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Serving: United States
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Bin busters?

Big crops could swamp storage capacity, even with this week’s devastating wind storm.

The Aug. 10 storms that flattened Midwest fields and grain bins could complicate what appears to be an already complicated storage outlook this fall.

While the extent of losses will take time to sort out, USDA’s August crop production estimates suggest the nation’s grain storage system could be stretched to the breaking point. The government’s first monthly forecast for the new crop corn, soybeans and sorghum harvests, added to large leftover inventories of old crops and 2020 small grains, point to supplies that could top 100% of the nation’s estimated storage capacity.

Whatever the losses from the August winds, supplies are expected to be up sharply from 2019, when floods slashed production and left most states with grain storage to spare. Basis for both corn and soybeans was stronger than normal over the past year as a result, despite turmoil caused by the pandemic and trade uncertainties.

But with most areas outside the upper Midwest exceeding capacity this fall, basis could be back to normally weak harvest levels in much of the region. Whether that weak pattern lasts ultimately depends on demand and how farmers around the world recover from the shock dealt by the novel coronavirus.

USDA updates its production estimate Sept. 11, which will also provide this year’s first evidence drawn from a sample of individual fields. Until then, weekly crop ratings and satellite maps should provide some clues about whether the storm damage is enough to alter what appears to be a tight storage outlook. The government’s August numbers indicate storage capacity will be the second tightest since 1988 and only slightly below the record set in 2016, when supplies filled 101.7% of the nation’s grain bins.

Both farmers and grain merchandisers have become adept at dealing with large crops, which could keep the harvest from completely overwhelming the market. Whether in bags on farm or in large covered ground piles at elevators, steel and concrete aren’t the only way to hold on to grain these days. Those temporary alternatives could also ameliorate the impact of capacity lost to the “derecho” winds. And, because some supplies are always in transit or being consumed, even the biggest crops eventually find a home until they’re needed.

Estimates for a dozen key corn and soybean states show all but one facing a tighter storage situation this year compared to 2019. Even in the exception, Nebraska, 112% of capacity could be used.

Lower Mississippi River and western Corn Belt markets could face basis challenges, at least early in the season. Missouri and Kansas look ready to run at 124% of storage capacity, with Kentucky at 121%. However, closure of key locks on the Illinois River for much-needed maintenance could limit pressure downriver on the Mississippi if repairs take longer than expected.

Capacity will be tighter in the eastern Corn Belt after a couple disappointing harvests in the region. Ohio, for example, could rebound to 101% of capacity. That may not be tight enough to cause problems because hog and poultry operations in the Southeast typically suck grain from the Great Lakes quickly after harvest.

Total U.S. Grain storage capacity used at harvest

percentage of storage capacity used at harvest

Knorr writes from Chicago, Ill. Email him at
The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
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