Interest Rates are Driving Grain and Oilseed Storage Costs to Record Levels

This new report issued by CoBank details how high commodity prices and rising interest rates over the past year are driving up the costs for storing grains and oilseed carryover inventories, placing pressure on the operating margins of U.S. cooperative grain elevators. According to the study, the interest-related cost of carry in the U.S. in the 2023/24 crop year will rise to its highest point ever, with corn storage forecast to increase 21 percent; soybeans, 42 percent; and wheat, 50 percent, year-on-year.

Compounding the problem are insurance costs, which have also risen significantly due to multiple weather disasters leading to insurance companies existing agriculture, and transportation, labor, and energy costs remaining high, or continuing to climb.

This complicated web of factors is leading elevators to look to move grain as quickly as possible to lower their carrying costs, but at the same time, flour millers, ethanol plants, feedlots, and crushers are finding it more beneficial to delay ownership to reduce their own inventory costs.

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