4 Factors Driving the 2019 Grain Elevator Outlook

A combination of factors paint a volatile picture for grain elevators in the coming year.
A combination of factors paint a volatile picture for grain elevators in the coming year.

“Cautious.” That’s the word Will Secor, a grain and farm supply economist with CoBank, would use to describe the year ahead for grain elevators. 

“There are some bright spots based on the fundamentals for corn and wheat,” he says. “But there’s extreme caution when we think about the overall picture, as we incorporate what is going on in the soybean market.”

Even with the recent news of President Donald Trump and Chinese President Xi Jingping agreeing to a trade truce, uncertainty remains. Combine that with farmers in challenging financial positions, likely interest rate hikes and other macroeconomic forces, and the outlook for grain elevators in 2019 looks volatile.

For next year, Secor is watching four major factors.

1. Storage

“The big issue is the large crops,” he says. “For an elevator, it’s not just the size of the crop, but it's where the crop is; we have some surpluses in localized areas, but generally, there is tight supply of storage and capacity.”

Illinois and Nebraska will have the largest grain storage shortages, Secor says. Iowa, Kansas, Indiana, South Dakota and Ohio will also come up short. 

Grain Storage - Surplus vs Shortage

Source: USDA, CoBank

“We’re hearing of a lot of producers using ag bags and opening up bins they haven't used in years,” he says. “It'll be really interesting to see how it plays out.”

2. Carry in the market.

Currently, farmers are seeing good returns for storage, Secor says. The market’s spread is being driven by the big crop and variable demand.

3. Basis

Soybeans have been the driver in basis levels, Secor says. 

“When you look at soybeans in the Dakotas, you have very, very weak basis due to the lack of P&W export movement for soybeans,” he says. “When you look at the rest of the country, you also see weak basis for soybeans, due to the demand issue and the size of the crop.”

Corn basis has also been highly variable, based on the region. 

4. Transportation 

From a transportation perspective, Secor is watching two elements: diesel prices and truck drivers.

“Diesel prices are leveling out, but remains above year-ago levels,” he says. 

On the labor side, he says, the biggest challenge is for elevators to get someone in a truck who can reliably deliver grain—at an affordable level. 

“There's a lot of wage pressure from the rest of the really strong economy here in the U.S.,” he says.

Secor spoke at the National Grain and Feed Association’s Country Elevator Conference, which is happening Dec. 2-4 in St. Louis. 


What bids and basis levels are your local elevators offering? Check them with AgWeb's Cash Grain Bids.


Latest News

Two Major Grain Companies Announce They Will Stop Doing Business in Russia

Within two days at the end of March, two grain companies said they will cease operations in Russia.

6 Spring Ammonia Season Reminders

The next couple of weeks will be busy with ammonia application in Illinois. Here are a few reminders to keep in mind when working with ammonia

9 Steps to a Perfect Corn Stand

More ears at harvest is the key to higher yield. That requires starting with a picket-fence stand with photocopied plants, achieved by adjusting your planter as conditions change from field to field and within fields. 

FieldAlytics Engage: Farmer-Facing App Clears The Communication Pathway

“This is a powerful app designed to strengthen service providers’ relationships with growers by housing essential information in a single source,” says Ernie Chappell, president of Ever.Ag Agribusiness.

Plagued By Drought and High Input Prices, Cotton Acres Could Crumble This Year

Just ahead of USDA's Prospective Plantings report, the largest cotton growing state in the U.S. is seeing another year of drought, and with fields resembling the Dust Bowl, crop prospects are dwindling by the day.

Farmers Really Want to Plant Corn Not Soybeans, Says FBN Chief Economist 

Kevin McNew says the company's survey of 2,000-plus growers shows they will plant 92.5 million acres of corn and 84.5 million acres of soybeans. Both estimates are counter to what USDA projected in February.