One of the factors causing U.S. grain prices to stay at their current moderate-to-low levels is the total quantity of U.S. corn, grain sorghum, wheat and soybeans available relative to commercial off-farm storage capacity. This “strain” on storage capacity can be described as a “high demand for grain storage space.” The net result of strong demand for limited U.S. grain storage capacity is a high real cost of storage – a factor that is influencing the U.S. hard red winter wheat market located in the central and southern plains states (Kansas, Oklahoma, Texas, Colorado, etc.).
The following slides are meant to illustrate this “oversupply relative to grain storage” situation as it exists in the U.S. and in the state of Kansas in the 2016/17 marketing year. In summary, large crop supplies relative to available storage capacity characterize the U.S. grain storage and handling industry at this point in time. Looking into the future the remedy for this current situation will come from either reduced grain supplies or increased grain usage. The quickest remedy would seem be some sort of short crop/short supply situation in the U.S. in the coming months of year 2017. Although it would be a surprise to the market, some combination of foreign crop production problems and increased U.S. grain export demand would also help to alleviate the current oversupply situation.
So, the grain market waits to see whether some combination of these supply – demand factors may reduce supplies relative available to grain storage capacity. It is not too much of a “stretch” to say that we should know the answer to that question by August-September 2017!