Piles of harvested grain more indicative that price isn’t right
Corn is offloaded into a pile at the Elkhart Grain Co. in Elkhart IL.
Justin L. Fowler/The State Journal-Register
With combines in the field day and night and huge piles of corn stacking up near grain elevators, people may be under the impression that central Illinois farmers are having another bin-busting, record crop yield. That impression may be misleading.
“There are always corn piles at harvest, and the bins are always full at harvest, so there isn’t really anything different to see at this harvest than at any other harvest,” said Phil Thornton of the Illinois Corn Growers Association.
The piles of corn often indicate that farmers are waiting to sell their harvested grain until the price improves.
“That’s always the strategy, to get the best price for your crop,” Thornton said. “Corn prices are below the cost of production right now. If we knew what was going to happen tomorrow, we wouldn’t be doing what we’re doing.
“The farmers will always do three things: They will sell some crops for cash, they will store some corn, and they’ll make some contracts (for future crop sales).”
Ed Corrigan, senior tech agronomist for the Springfield-based Brandt worldwide agricultural services firm, agreed that the corn piles tell only part of the story.
“It means we’ve had a big crop, but it also means that the price is not conducive to ship it down the river and into the terminals,” Corrigan said. “It means that the growers are waiting for a better price. They can make money by paying the storage and selling at a later date.”
Conditions looked good for record corn and soybean crops in Illinois, but “we started to dry out from about May 13 to June 22” at a critical time for the plants, Corrigan said. “So we are seeing some phenomenal yields, which we expected, but in some cases with that drought came some stress in some fields where we ended up with a disease that attacks our corn and soybean roots, and that is what has made it difficult for some fields to achieve high yields.”
“We started off the season with really strong soybean yields, but as we have moved along, the yields have gotten pretty average,” said Jenny Mennenga, a former director of the Illinois Soybean Association who farms in McLean and DeWitt counties. “Everybody was really excited about soybean yields at first, but now it has just kind of tapered off to average.
“Soybeans really benefit from those August rains, but what we saw this year was that the rains were so spotty, yields were very different from one field to the next. The soybean yield on our central Illinois farms may range from 55 to 80 bushels per acre.”
“A lot of people are getting out in their fields and they are finding surprises, and not the good kind of surprises,” Mennenga added. “But the beans have to go in a bin regardless, so I think we have some time to get a better price.”
There is a silver lining, she said.
“In central Illinois, we are thankful for the harvest weather we have gotten so far,” Mennenga said. “We have the stress of low prices, but at least we don’t have the stress of bad weather.”
Paul Crombie is CEO of Elkhart Grain Company, which has a 10 million-bushel permanent and temporary storage capacity. He said harvested crops are coming in quickly as they always do at this time of year, and there appears to be enough room to store it.
“We will use all of our permanent storage and we will use some of our temporary storage in the form of two ground piles, which is common in this part of Illinois,” Crombie said. “We think that we will have enough room to hold the whole crop.”
“The weather was hot and dry at the beginning of harvest time, and when the corn dries down quickly, typically farmers can harvest it a little bit faster and get it into our facilities faster,” Crombie said. “There were a lot of people who were comparing this year to (the record year of) 2014, and our best guess right now is that the yields are not quite as strong as they were in 2014, but they are still very good corn yields.”
RCM Co-op has grain elevators in Edinburg, Mechanicsburg, Dawson, Ashland, Richland, Pleasant Plains, Athens, Williamsville and Greenview with a total capacity of 22 million bushels. RCM’s Gary Chandler thinks they will use all of that capacity.
“So far, our storage capacity is holding out, though it’s hard to tell exactly what’s coming to the elevator each day. Some of our facilities are getting a little tight on space, and others aren’t,” Chandler said. “The southern elevators are a little farther along in their harvest and they are getting a little fuller than the north right now.
“I think most of the growers are storing it rather than selling it, from what I’ve seen so far. We may have a couple of ground piles this year. From what we can tell, it’s probably down about 20 bushels an acre from 2014. There’s been some quality issues with crop damage. But the crop overall looks pretty good.”
At the Assumption Cooperative Grain Company, with elevators in Assumption, Pana, Westervelt, Owaneco and Palmer, general manager Randall Sexton said, “We believe we have the capacity to handle the grain that is coming in.”
“We have had a significant amount of the corn harvest already accomplished, more than usual at this time of year. Soybeans, we have less delivered than usual at this time of year,” Sexton said. “I think overall the corn crop is a good crop, but it’s not as good as the crop we had two years ago as far as yields go.”
Hot and dry
When central Illinois grain is sold, it usually begins its journey to the export market at a place like Cargill’s barge-loading facilities at Meredosia or Florence on the Illinois River.
“There are a lot of empty barges coming into harvest. There are more than 100 barges sitting in the fleet waiting to be loaded at our facilities,” said plant manager Dan McClenning. “The transportation is well set to get the grain out of the bins and into the Gulf of Mexico.”
Each barge holds about 60,000 bushels of corn, which is approximately 75 tractor-trailer loads, McClenning said. That’s 1,680 tons of corn per barge using the USDA average weight of 56 pounds per bushel. But low prices and an abundance of harvested grain means that even at places like Cargill, there are piles of corn on the ground.
“When there’s a lot of grain, the pipeline gets full, exports can’t handle all that grain at once, so it’s stored in ground piles to carry into the market later this year or the first of next year,” McClenning said. “It’s been a good harvest for both corn and beans. The yields per acre seem above average from what I hear from the customers.”
Hot and dry weather early in the harvest season has helped growers to get the crops picked, but the ideal harvest conditions have a downside for Cargill.
“We have driers to dry grain, and if it comes in dry, we don’t have an opportunity to make anything on that part of it,” McClenning said. “It seems that this has been a pretty dry year, but it is ideal for the customer.”
— Contact David Blanchette through the metro desk: 788-1510.
After a string of profitable years, lower prices for corn and soybeans are expected to continue at least into 2017, according to a fall analysis by the University of Illinois at Champaign-Urbana.
The report looked at cost compared with revenue by region of the state from 2010 through 2015 and included projections for 2016 and 2017. Here are the price per bushel and return or (loss) per acre by year for central Illinois.
* 11.7 million acres of corn planted, unchanged from 2015; estimated production of 2.32 billion bushels would be up 15 percent from last year and the second highest on record after 2014.
* 10.1 million acres of soybeans planted, up 3 percent from 2015; estimated production of 623 million bushels would be up 14 percent from last year and would set a record for Illinois.
* 62 percent of corn as of the start of this week compared with 65 percent at this point in 2015 and the five-year average of 51 percent; 83 percent of the crop was rated good to excellent, 13 percent fair and 4 percent poor to very poor.
* 39 percent of soybeans compared with 65 percent in 2015 and the five-year average of 46 percent; 82 percent good to excellent, 14 percent fair and 4 percent poor to very poor.
Source: National Agricultural Statistics Service
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