Slow U.S. grain harvest, fast use easing
squeeze on storage
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[October 22, 2014]
By Christine Stebbins
CHICAGO, Oct 21 (Reuters) - With rain
delaying the U.S. harvest and domestic and export use of crops strong,
the squeeze on storage space in the world's biggest food exporter is not
as bad as many feared, a top grain market analyst said on Tuesday.
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"We've got a lot of product to store, no question about it. But
the fact that we are stretching harvest out means that every day you
are consuming another 70 million bushels," Darrel Good, agricultural
market economist at the University of Illinois in Champaign, said in
an interview. "That reduces your storage dilemma a little bit," he
added.
Iowa and Illinois, the top two corn and soy states, are ground zero
for storage issues this year. In a note issued to the grain industry
on Monday, Good estimated that "total fall crop supply this year
likely represents about 95 percent of total storage capacity" of
about 24 billion bushels.
Some grain merchants in the Corn Belt are already piling up corn in
covered tarps outside, making it tough to maintain crop quality.
They expect the system to get clogged with rail and barge resources
tight and freight rates soaring.
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"Still, not all of the supply has to be stored," Good noted.
"Harvest occurs over a relatively long period of time and crops are
continually consumed. Harvest has proceeded more slowly this year
than in the recent past due to wet weather in some major producing
areas."
The U.S. Department of Agriculture reported on Monday that the U.S.
soybean harvest was 53 percent complete as of Sunday, behind the
typical pace of 66 percent by the third week in October. For corn,
31 percent of the crop was harvested, versus the average of 53
percent.
Using USDA's weekly export inspections data, U.S. industry soybean
crush data, and the government's latest supply and demand
projections, he calculated about 3.2 billion bushels of grains and
oilseeds have already been consumed from Sept. 1 to Oct. 16. That
equates to 69.6 million bushels per day, for the first 46 days of
the new marketing year.
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"That pace of use continues so that nearly 16 percent of the total
fall crop supply has already been consumed," Good said in his Monday
note. "That magnitude of consumption has substantially reduced the
requirement for crop storage capacity, resulting in a modest
strengthening of the corn and soybean basis in many areas."
Good pointed out that while the overall storage issues may have been
eased somewhat, the regional bottlenecks, including in the core area
of Iowa and Illinois, will persist this fall. Rail locomotives and
crews tied up by shale oil industry demands in the Dakotas remain a
key issue, he said.
"From a production standpoint, it's going to be the eastern Corn
Belt and Missouri where the really big yields are. So that's where
you would expect to have some issues with finding storage capacity,"
Good told Reuters. "Illinois would be one of them." (Reporting by
Christine Stebbins; Editing by David Gregorio)
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