Between a weather-delayed harvest and uncertainties about the demand for their crops, farmers have been slow to sell corn and soybeans this fall. One consequence is tighter margins and revenue pressures on country elevators that will persist into the new year, said a report from ag lender CoBank.
“Grain elevators’ margins will be compressed in 2020,” said the report, listing the effects of high local prices for grain compared to potential returns from futures contracts and the expenses of incentives to acquire grain, such as lower storage fees and free grain drying. “While these incentives might successfully increase the amount of grain in storage, it will mean reduced profit margins.”
Still, there are opportunities for revenue in a stressful year. “Grain handlers can profit from blending new-crop supplies with existing old-crop inventories, and those with reliable access to propane can profit from drying grain,” said CoBank. “And in regions of the country where farmers harvested record crop yields, elevators can make up the loss in margin with greater volume.”