Commodities Surplus Exceeds Storage, Chokes River Traffic
Low commodity prices for soybeans and an abundant harvest have created a shortage of space in grain elevators. The shortage is causing backups in states like North Dakota, Minnesota and Louisiana and further hurting prices.
China, the biggest market for U.S. soybeans, slapped 25 percent duties on the crop in retaliation for President Donald Trump's tariffs on Chinese high-tech products. Now the country is virtually closed for business to American soy growers. This means some farmers are gathering more soybeans than they can sell or store, jam-packed silos are running out of room, and the trains that usually carry soybeans to the Pacific Northwest to ship to China aren't moving.
"In Southwest Minnesota and the Dakotas, you now have elevators that are storing all their beans because there's no market to the West. There is absolutely no bid," said Bill Gordon, a farmer in Worthington, Minn., and member of the American Soybean Association board of directors.
Gordon said some storage sites are piling corn outside to make room for soybeans, and that his local grain elevator was expected to be full after the first week of the month-long harvest.
The demand for storage space is also widening the gap between the market commodity price for soybeans and the cash price farmers receive for their crops at the elevator. Grant Kimberley, director of market development for the Iowa Soybean Association, said the drop-off — or "basis" — is normally 30 to 50 cents per bushel in central Iowa. Now it's about $1 per bushel.
There's also a surge of Midwestern crops being shipped down the Mississippi River to New Orleans, where they're sold to Europe, South America and elsewhere. That's putting extra strain on growers and exporters in Louisiana.
Source: Politico