Iowa farmer Karl Fox is drowning in corn.
Reluctant to sell his harvest at today's rock-bottom prices, he has stuffed storage bins at his property full and left more corn piled on the ground, covered with a tarp.
He would rather risk potential crop damage from the elements than pay the exorbitant cost of storage elsewhere.
"That's how poor people do it," said Fox, who has been farming for 28 years. "You do what you have to do."
Farmers face similar problems across the globe. World stockpiles of corn and wheat are at record highs. From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for basic foodstuffs.
Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tonnes going into the next harvest - the third straight year of historically high surplus, according to the U.S. Department of Agriculture (USDA). That's enough to cover demand from China for about a year.
In the United States, farmers facing a fourth straight year of declining incomes and rising debts are hanging on to grain in the hope of higher prices later. They may be waiting a long time: Market fundamentals appear to be weakening as the world's top grain producers ponder what to do with so much food.
The persistent glut is a striking contrast from the panic a decade ago, when severe droughts in Russia and the United States sent prices soaring. The shrinking supply forced big importers such as China to enact policies to encourage more domestic production and increase the volume of storage to improve food security.
China abandoned that policy last year and is now selling off hundreds of millions of tonnes of old stocks.
Russia, too, is looking at exporting from state-held stockpiles, with storage stuffed after a record harvest in 2016.
A surge of Chinese and Russian exports would put even more downward pressure on prices in an oversupplied global market.
That means U.S. farmers will likely be producing more grain for less money. The USDA forecasts net farm income will fall 8.7 percent this year to $62.3 billion - the lowest level since 2009.
CATERPILLARS, RODENTS AND DONKEYS
In farms across Iowa, corn bulges in plastic tubes that snake across the fields.
The grain-stuffed silo bags are taller than a man, often longer than a soccer field and look like monstrous white caterpillars.
On the other side of the globe in Australia, demand for the storage bags has exploded after farmers produced record crops of wheat and barley.
They are laying across fields in Argentina, too. There, wheat production spiked 41.6 percent this year over the 2015/16 season, according to the most recent USDA data.
There are risks to using the bags, however, as wild animals ranging from rodents to armadillos and even donkeys can be tempted to break in for the grain, said Mariano Bosch, the head of Adecoagro SA (AGRO.K), which farms more than 225,000 hectares of row crops in Argentina, Brazil and Uruguay....MORE
Tuesday, April 11, 2017
"Grains Piled on Runways, Parking Lots, Fields Amid Global Glut"