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Storage Squeeze Shifts North

Big corn and soybean crops this fall may not stretch storage capacity as much as projected earlier this summer, though space should still be tight across much of the Midwest this fall.

Hot weather that baked much of the southern half of the Corn Belt this summer is also shifting the most severe storage squeeze further north than usual, according to Farm Futures updated estimates. While an early harvest likely will swell key states at or above capacity, burdensome supplies shouldn’t last long. Most elevators are used to coping with ground piles, and strong demand should also eat into the surplus.

Still, basis promises to be weak, with transportation costs for harvest slots already 30 cents a bushel or more above the recent spot market.

Farm Futures made its first projection of storage conditions in July, based on crop early crop conditions and USDA’s June 30 acreage estimates. The latest update is based on current Farm Futures production forecasts, along with updated stocks estimates.

The overall storage crunch appears to have eased slightly. Our first estimate indicated 99% of available storage would be used by wheat and feed grains supplies, the highest in the last 14 years. Our latest estimate shows 97.4% of capacity used, less than the 98.2% filled in 2009.

Most of the 13 states included in the breakouts should see lower than projected stocks, with heat, and in some cases flooding, trimming yield potential. Sept. 1 stocks of corn, soybeans and wheat are also expected to be lower than first projected, thanks to export demand caused by the big cutbacks in global wheat production this summer.

States along the northern tier in the U.S. are seeing improved yield potential, which should tighten their space requirements. Minnesota, North Dakota, Michigan and Wisconsin all should have more crops on hand this fall than previously expected. However, none of the states should see record tighteness.