News

Turbulent times for grain elevators

An ag economist says some ag co-ops are entering the 2016 season under financial duress.

Tanner Ehmke tells Brownfield they have noticed a slip in credit quality with their CoBank customers.  “This all has to do with a number of headwinds that are facing the industry today and that’s declining revenue off of the basis market that has been very stagnate.  He says, “There just hasn’t been a lot of movement or profitability to be made in a very stagnate market.”

Ehmke says a sharp drop in drying revenue last fall has also created challenges for grain elevators.  “That’s generally about 8-10 percent of a grain elevator’s income every year and a lot of that income disappeared at the end of 2015 for a lot of co-ops—we may see a repeat of that this year.”

Ehmke says the transition of the El Niño weather pattern into La Niña this growing season could possibly mean a drier crop which would mean less drying revenues or even a smaller crop size for grain handlers to move.

He says recent rallies in the grain market has been beneficial to elevators.

AUDIO: Interview with Tanner Ehmke