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Grain Elevators Faced Multiple Challenges in 2019, Can Expect Lower Returns: CoBank

U.S. grain elevators could see lower returns and tighter margins from 2019 compared to 2018, largely due to a higher basis for corn, soybeans, and wheat, according to CoBank.

In addition to this expense, elevators have also been offering farmers incentives in the form of lower storage rates, no-charge drying, and free delayed pricing offers as incentives to sell bushels. Meanwhile, the grain that is coming in has been harvested from wet fields and is of lower quality and higher moisture levels, and the fallout from the propane shortage from earlier in the year is still being felt.

All of these factors are being seen as continuing to negatively pressure margins for elevators in 2020, with corn seeing lower quality and a harvest basis at multi-year highs; soybeans having harvesting issues, which is affecting storability and causing longer and more expensive drying times; and wheat, which is usually a dependable grain for elevators, seeing its spreads steadily deteriorate.

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