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High wheat yields contribute to a glut at elevators

Rain came to Texas, relieving drought conditions in many areas. It also slowed the wheat harvest in the Rolling Plains, but this year that might be a good thing, according to Texas AgriLife Extension Service personnel.

Rolling Plains wheat producers were reporting above-average yields and average protein levels in most cases. But grain elevators in many areas were having a hard time handling the volume of wheat, said Steven Sparkman, AgriLife Extension agent for Hardeman County, northwest of Wichita Falls.

This has resulted in something of a crisis for both elevator operators and growers, Sparkman said, and it all began with high yields combined with the best of intentions on the part of the local grain elevator management.

"Both of the grain elevators in our area built shuttle-train loading systems. They can load a unit (100-110 car train) within 15 hours," he said. "Because of their access to the railroad and that they offered attractive prices, they had an inflow of wheat from as far away as 100 miles."

Many other elevators in that 100-mile radius have lost their railroad access in the last 10 or 15 years, which contributed to the problem. In some cases, the line for farmers waiting to unload their wheat was 70 or more trucks long, with day-long waits, according to Sparkman.

The problem was not limited to Hardeman County, he said. In nearby Wilbarger County, the co-op ran out of room and was storing wheat in cotton compresses.

The increased volume at some elevators was due only in part because of the good regional yields, Sparkman said.

"Our basis from Kansas City right now is from a $1.40 to what I've heard is $1.75 (per bushel). Usually we'll be at a 60 cents to 70 cents basis. Down at Knox City or Stamford, where a lot of the wheat is coming from, it's even worse than that, so it makes it feasible to truck it up here."

Basis is the difference between local prices and those at the Kansas City Board of Trade, which is the standard pricing method for hard red winter wheat, Sparkman explained.

Many farmers are angry with the elevators, but the operators are just trying to make an honest profit like everyone else, Sparkman said. The problem is one of supply and demand.

"That's huge basis. I've just never heard of it being that big. The problem is that there's just so much wheat," he said

The bottom line? The price is down, locally hovering $3 to $3.35 (per bushel), Sparkman said.

"Most producers will need $4.50 to $5 to have a decent year."

But the rain helped in a way, he said. "We've been getting rain for the last three days, so the lines have diminished. Last night, there were about six in line sleeping there, waiting for them to open this morning. I bet there were 60 or 70 -- more than you can count -- before."

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