Grain storage and marketing a challenge for Nebraska farmers
GRAND ISLAND, Neb. — With a large amount of old crop corn still in storage and another big crop coming on in Nebraska, grain storage will be a real challenge for farmers this fall.
While farmers do not expect they'll top last year's state corn or soybean production figures, it will still be a big harvest in Nebraska.
"I don't think it's going to be a record crop, but it's going to be a good crop," says Greg Greving, who farms near Chapman, Neb.
Add to that the fact that many farmers have been storing their 2016 crop. The problem is it creates a bottleneck in grain logistics and marketing with farmers essentially trying to market two crops at nearly the same time.
"People didn't like the prices and they didn't sell, so we're going have two crops to look at," says Bertrand farmer Dennis Gergenbach. "It's going to be a challenge."
Paul Hay, an extension educator at the University of Nebraska, says they are trying to get a handle on the amount of corn that's already in storage going into harvest to help producers with their marketing.
"I think it's real problematic if we've have a lot of storage already occupied and then we have a lot of corn that's got to find a home," he says.
Recently large supplies of old crop grain have been moving to market.
"I know a lot of producers across this state have carried over a lot of grain," says Oakland, Neb., farmer Tony Johanson "The last month, month and a half I've never seen so many semis on the road hauling corn and soybeans to the elevators."
Dave Dannehl, chairman-elect for the Nebraska Bankers Association, sees the trend among his clients.
"There has been a quite a bit of old crop coming to town that unfortunately they sat on a little longer than they cared for," he says. "But we're 30 days away from harvest, so many producers are looking at their storage needs. They finally decided it was time to get it sold and moved."
Other farmers have been selling because they need to exercise on deferred pricing or basis-fixed contracts before expiration, or they just need the money.
"I think a lot of it is cash-flow needs," Johanson says. "A lot of producers do a cash-rent agreement where they split the payments. You saw a lot of selling activity when the cash rents are due in September."
However, even with those grain sales, farmers and elevators will have a tough time finding space for the crop this fall and will have to pile the harvest on the ground.
"There's a lot of elevators that I've heard are not even completely empty from last year," Greving says. "If you take an elevator that still has a 100,000 bushels carryover from last year, that might be another 100,000 on the ground."
Johanson agrees that storage space will be extra tight this fall.
"As I look at on-farm storage, there might be enough, but when you start to get to these local elevators, I think we're going to run short on storage — just from the carryover from the previous year and the lack of selling."
A few farmers are putting up more bins yet this fall, but more will use temporary storage and wait for better prices. Dannehl says that is the strategy for many of his customers at the bank.
"Yes, storing and waiting for the rally — certainly, in our area we've seen a large increase on the bag storage," he says.
Ansley, Neb., farmer Guy Mills confirms this trend and says many farmers will put that stored corn under loan.
"We are thankful we do have a government program where you can even seal the corn you know," he says.
However, last year many growers stored the harvest and waited for higher prices with no reward. So, this season if farmers are going to store the 2017 crop they're encouraged to put a more aggressive marketing plan in place.
"You really have to be on your toes and market it right, get your basis appreciation and then, of course, get your carry in the market," Mills says.
Dannehl cautions farmers that the rallies in the market have been very short-lived.
"Producers have to have good solid marketing plans and be ready to pull the trigger in a short amount of time because they may not have a lot of time to make that decision," he says.