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Archive for Wednesday, September 23, 2009

Elevators still full of wheat as fall crops come in

September 23, 2009

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— Amid a global glut of wheat stockpiles, grain elevators across parts of the Great Plains are still crammed with unsold winter wheat as facilities brace for expected bumper fall harvests of corn, sorghum and soybeans.

“This is going to be putting a lot of pressure on storage facilities and the transportation system. Overseas buyers are sitting on their hands seeing these prices continue to fall,” said Mike Woolverton, a grain marketing economist at Kansas State University.

The lackluster demand for wheat has clogged the nation’s grain-handling pipeline, particularly in major wheat-producing states like Kansas where a good winter wheat crop this summer will be followed by anticipated record harvests of other crops this fall.

“From a physical handling perspective, we are fully expecting grain to be placed on the ground in some areas,” said Tom Tunnell, executive director of the Kansas Grain and Feed Association, the industry group for the state’s elevators.

Most of that grain will likely be sorghum, which has the lowest value and is easiest to store on the ground, he said.

Elevator operators will have to decide whether they want to handle the excess crops because spoilage losses are higher for crops stored on the ground — typically a 3 percent loss as compared to 0.5 percent for crops stored inside, Tunnel said.

Poor crops in neighboring Oklahoma benefited Kansas because the losses freed up storage space in terminals down there, Tunnell said.

In Enid, Okla., grain elevators are nearly full with winter wheat that has come down from Kansas and Nebraska, said Joe Hampton, executive director of the Oklahoma Grain and Feed Association. Elevators in the rest of the country have plenty of available space.

“We had a terrible wheat crop and our corn crop was burned up in June — what corn we had,” Hampton said. “We don’t have a (storage) problem. I wish we did, but we don’t.”

Wheat-growing states north of Kansas are also bracing for the fall bounty.

“I don’t know if it is going to be as tight as it is going to be in Kansas,” said Pat Ptacek, executive director of the Nebraska Grain and Feed Association.

Nebraska, which has 24 ethanol plants, expanded its storage facilities more than two years ago in anticipation of the ethanol industry gearing up. Even so, Nebraska facilities expect to see a substantial amount of corn dumped on the ground. And South Dakota elevators are also gearing up for bountiful fall crops by trying to move as much wheat out as possible.

“Everybody will manage it as best as they can,” said Kathy Zander, executive director of the South Dakota Grain and Feed Association. “It is a good problem to have.”

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