2019 Squeezed Grain Elevator Margins

Not only were America’s farmers seeing lower cash returns last year, grain elevators are also expected to see their profit margins from 2019 drop compared to the previous year. A recent report from CoBank’s Knowledge Exchange Division blamed the lower returns on a higher basis for corn, soybeans, and wheat. The report cited grain elevators offering farmers incentives to sell bushels, such as lower rates on storage, free delayed pricing, and free grain drying. Lower quality and high-moisture grain coming in from wet fields also boost costs, while propane shortages continued to put a damper on elevator revenue. And if that wasn’t enough, drying wet grain can lead to commodity shrinkage, which adds to lost bushels and higher costs for elevators. CoBank says those challenges from 2019 will likely carry into the new year.