Storage capacity is squeezing as grain farmers in the United States harvest a record harvest of wheat, corn, and soybeans. This is putting particular strain on the storage and logistics of soybeans. Wheat and corn could benefit.
The US is preparing for an exceptionally large wheat, corn, and soybean harvest, according to Cobank in a report on grain logistics. Wheat and corn, in particular, are benefiting from strong exports and favorable transportation costs, while soybean sales are lagging due to the lack of Chinese demand.
Corn and wheat sales in export markets are historically strong. Low prices, a weak dollar, and low transportation costs are driving strong foreign demand. Export sales are up 94% (corn) and 41% (wheat), respectively, compared to last year. Soybeans, on the other hand, are experiencing a sharp decline: export sales are 51% lower than a year ago. The lack of Chinese purchases is weighing heavily, while other markets are not compensating for this.
Transshipment companies increase rates
Due to the record harvest and uneven export flows, storage capacity is under pressure for farmers, traders, and transshipment companies. Wheat and corn are prioritized for storage and shipping because these markets are more stable and involve less risk. Soybeans are more often stored on-farm or in temporary storage. Transshipment companies are raising their rates for limited storage space or rejecting consignments of soybeans that are difficult to sell, the report states.
With lower tariffs, the railroads support exports to Mexico and the Gulf region. About two-thirds of exports to Mexico are shipped overland. More railcars are also being moved in that direction. This is partly at the expense of transport capacity to the Northwest.