Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: East

At Mid-South elevators Long waits slow grain harvest

Mid-South farmers are complaining that harvest of their grain crops has dragged on too long this season, and they blame most of the problem on slow unloading at grain elevators. Some producers say waits have been as long as five hours.

Grain elevator operators say they have their own bottleneck to contend with — a triple whammy of high soybean yields, more corn acres and a low river during peak harvest.

According to those familiar with grain storage and transportation, the problem varies by location, storage options and whether or not there is a local use for grain.

In mid-September, the bins were full at Bunge in Marks, Miss., and the soybean processing facility was only accepting soybeans it could crush in one day.

A Mississippi grain producer who forward contracted soybeans with the facility said several of his grain trucks had been waiting at the facility for five hours. “I'm here with combines sitting all day with trucks going to Bunge and waiting five hours to get unloaded. Tell me what's right about that,” said the farmer, who asked not to be identified.

The basis had widened to around 60 cents under in mid-September, but the producer was more concerned about the wait than a weak basis. “I was told they were almost full, and if they (weakened) the basis, they would get more beans than what they wanted. I don't have a problem with that. But don't tie me to my contract when you're overbooked and you can't get our crop out of the field.

“I have two machines cutting 50- to 60-bushel soybeans. I cut five truckloads yesterday. Where we would normally cut 150 acres a day, we're cutting about 50 acres to 60 acres a day.

“It's cut harvesting efficiency in half, plus we're exposing our beans to late season disease, which can get in them after a rainfall. With them cutting our production efficiency in half because we're waiting on trucks, and with the disease potential, they're jeapordizing the farming community.”

Fletcher Powell, who runs the Marks Bunge facility, says a big factor is that farmers were cutting anywhere from 50 bushels to 70 bushels of soybeans at the time of this writing, well above the levels of past years, and bins at the facility quickly filled up.

How harvest proceeded in the rest of the Mid-South depended on location. Corn harvest did not go smoothly for Tillar, Ark., farmer Ken Holt. “I couldn't keep the trucks going. Harvest of my little 400 acres of corn went on and on and on. You send a truck out and it's eight hours coming back. Next year, we will have to make different arrangement. We are going to have to start building some more bins.”

Cherokee, Ala., grain producer Neal Isbell has nearly 180,000 bushels of on-farm storage, but was running three trucks to grain elevators, and not having to wait long. “I can put the rest of what we're going to shell in the bins if I have to,” Isbell said of his corn harvest. “We're in a good area because of all the poultry operations. We're actually in a plus basis around here. Sometimes we get as high as 30 cents over. So we're real fortunate. We also have an ethanol plant in the planning stage about 7 to 8 miles from here.”

At the end of September, a grain truck driver at a grain elevator in Memphis was fifth in line for unloading corn and said his total wait had been about 15 minutes. There were at least seven other grain trucks behind him. He said his longest wait at the facility this year had been about three hours, when he was unloading soybeans.

Farmers have also been concerned about unusually weak basis levels over the past year and into harvest. Elevators typically drop their cash price relative to the futures price during harvest. Called basis weakening, the intent is to discourage grain from being delivered when bins are full. The basis strengthens when grain elevators or processors are running short on grain.

Basis is also a reflection of the cost of handling, storing and transporting grain. Factors that affect the basis include cost of fuel, size of the river barge fleet, availability of the barge fleet, storage capacity, demand, the size of the anticipated crop, location of the elevator taking the grain, even river levels, which affect how much grain can be loaded and safely transported down a river.

For example, if a river level is down, a grain elevator can't load as many bushels in a barge or the barge will not have enough bottom clearance to navigate the river. Costs per bushel go up because fewer bushels are being transported for essentially the same cost. The Coast Guard, concerned with narrower channels may also space out traffic down the river.

Location is also a factor, according to Charlie Ross, with Ross Risk Management, LLC. “If you're a producer in Clarksdale, Miss., you can take your corn to the closest elevator on the river or to an elevator in Marks, Miss., that only has rail and truck. Normally, you would get a weaker basis if you took your corn to Marks versus the river. That's because the river elevator has a barge for transporting grain to New Orleans. The elevator in Marks is going to have to absorb the costs of hauling it to the river.”

One problem affecting this harvest season is that the shift to more corn is not only replacing cotton bales with bushels of grain, but on soybean acres replaced by corn, soybean yield is being replaced with corn yield. “That's 150 bushels per acre for corn versus 40 or so bushels for beans,” Ross said. “You essentially have four crops coming off the same acres it came off last year that the elevator has to handle.”

Producers can manage basis risk with a fixed basis contract, which specifies a particular delivery period and locks in the basis for that delivery period. It leaves the futures component of the net producer price open to be priced at a later date. It allows producers to lock in or capture an attractive basis for a specified delivery period and yet not be locked into that particular day's futures price.

A hedge-to-arrive contract permits the seller to set the futures level on the contract date, but the basis level is determined by the seller at a later date.

Usually a farmer has the opportunity to book corn at anywhere from 30 under to 15 to 20 over during the year. Typically, the better basis occurs in the winter before anything is planted. But this past year, the best basis during the winter was historically weak, so most farmers shied away from it, noted Ross.

“But from that point on, it steadily eroded. It got to 80 under in some places. It's better now than it was at one time. Usually, when the price on the board goes higher, basis widens.”

The most obvious solution to the basis problem is more on-farm storage, according to Ross. “One recommendation I would make to every farmer in the Mid-South would be to get grain bins. A farmer is going to have to have grain bins. If you have some now, you probably need to be adding some more.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.