By The Trough
The latest analysis from CoBank shows profit outlook for U.S. grain elevators storing corn and soybeans has improved for the 2023-24 marketing year. The world market is, according to CoBank, “awash in grains, and global supplies of corn and soybeans are abundant.” This marks an improvement following two consecutive years of inverted futures markets.
However, according to the report, farmers have been reluctant to sell, and corn and soybean prices have fallen from their earlier peaks, leaving elevators with lower levels of grain ownership to take advantage of wider carries and basis levels. This delay is expected to be short-lived, with easing expected in early 2024. CoBank predicts that farmers will be compelled to sell in the first three months of the year to generate cash for spring planting and operational expenses. Farmers are also expected to be more willing to sell on price rallies over $5 per bushel for corn and $14 per bushel for soybeans.
“Many grain farmers have the benefit of being in a very strong cash position following last year’s record farm income levels,” said Tanner Ehmke, grains and oilseeds economist for CoBank, in a statement. “They have been quite content to hold on to their grain since prices have fallen. But higher land rents and borrowing costs, combined with rising prices for inputs like fertilizer, will probably motivate farmers to sell as the calendar turns to 2024.”
Some elevators have made up for the lack of ownership through higher storage fees or through delayed pricing programs.
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