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 Farmers in 2016 are storing more corn on their farms to keep from
paying storage fees at the local elevator as a way to increase their
profits. “On our farm we’ve stored as much corn as we can and with
the idea that we’ve delivered to the elevator whatever forward
contracts we had from back when it was hot and dry in June and the
price had a four in front of it basically. Once harvest started we
weren’t incredibly happy with the $3.10 corn price (as of printing
that price is $3.30). So we decided we’d put it in the bin and to be
truthful it’s paid off, just from the beginning of harvest until
now, we’re experiencing a little rally here in the last week to ten
days in the corn market.”
While on-farm storage is helping to increase profitability, Olson
also notes that the basis is a very important factor, too. “But the
other side of that is the basis. The basis would be the difference
between the board of trade price and the elevator cash price. "The
basis is basically controlled around here by ADM in Decatur, who
does a lot of determining what the basis is going to be and then the
elevators, say Elkhart Grain Company, would react to that. Here in
the last week or ten days we’ve seen ADM kind of push or basically
make the basis better, make that gap between the Chicago Board of
Trade and the elevator’s cash price smaller, so it’s adding value to
the crop.”
 “I was just talking to my marketing guy and it’s kind of like a game
of cat and mouse,” says Olson. “ADM knows we’ve got the corn and
they know the 2016 crop is a record in this country as far as number
of acres and yield-making total bushels. They know it’s out here but
they also have to entice us to sell them the grain. So by the board
rallying or a basis improvement, the corn in the grain bin has
appreciated in value over the last week to ten days. That gives us
hope, I guess, that maybe this winter ADM will get to where they
need corn or there’s other things that could affect that as well.”
Olson mentions La Nina as one of those other factors. “It was
supposed to get hot and dry in July and August here, and it rained.
So if the South American crop would struggle and they would have a
drought, then it could pay to have that grain stored here because
it’s going to go up.” Olson emphasized a huge factor that
contributes to that is demand.
The current outlook as far as demand is concerned is good for
farmers in 2016. “We’re seeing very, very strong demand both for
corn and soybeans right now so we know that the appetite is out
there right now from the consumer, or the end-user, to buy the
grain,” said the Logan County farmer. “Like I said, it’s just that
game of cat and mouse.”
Now it’s just a matter of the farmer staying on top of that game
everyday. Olson added, “It’s definitely something you have to pay
attention to, as far as storing grain. It’s just another management
tool that we have to try to add value.”
There are other advantages to having grain bins on the farm,
according to Olson. “One of which is just the speed of your harvest,
said Olson. “When we get into the dead of harvest and everybody is
hauling corn to town and the corn is making into the 200 range as
far as yield, we can go to a grain bin and basically the only line
we have is our own. We don’t have to worry about waiting on if there
is a long line and a lot of bushels that have to be dumped. If we’ve
got a bin sitting at the corner of the field or even a couple miles
down the road, it kind of makes us a little more independent as far
as dumping grain and it makes us more efficient on our farm. We can
dump it without having to relying on someone else to be there to
take it. That kind of helps on our end.” Olson continued, "Or say
the elevator closes at seven and we decide we want to run a couple
more hours, we can dump corn in a grain bin after-hours. It makes it
so we can set our own schedule and move at our own pace if we want
to. Particularly if the storage already exists and you don’t have to
spend the money to build it.”
In the Olson’s case they actually had to rebuild a grain site once.
Blane and his dad, John, have their own grain facility out by the
Elkhart coal mine. “A tornado actually wiped that whole bin site out
in 2009 and that was the year the crop was real wet and we never
started harvest until like the first of October,” the younger Olson
explained. “They rebuilt and we used that facility that fall. We
have a dryer there so we can dry our own grain and then store it.
That gives us the ability to play that game with the buyer. If they
want it all at once we’ve got the ability to sell bushels that are
sitting there ready to go and then we can save a little money drying
it ourselves versus paying to have it done in town.”
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Olson’s vast experience with on-farm grain storage shows in his
knowledge. “Another advantage to grain storage is let’s say I
deliver a bushel of corn to the elevator and I decide I don’t like
today’s price, you have the option to store it in commercial storage
and you pay a fee. But once my grain bins are paid for it doesn’t
cost me anything to store it on my own farm, outside of labor and
management, you know, utilities and things like that. It’s more cost
effective if you have storage to store it on-farm,” noted Olson. “In
this business, diversification is huge and it gives us more
opportunity to diversify our operation from not only a pricing
strategy but also efficiency and independence and things of that
nature. So there’s a lot of advantages to being able to store the
grain on the farm.”
Olson, who attended Lake Land College and then graduated from
Western Illinois University with an Ag Business degree, also stays
on top of the game and is current in all issues related to his
passion. “The talk right now is that some of this corn can sit
around in these grain bins until next summer. Let’s say we have
trouble in this country with weather, for example a wet spring and
we plant late, which would indicate we would have a shorter crop, or
if it would be hot next June or July, as long as the grain is in
good condition it doesn’t hurt it to stay in the bin that long. That
gives you more opportunity as far as when to market it or different
events that could change it. Most generally it will all get to the
market by end of next August. September is kind of a weird month
between old crop and new crop, so most generally farmers are trying
to get things emptied out by the end of August because they want to
refill it with new grain. It’s easier to store new grain than old
grain.”
Olson is also pleased with the year 2016. “From a yield standpoint
it’s been very good. The bean market has been a lot more friendly to
us as far as price. Corn has been more challenging and I think
that’s probably why a larger percentage of on-farm storage would be
corn instead of soybeans. But looking into the future the things we
are still talking about are profitability and the marketing and that
side of it is obviously very important,” said Olson. “But then also
how to make our operations just more efficient in general, maybe
trimming the fat is kind of what we are doing as a whole. As a group
of farmers right now is (about) eliminating some of the places where
maybe we are doing things that aren’t quite as efficient or aren’t
quite as cost-effective. I know that farmers are very conscious that
storing grain can be used as a tool to add value to your product. I
would even say that while we are being conscious of where we spend
money and how we spend it, that I would venture to guess that grain
storage is actually still being added because it adds value to an
operation. If you can afford to do so, the guys are doing it or at
least considering it or looking towards it.”
Olson is a big believer in using on-farm storage as a means to
making the farm operation more efficient and potentially getting a
better price on grain. Olson also likes the longevity of the grain
bin, some of which on the Olson Farms are “older than I am” he said.
Finally, Olson said of the grain bin, “Every year it will be used
and it’s something that we can utilize on our operation.”
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