Filling a boom
REYNOLDS, N.D. Paul Coppin and his friends are bracing for Big Corn. The manager of Reynolds United Co-op will shepherd his elevator's addition of another 750,000 bushels of storage this spring. The twin, 375,000-bushel steel Chief bins will repr...
REYNOLDS, N.D. Paul Coppin and his friends are bracing for Big Corn.
The manager of Reynolds United Co-op will shepherd his elevator's addition of another 750,000 bushels of storage this spring.
The twin, 375,000-bushel steel Chief bins will represent a 38 percent increase in storage from its current 2 million bushel storage a $1.5 million investment for this co-op of 350 members, which trades in a 30-mile radius.
"It's going to be done primarily because of corn (increases) in this area," Coppin says during a subzero February walk around the north side of his south bin complex in town where new steel tanks are rare.
"Typically up here, we're all conservative people," Coppin says. "We see this (corn market) and say; holy cow! Is this too good to be true?'"
But the company sells corn seed.
"We know it's not smoke; it's going to be out there," Coppin says. "Our corn seed sales are up 150 percent more than double," Coppin says. "Based on what we're seeing, we expect to see corn acres up 50 (percent) to 75 percent in our trade."
He's quick to add that that is from a relatively small acreage, but notes that "three years ago, we didn't have any corn up here nothing to the extent we're going to have in the next three years."
Reynolds United Co-op is a full-service local cooperative.
Change is nothing new in the elevator business, but usually change is less dramatic.
Reynolds supplies agronomy services with fertilizer and crop protectants. The co-op purchased the Farmers Union Elevator Co. of Buxton, N.D., in 2006.
It is a member/owner of Alton Grain Terminal L.L.C., south of Hillsboro, N.D., and ships a fair amount of its grain to that location. At Alton Grain Terminal, Coppin serves as one of the board members. That facility has 2 million bushels of storage today and will add another 2 million this summer four 500,000-bushel tanks. The increase in corn acres and desire to hold corn longer.
On its own, Reynolds also runs 26-car unit trains and ships corn to Canada and to an ethanol plant in Walhalla, N.D. Wheat typically goes straight to mills.
Historically, the Reynolds elevator has handled 50 percent wheat, 30 percent soybeans and 20 percent corn. In 2007, Coppin thinks those percentages could change dramatically 40 percent corn, 30 percent beans and 30 percent wheat.
"We've got some old, some new, some flat and upright," Coppin says. "We have two wooden houses in Reynolds along with steel bins. We completed an expansion three years ago and added 500,000 bushels." That expansion was designed to speed up the handling and came with a 5,000-bushel-per-hour grain dryer.
With the Buxton acquisition, the co-op added another 750,000 bushels of con crete storage. Both locations are on the Burlington Northern Santa Fe mainline.
Coppin has been manager here since 1999.
"The way I see it, right now, we're going to have a lot of farmers raising corn who have never raised it before. They're going to have 300, 400 . . . maybe 500 acres."
The corn acreage increases in Traill County will be large, percentagewise, but they won't be as large in total corn acreage increases as in the southern Red River Valley, Coppin acknowledges.
A dramatic shiftCo-op members started considering the expansion last fall, as the price of corn started to rise, and the seed orders started arriving. They signed contracts Jan. 1 because they needed to to assure receiving the materials.
"It's hard getting elevator (construction) crews and material because they're going to ethanol," Coppin says. "With all of the ethanol plants being built, it takes a lot of people to put them up. Everything is maxed out because of ethanol."
Among the factors in the decision to build elevator storage was that there has been a lack of on-farm storage expansions. The elevator conducted its own informal survey.
"It's been kind of surprising," Coppin says.
"The farm facilities up here aren't set up to handle corn, but the market says you have to plant corn," Coppin says. "We felt we needed to fill that boom.
"They don't want to gear up (on the farm storage) for corn and two years down the road, they don't have a need for it," Coppin says. "They're willing to let us handle the corn right off the field let us take the chance on whether the storage bins will pay off.
"We're all concerned about how long this is going to last, but you look 10 years out, and this (ethanol industry) is going to be a corn-eating animal. If we have a drought, there's a concern that the corn's not going to be there, but we put a lot of thought into this."
And while it isn't clear what the price of corn will do, it is certain that the acres will go up. "And at least initially (the corn) is going to come to town," Coppin says. "We wanted to be there."
Coppin says that in his 28 years in the grain-handling business, the ethanol factor is the most dramatic shift he's seen. He says he goes home at night and tells his wife, "You wouldn't believe what's going on."