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College of Food, Agricultural, and Environmental Sciences


Increased Corn Production Could Pose Grain Storage Problems

May 15, 2007

COLUMBUS, Ohio -- If the intended number of the country's corn acres is planted, growers could be facing grain storage issues this fall and weak cash prices reflective of the market's reaction to the shortage.

"If we do see the number of bushels at harvest the market would like -- 12.5 billion or 13 billion -- we could face a storage shortage this fall, and weaker cash prices compared to futures prices," said Matt Roberts, an Ohio State University Extension agricultural economist. "This is just the market's way of providing a financial incentive to those farmers who have on-farm storage to use it as long as possible to get through the pressure of harvest."

According to the U.S. Department of Agriculture, growers intend to plant 90.5 million acres of corn, the highest acreage this country has seen in over 60 years. The record acreage is being driven by the growing ethanol demand.

"We are talking about 500 million to 1 billion more bushels compared to 2004, the last time we faced serious storage and transportation issues," said Roberts. "We really won't know how this will all play out until this fall, but it's safe to say that there will be more grain storage pressure in corn- intensive areas like Iowa and Illinois."

Roberts indicated that the problem might not only be storage, but also a shift in distribution channels from rail and barge exporting to more local use by ethanol plants.

"The good news is that more on-farm storage has been built over the years," said Roberts. "There has been a boom in grain bin construction and grain elevators have added capacity."

For Eastern Corn Belt states, like Ohio, the situation with grain storage might not be as significant as in Western Corn Belt states, but the possibility of a problem still exists.

"Ohio's situation is not dissimilar, but one of the differences is that we rely on rail or barges to move our supply to other states," said Roberts. "We are behind the rest of the Corn Belt in terms of ethanol production, so keeping the corn stored locally won't be as widespread as in Western Corn Belt states that are becoming less and less export driven because of the boom in ethanol production in their areas."

Growers can easily store corn into the following summer, but as temperatures begin to warm up, careful attention to management becomes important.

"Warmer temperatures means an increasing amount of management to store it, maintain pest control and keep aeration and temperatures at normal levels so the grain won't degrade," said Roberts. "It can get costly to store grain, but the biggest costs in storage will not be management costs, they will be opportunity costs -- the idea that stored grain at $3.50 or $4 a bushel on the market is not sitting in the bank earning interest."

According to the USDA, planting across the country is just 5 percent behind last year and equal to the five-year average. Just a week earlier, corn planting was significantly behind schedule, but favorable weather conditions across portions of the Corn Belt have allowed for rapid progression.

Candace Pollock
Matt Roberts