The United States is set for a record fall harvest of 21.5 billion bushels of corn, soybeans, and grain sorghum, up 10% from last year. Yet, as highlighted in a new CoBank report by Tanner Ehmke and Emmie Noyes, this abundance is colliding with storage shortages, transportation bottlenecks, and uncertain export demand—factors that the authors warn could make this “one of the most complicated handling seasons in recent years.”
The report, “Grain Logistics Outlook: Record crop meets trade uncertainty”, highlights that U.S. storage capacity will fall short by 73 million bushels this year, a sharp contrast to last year’s surplus of 1.8 billion. Among the top 12 corn-producing states, the gap widens to 1.4 billion bushels, forcing elevators to rely on bunkers, ground piles, and other temporary solutions. “Grain merchandisers will charge higher storage fees on scarce capacity and strained infrastructure,” note Ehmke and Noyes. While this tightness poses challenges for farmers, elevators may benefit from wider futures carries and cheaper basis, enhancing their margin opportunities.
EXPORT PROGRAMS DIVIDED
Corn and wheat exports are off to a historically strong start. Outstanding corn sales are up 94% year-on-year, while unshipped wheat sales are up 41%. Supported by cheap prices, a weaker dollar, and favorable freight rates, these crops are likely to dominate export flows.
In sharp contrast, soybean and grain sorghum exports have collapsed amid a lack of Chinese demand. Soybean sales are down 51% y/y, while grain sorghum sales have plunged 58% y/y. According to the report, “the weak pace of soybean and grain sorghum exports may actually benefit corn and wheat by freeing up transportation and elevation capacity.”
TRANSPORT BOTTLENECKS
Logistical constraints could further complicate the flow of grain:
Rail: While rail capacity is expanding in the West and Central U.S., cuts are planned in the East. Rail rate reductions are boosting exports to Mexico and the Gulf, but limited soybean demand from the Pacific Northwest has reduced service to that corridor. “The risk to the rail market lies in a U.S.-China trade resolution,” warn the authors, as renewed Chinese soybean buying would quickly tighten rail availability.
River: Low water levels on the Mississippi River have restricted draft sizes and pushed barge freight rates up 31% in one month as of late September. Still, below-average soybean shipments may allow more corn and wheat to move south.
Ocean freight: Bulk carrier rates remain down year-on-year (–6.8% in PNW, –12.7% in Gulf), though seasonal demand is pushing them higher. Political uncertainty around Section 301 tariffs on Chinese vessels could affect shipping capacity during peak season.
BASIS PRESSURES AND FARMER STRATEGIES
Basis levels tell a story of diverging market realities:
Corn: Weakening basis reflects the massive harvest, though stable ethanol and feed demand, alongside strong exports, provide elevators with confidence. Corn is also easier to store in bunkers than soybeans.
Soybeans: “The loss of Chinese business has weakened export demand for soybeans, dragging basis to historically low levels,” the report notes. Farmers may attempt to store beans on-farm, but risks of quality degradation loom.
Wheat: Following the largest harvest in five years, elevators are raising storage fees. While exports are robust now, competition from Black Sea and southern hemisphere suppliers could pressure U.S. wheat in the months ahead.
Grain sorghum: With China historically accounting for up to 90% of U.S. sorghum exports, the collapse of that trade has pushed basis to extreme lows. Some elevators may refuse deliveries altogether.
FINANCIAL RISKS AND MARKETING PROGRAMS
Elevators face further risk from Delayed Pricing (DP) programs, which allow farmers to deliver grain but price it later. In a carry market, this creates exposure for merchandisers if market rallies trigger steep margin calls. Some elevators are shifting to cash-only or alternative contract structures to reduce risk.
“The record fall harvest will be an opportunity for grain elevators to profit on bigger carries, cheaper basis, and higher storage fees,” write Ehmke and Noyes. “But the risks are equally large, from export volatility to tighter credit requirements and the potential for sudden margin calls on short futures positions.”