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Grain Storage Costs Skyrocket, Creating Concerns for Elevators and Co-ops

Record-High Expenses and Market Challenges Worry Grain Merchandisers and Farmers

By Jean-Paul MacDonald
Farms.com

Grain elevators and co-ops in the St. Louis region are grappling with unprecedented storage costs for corn, soybeans, and wheat. A recent report from CoBank, an agricultural lender, reveals that factors such as rising interest rates, elevated crop prices, and increased transportation expenses have contributed to the record-high costs.

The surge in expenses has left grain merchandisers eager to sell their grain quickly to maximize profits. However, the current conditions pose logistical challenges. Grain elevators simply cannot ship all their inventory at once.

The scenario makes it less likely for end users, such as ethanol plants, flour mills, and cattle feeders, to buy grain before it is absolutely essential. CoBank economist Tanner Emhke explains that it becomes a game of passing on the risk, and co-ops often end up bearing the burden due to their obligations to hold the grain.

Elevated interest rates exacerbate the issue, putting those who store grain for longer durations in a difficult position. Emhke highlights the combination of high prices and borrowing costs, resulting in the highest borrowing expenses on record for storing grain.

While these factors may not directly impact consumers, farmers are likely to face repercussions. Co-ops and elevators could reduce upfront payments for grain to mitigate the rising storage expenses.

Amidst this challenging landscape, grain operators closely monitor the Federal Reserve's actions and weather conditions. The possibility of further interest rate hikes adds uncertainty, while deepening droughts in parts of the Midwest, including Nebraska, Kansas, and Missouri, threaten corn crop yields.

As the industry grapples with mounting storage costs and market dynamics, the coming weeks will be critical in determining the fate of the corn crop. Farmers anxiously await both the Federal Reserve's decisions and the weather forecast, recognizing that these factors will significantly impact their profitability and the overall grain market.


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Why Seed Analysts are Thriving Under Seeds Canada

Video: Why Seed Analysts are Thriving Under Seeds Canada

Last month in Edmonton, Alta., industry leaders and stakeholders gathered to discuss the evolving landscape of the seed industry at Seeds Canada’s annual conference. Among them was Sarah Foster, president of 2020 Seed Labs and the new vice-president of Seeds Canada.

Foster, who has been on the board of Seeds Canada for over a year, has witnessed firsthand the challenges and opportunities that come with the formation of the organization. Seeds Canada was established just over three years ago through the merger of multiple seed industry groups, including the Commercial Seed Analysts Association of Canada (CSAAC). Since then, the organization has been working to define its priorities and solidify its role in the industry.

“The challenge has been allowing the dust to settle after the merger,” Foster explained. “We’ve been focused on identifying what our priorities should be and ensuring that our members, especially the seed analysts, are getting what they need to continue their professional work.”

One of the recent highlights was a pre-conference event where the three major seed labs in Alberta — 20/20 Seed Labs, SGS Canada and Seed Check — opened their doors to members. The event saw a record number of seed analysts and business professionals in attendance. Foster emphasized the importance of this transparency, stating, “It’s crucial for people to see what goes on behind the scenes. We’re an open book now, and that openness helps build trust and understanding within the industry.”

The event also featured an environmental scan and a series of discussions that fostered strong communication among attendees. According to Foster, the dialogue was both encouraging and inspiring.

“A lot of people were really inspired by the fact that Seeds Canada is moving ahead with its agenda. The seed analysts, who have always worked diligently in the background, are now being recognized more prominently,” she said.

Before the merger, seed analysts were represented by CSAAC. Now, as part of Seeds Canada, they are finding their place within the larger organization. Foster believes that the integration has been successful, noting, “I think we’re thriving. You only need to look south of the border, where similar consolidations are happening.”

As Seeds Canada continues to evolve, Foster remains optimistic about the future. “I want to be totally transparent with anyone who is a seed analyst — I’ve got your back. We’re moving in a positive direction, and we’ll do everything we can to meet the needs of our members,” she said.