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Grain storage glut to create harvest issues
Iowa Correspondent

WASHINGTON, D.C. — With more than 2.11 billion bushels of 2004’s grain still on hand, U.S. farmers face the unique challenge of limited storage space as they complete 2005’s harvest, with Iowa holding more than 551 million bushels of corn and soybeans from last fall.

“Entering the 2004 harvest, most commercial and on-farm storages were empty,” said Charles Hurburgh, Iowa State University (ISU) professor of agricultural and biosystems engineering and professor-in-charge of the Iowa Grain Quality Initiative.

“Still, the crop overwhelmed the available storage capacity and large amounts of crops were placed in outdoor piles,” Hurburgh said.

Hurburgh said trade estimates placed the amount of piled corn in Iowa at around 250 million bushels out of a 1.4 billion bushels production in 2004.

“There was a large premium for storage in the market, so the inevitable risks of outdoor storage seemed worth taking,” Hurburgh said.

Wes Buresh, grain manager at Fairfax Grain Co. in Fairfax, Iowa, farms 700 acres of corn and soybeans, and stores all his grain on his rural Ely farm.

“I have some left over from 2004 and I’m going to market it at a daily market price, so I can have room for my 2005 crop,” Buresh said.

The USDA reported the highest Sept. 1 corn stocks since 1992, with 2.11 billion bushels, which is up 120 percent more for corn and 127 percent more for soybeans from 2004.

Of the total grain stocks, the USDA said 821 million bushels are stored on farms, up 87 percent from a year earlier; off-farm stocks totaled 1.29 billion bushels.

The USDA report added that Iowa farmers now hold 23 percent of the total U.S. stocks, with Illinois holding 362.5 million bushels Minnesota is also experiencing a grain storage space shortage, with an estimated 7 million acres of corn and 6.7 million acres of soybeans to be harvested this year.

According to the USDA 2002 Census of Agriculture, there was a storage capacity of 1.5 billion bushels of grain on Iowa farms, with available commercial storage for 1.5 billion bushels.

By comparison, the latest USDA crop report projected 2.6 billion bushels of Iowa corn and soybeans would be harvested this fall.

“Add in carryover bushels from the past and a few acres of other grain crops, and we are looking at a very tight situation,” said ISU Extension Economist William Edwards.

Moreover, Iowa had 493 million bushels of corn still in storage, 313.8 million bushels of which were held on farms, 299 million bushels larger than in 2004. Iowa farmers also still hold 57.8 million bushels of soybeans, up from 30.5 million bushels from 2004.

Currently, Iowa’s total grain storage space is at 2.7 billion bushels, with 20.4 percent already filled as farmers harvest an estimated 2.1-billion-bushel corn crop and a 452-million-bushel soybean crop.

“The current production forecast shows total Iowa grain supplies this fall to be about 148 million bushels larger than last fall, when many elevators were forced to store corn in outside piles,” said ISU Extension Economist Robert Wisner. “Large supplies almost certainly will keep the corn and soybean basis depressed for the next several weeks.”

Ed Kordick, commodity services manager for the Iowa Farm Bureau Federation, said last week that while the soybean basis may recover some, shortly after harvest, the corn basis may remain depressed into at least December in the western half of the state.

“We have seen the huge amount of corn pressure basis all summer,” Kordick said. “Now those supplies are confirmed at the time that the new crop is ready for harvest.

“Basis pressure will probably continue through harvest,” Kordick said. “Those with storage capabilities may be able to take advantage of the seasonal basis strength that historically happens after harvest.”

When grain storage is scarce, Edwards said older bins and other structures that aren’t usually in use may be pressed into service.

“Often this extra space is available on a rental basis,” Edwards said. “Several questions arise about fair rates and terms.”

For instance, commercial storage rates often run from 2-3 cents per bushels per month, with a 60-day or 90-day minimum and those rates may be higher this year.

“However, elevator storage also includes handling and managing the grain, and bearing the risk of storage losses,” Edwards added. “When storage is rented on the farm, those services are usually not provided. Thus, farm storage rental will generally be below commercial rates.”

According to the 2005 Iowa Farm Custom Rate Survey conducted by the ISU Extension Office, the average rental rate is 2.7 cents per bushels per month for on-farm grain storage, and about 13 cents per bushels for the whole year.

“The range of rates reported for annual storage was 7-25 cents per year,” Edwards said. “Owners of farm storage usually prefer to rent by the year, since they will seldom have a chance to rent a bin more than once during a crop year.”