July 2017 corn stocks

Grain stocks show ample supply

Grain stocks have grown steadily since the 2013 low, and the majority of grain is held in on-farm storage. That will affect the basis as new-crop corn is harvested.

USDA released several key reports on June 30 – including the quarterly grain stocks report. June 1 grain inventories were estimated at 5.22 billion bushels; 510 million bushels bigger than 2016. More importantly, bigger stocks are part of a more enduring trend since the recent low scored in 2013 of 2.76 billion bushels.  

Meanwhile, compared to 2013 mark, June 1 grain stocks have increased 2.46 billion bushels – or nearly doubled in just four years. However, there’s an additional story behind that growth that’s critical to both the market and general trends we’re seeing in agriculture.

This week’s illustration highlights that nearly 65% of the additional stocks are being held on the farm. In other words, the wide-spread investment in on-farm storage is making a difference! Farmers are using those bins as industry storage and an important tool for marketing flexibility.  

That influence will play an important role in basis trends in the coming months as we begin to focus on harvest. That is, those inventories will likely have to start moving to clear the way for new-crop corn storage on the farm. The market could witness some major breaks around basis. 

Nevertheless, the on-farm storage trend is an important indicator relative to agriculture. It underscores that farms are getting bigger, are increasingly attempting to be price-makers and using any and all tools to improve their marketing precision.  

How do you perceive these trends? Do you think farmers will continue to invest in on-farm storage in the years ahead? What impact do you see this having on marketing arrangements and options in the corn markets going forward? How might this influence the 2017 grain market – especially as we get closer to harvest? Leave your thoughts in the comments section below.

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

TAGS: Marketing
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