some cases for longer than farmers can remember.

"We're out of storage," said Richard Guse, a Minnesota farmer who also co-owns a grain elevator. "Our next best option is to find a place to sell it, so you get that harvest pressure."

Minnesota, Iowa and Nebraska, which account for a third of U.S. corn and a quarter of soybean output, have produced record yields thanks to near-perfect conditions after some bad weather early in the growing season suggested yields could drop.

As a result, farmers in Southwestern Minnesota, for example, are getting paid about 15 cents less per bushel for their corn and soybeans than they would if there was enough space, estimates Ed Usset, grain marketing economist for the Center for Farm Financial Management at the University of Minnesota.

That means an even deeper dent in farm incomes given the cash price for corn in the area is about $3.25 a bushel, already well below the estimated $4 production cost, Usset said.

The squeeze caused by storage bottlenecks comes against a backdrop of South American farmers planting massive crops this fall, adding to record global soy inventories and near-record corn stocks. With the strong dollar weighing on U.S. exports and crop prices already down 50 percent from their 2012 peaks, farm incomes are under pressure, already expected to drop 36 percent this year, according to the U.S. Agriculture Department.

Poor returns could prompt farmers to idle some of their less-productive farmland next spring or devote more to crops that are cheaper to sow like sorghum. They may also cut back on fertilizer or premium seeds, which could drag down yields. 
For now, they are struggling to make space for record harvests or trying to sell it, even if it means taking a further hit....MORE
In August 2014 the story was "'Too Much Corn With Nowhere to Go as U.S. Sees Record Crop' (Buy storage)" while in 2011 it was "Farmers Betting on Corn Storage (and how not to sell a silo)".
And in 2009: "Commodities: 'Harvest sure to overwhelm already full elevators'" wherein, being the helpful folks we are we included "Here are some handy hints for temporary storage from Corn and Soybean Digest:".

The U.S. has had great weather for the last 25 or so years.
You have to go back around 800 years to find a comparable stretch.

The futures appear to be forming a high-fructose fat bottom: