You’ve hearing about the record low levels along the Mississippi River system for the second-straight year—and the challenges it brings for Indiana farmers when it comes to moving harvested grain to market.
“One of the big options is looking at grain storage,” says Danny Munch, an economist with American Farm Bureau Federation. With the lower water levels, it means less grain can be shipped along the river—which also makes the cost to ship it more expensive. He says holding on your grain may be the best choice temporarily.
“When farmers have a sufficient storage capacity close to where they’re growing, it means they can have a place to offload harvest if downstream transportation options are too expensive or unavailable, as they’re in many places right now. On-farm storage allows them to have almost full control over when they want to market those goods. So, they can really track transportation prices and other market factors before making the ultimate decision to sell or ship their product,” says Munch.
USDA says the total capacity for storing grain across the U.S. is 25.4 billion bushels.
“When you look at total current stocks as well as expected harvest, that number is 23.12 billion bushels. So, comparing those two numbers we have about a 2.2 billion bushel surplus of grain storage, which means we have a little bit of wiggle room, which is good during these low river conditions. It’s not uniform across all states, though, so depending on the state you’re in, some product is going to have to find another way to move.”
But, that decision to store grain for longer periods of time does require some financial considerations.
“High interest rates increase the cost of storage and elevators, which means farmers might receive lower bids for their crops. Farmers also have large sums of money tied up in grain inventory based on the capital that they borrowed for the season’s expenses, and that can be paid back when they sell their product. So, if they choose to store the product, those farmers are on the hook for more interest payments, and continue to have all that capital tied up, but obviously weighing the costs and benefits is really important for each individual farmer,” according to Munch.
The Mississippi River gauge hit an all-time record-low water level of -11.52 feet on October 11 at Memphis, Tennessee. It surpasses the previous low of -10.81 feet set in October 2022. The weekly USDA Grain Transportation Report says records were also broken on the Ohio River at Cairo, Illinois. That gauge read 4.5 feet, the lowest river level since 1901.
Draft and tow-size restrictions are in place along the entire Mississippi River system. Despite some recent rains, more rain will be needed to raise water levels enough to improve the navigation conditions.
Source: NAFB News Service.
