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Grain flow disruptions expected at harvest

Chad Hart, an ag economist with Iowa State University Extension, says moving grain might not be an easy thing this fall if the U.S. raises a large crop.

“We’re trying to push 1.4 billion bushels more through the system than we’ve ever had to.”

He says it would be an adjustment.

“Things will have to work as optimially as possible to handle the increase in production.”

Hart says large crops can challenge storage. It’s unclear how U.S. ag will move grain to alleviate the problem and that doesn’t include transportation hiccups.

He says the location of the large crops will determine which transportation channel will bear the brunt of the large supply.

“Let me pick on North Dakota. When you look at them, it is mainly rail they’re looking at. The railroad is the main way they’ll be moving their crops to reach those customers. In Iowa, it’s a combination of rail and river.”

Hart says a problem on any of those modes of transportation forces more of the crop to move on other channels, which can cause backups and price responses.

He says grain flow can widen basis.

“As those bushels get backed up and can’t flow through their normal path in a timely manner, they start to search for alternative paths. It tends to cause the lower basis level to ripple out from the original sore spot and get into other parts of the market.”

While international demand for some ag commodities, like corn, aren’t affecting grain flow yet, he says the uncertainty of a new trade agreement and lack of demand from China will make an impact.

He says harvest pace and consistent demand throughout harvest will determine if farmers should consider alternative options to move or market their grain.