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Bumper Crops to Lead to High Profits for Elevators – CoBank

New research from CoBank finds that bumper grain harvests this year coinciding with a combination of additional factors are indicating higher profits for U.S. elevator operators who saw depressed profits last year.

A combination of record corn, soybean, and sorghum volumes competing with already high volumes of wheat from earlier this year and futures markets that are prompting farmers to store crops on longer terms have raised the value of tight storage space across the Western Corn Belt and Southern Plains.

Additionally, a decline in shipments of crude oil and coal has resulted in increased grain shipping capacity along U.S. barge and rail lines while freight rates continue to fall despite high demand.

Meanwhile the U.S. Department of Agriculture (USDA) is predicting the highest wheat and corn ending stocks since the 1987/88 marketing year, leading to interior basis levels for the two grains to reach multi-year lows, enabling elevators to profit on basis appreciation of company-owned grain stocks.

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