The most recent episode of the Grain IQ podcast featured a discussion on the outlook for grain storage in U.S. Elevators as bushels remain elusive. According to Tanner Ehmke, Lead Grains and Oilseeds Economist with CoBank, the current challenge for grain elevators lies in acquiring ownership of bushels.
Farmers have been reluctant to sell, as corn and soybean prices have fallen sharply from their peaks earlier this year. That has left elevators with lower levels of grain ownership to take advantage of wider carries and basis levels. Basis has fallen to multi-year lows in some regions of the country.
However, the delay of grain moving to elevators is expected to be short-lived. According to a new report from CoBank’s Knowledge Exchange, the challenge of acquiring bushels should begin to ease for elevators early in 2024.
In the interview, Ehmke provided context on CoBank’s role as a lender to agricultural cooperatives and explained how global supply factors can impact futures market spreads and local cash prices. This gives signals to elevators on whether they should encourage storage.
Ehmke noted elevators need to own bushels to capture potential profits from carry in the market. However, farmers are currently reluctant to sell. This poses a challenge for elevators. Delayed pricing was discussed as a riskier option elevators may pursue.
Looking ahead, Ehmke expected renewable diesel and soybean crush capacity expansion to influence the corn and soybean markets. Some crop acres may shift marginally to soybeans over time. The podcast discussed ongoing changes in agriculture and the role of elevators.
Grain IQ is a production of the Nebraska Rural Radio Association, in cooperation and with support from the Nebraska Soybean Board. Listen to Grain IQ on Spotify, Apple Podcasts, Google Podcasts, YouTube, or ruralradionetwork.com.
