While south central and southwest Kansas isn’t known for mountain ranges, piles of grain stored on the ground are going to be a common sight when the fall harvest starts rolling in.
The wheat harvest turned out to be better than anticipated with some farmers harvesting the equivalent of a double crop of wheat in one year, said Pratt County Extension Agent Mark Ploger.
Unfortunately, the price of wheat didn’t double and wheat prices are at a low level not seen in years. The same goes for other crops with milo and corn prices especially low.
So no one is selling grain and the elevators are almost filled to capacity. Big mounds of grain can be seen at several locations in Pratt County but more are expected to appear when the corn harvest starts rolling in and no grain is rolling out.
Glen Newdigger, Stafford County Extension agent, said a lot of milo and corn will have to be stored on the ground in his county. The corn crop, especially the dry-land, looks tremendous in the Stafford and St. John area so storage will definitely be an issue.
A couple of grain elevators in Stafford County are increasing their storage capacity but it isn’t going to help the price of grain, so little is leaving the already full elevators.
The problem is the same across the area. Rod Craft, location manager for Alliance Ag and Grain in Greensburg, said they were measuring ground for possible grain bunkers at their Joy and Brenam facilities. They have about 30,000 bushel of storage still available in their elevators but that will quickly fill up in the fall harvest. Other locations under consideration for storage include Haviland and Mullinville.
"We’re going to have to have some place to put it," Craft said.
They still have 120,000 bushels of corn on the ground from last year.
It’s not just the local elevators that have a lot of grain on hand. Terminals in Haysville and Gavilon are not moving grain because of the low price of wheat, said Rex Robinson, Kanza Co-op manger in Coats.
Those facilities are building more ground storage just as local elevators are preparing for more ground storage of their own. Even though the Coats facility added 400,000 bushel of storage last year, it filled up and more is on the way. Farmers are just too good at their job, Robinson said.
The overabundance of grain has several causes. Wheat farmers have gotten very good at producing wheat and so have other producers around the world. The world stockpile is very high right now so there is no place to go with the wheat, Robinson said.
Another factor is the U.S. dollar is very strong now so countries needing wheat will go to other countries to buy wheat at a lower price.
In the meantime, elevators are doing all they can to prepare for the influx of corn from a harvest that looks like it will produce a big yield as well. Coats still has corn left over from last year’s harvest, so they are leveling out spots for corn and milo.
Even if terminals had space, local elevators can’t just ship out corn, beans and milo for storage. It has to be sold before it can be moved, Robinson said.
"We have to hang on to everything else," Robinson said.
Businesses that use wheat, such as a flour mill, have limited storage space at their facilities. They may purchase an amount of wheat, 500,000 bushels for example, but they may not have enough space to hold the entire purchase so it still has to stay at the elevator.
While storing crops on the ground provides a temporary solution, it is not the ideal situation. There is always some loss to spoilage when a crop is stored on the ground. If the grain is moving and can be hauled out quickly, the loss would be very minimal, around 1 percent.
The longer the crop is on the ground, the higher the loss percentage. A 2 to 5 percent loss is common. The loss percentage goes up if there is rain because it causes spoilage.
Ideally, outdoors grain storage will have some kind of covering and aeration capability to reduce moisture build-up.
Farmers still have to pay bills even if they want to store their crop in hopes of a better market. Wheat, corn and milo are all hovering around $3 a bushel. Wheat hasn’t been that low since the ’90s, Robinson said.
Farmers can take advantage of the Loan Deficiency Payment plan if the price gets below a certain point. The LDP guarantees a certain price when the farmer sells the crop. If the sale price is lower than the guaranteed price, the LDP will make up the difference. It has been many years since the LDP was necessary.
Unless the grain market changes, farmers will continue to hold onto their crops, hoping for a better price, Ploger said
Some farmers have on-the-farm storage and they are using that as an alternative to keeping grain in an elevator and paying storage fees.
Unfortunately, one thing that would shake the market loose would be a drought disaster somewhere in the world. But for right now, there’s nothing on the horizon that would spur any action on the markets.
One other part of this equation is that farmers who aren’t selling grain are also not spending money for things like equipment, trucks, tractors and pickups so the low markets are impacting more the just the producers.