Grain Storage Outlook Improves for U.S. Elevators, but Bushels Remain Elusive

The profit outlook for U.S. grain elevators storing corn and soybeans has improved significantly for the 2023-24 marketing year with buy basis falling and carries returning to futures markets. The world market is currently awash in grains, and global supplies of corn and soybeans are abundant. The improved market conditions follow two consecutive years of inverted futures markets, which limited the ability of many elevators to earn a profit from storing grain.

The current challenge for grain elevators is simply gaining ownership of bushels. Farmers have been reluctant to sell, as corn and soybean prices have fallen sharply from their peaks earlier this year. That has left elevators with lower levels of grain ownership to take advantage of wider carries and basis levels. Basis has fallen to multi-year lows in some regions of the country.

However, the delay of grain moving to elevators is expected to be short-lived. According to a new report from CoBank’s Knowledge Exchange, the challenge of acquiring bushels should begin to ease for elevators early in 2024. The rising cost environment will likely compel farmers to sell in January, February and March 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, which will cap any run-up in basis.