Who would have thought it? When Mid-South farmers began their grand experiment with corn last March, who would have dreamed so many calamities could befall them?
First off, a late freeze sent temperatures into the teens, killing corn at the growing point. Then, a drought zapped the moisture out of soils from Tennessee to the Gulf Coast. And, as harvest began, temperatures soared above 100 degrees.
Just when many were about to admit the experts might have been right about the South not being an ideal place to grow corn, producers began harvesting 180 to 220-bushel corn — about 20 to 40 bushels per acre more than expected.
For those who sold corn when futures were surpassing $4 per bushel on the Chicago Board of Trade, the yields made enduring the heat and humidity at harvest easier. If farmers could have hauled corn to the elevator, dumped it and pocketed their money, it would have been a perfect ending.
Louisiana growers have been enjoying good weather, good prices and exceptional yields during harvest, says David Lanclos, soybean and feed grain specialist. But those yields have led to long waits at grain elevators.
With 75 percent of the state's 750,000 acres of corn harvested, truck drivers have been waiting five hours and more to unload trucks. Farm crews have had to wait with loaded carts and combines, adding to harvest expense.
That expense pales in comparison to the widening basis at elevators that are filled to capacity and running out of trucks, barges and rail cars to move grain.
Growers are upset. “Supposedly, farmers paid a wide basis for elevators to secure barges so this would not happen,” said a Louisiana consultant. “We are waiting to hear the story on why the barges are not available.”
Rep. Jo Ann Emerson, R-Mo., sent a letter to the chairman of the Federal Trade Commission, asking why cash prices have fallen to $2.56 a bushel or 85 cents a bushel off the nearby Chicago futures contract at one southeast Missouri elevator.
Wider basis levels — $1.17 for soybeans and $1.19 for soft red winter wheat — represent an added cost to farmers, she said. When those costs get out of control, “the entire agricultural community is affected for years to come.”
Grain merchandisers will say the wider basis simply reflects market realities: They are being asked to handle much larger grain quantities than the system can handle. That excuse is beginning to wear thin. The grain industry has known for six months or longer Mid-South farmers planned to significantly expand their corn acres.
Yes, more farmers could have forward contracted or hedged corn futures or hedged the basis to protect against it becoming weaker at harvest. But growers are beginning to wonder why they seem to be the ones always taking the risk? The risk of coming out on the short end when it comes to the markets, the farm bill or input and equipment prices.