2019 Squeezing Grain Elevators in Rural America

CoBank recently said it isn’t just farmers that saw lower cash returns in 2019. Grain elevators will also see their profit margins drop compared to the previous year. The lower returns are blamed on a higher basis for corn, soybeans, and wheat.

CoBank’s Knowledge Exchange Division recently said, “In addition to having to buy a  more expensive basis, grain elevators are offering farmers incentives to sell bushels, such as lower rates on storage, free delayed pricing, and free grain drying.”

Lower quality and high-moisture grain coming in from wet fields around rural America also boost elevator costs. Propane shortages in 2019 also continued to put a damper on elevator revenue. As if that’s not enough, drying wet grain can lead to commodity shrinkage, which adds to lost bushels and higher costs for elevators.

CoBank said those challenges from 2019 will likely carry into the new year.

“Grain elevators’ margins will get squeezed in 2020 by the tightness in basis, diminishing carries in the futures markets, and many other challenges from low test-weight and high-moisture grain,” the report continued.

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