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David Sparks Ph.d On-Farm Storage
by David Sparks Ph.d, click here for bio

Program: Idaho Ag Today
Date: August 08, 2018

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The benefits of on farm grain storage. The other day I heard this comment from Jake Putnam. “Farmers are holding onto their grain until prices change. Right now with world stocks and our stocks on the market, there’s just too much grain out there.” That led me to think about not being forced to sell grain until the price is right. Something else. And this gives you yet another idea of how much risk is involved in farming.

Dry conditions in the eastern cornbelt in late summer led to a drop in the Mississippi River resulting in limited and even eliminating barge traffic during harvest. The barges that did travel had smaller load sizes to be able to navigate the shallow waters. This led to a spike in barge rates that were double to triple normal rates. Storage and logistical problems were magnified by a large amount of 2016 corn delivered by farmers to the market just prior to the 2017 harvest. Facilities were already short of storage as a large 2017 crop harvest began. 

Producers who did not have on-farm storage were at the mercy of the local grain elevators and merchandisers. With an overabundance of grain at their facilities, many buyers forced farmers to sell upon delivery at the discounted prices. Selling at the normal harvest low was thus compounded by the record wide basis and lower than expected cash prices. 

Producers who had on-farm storage did not face the same dilemma. They could store their crop during this unfortunate time and weather the storm. Basis levels still remain wide, but they are narrowing. Also, the carry in the market is attractive, allowing these same farmers to forward contract their sales for next spring or summer at significantly higher prices. On-farm grain storage puts you in control of your harvest and grain marketing decisions as noted by: 

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