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North Dakota adds capacity as farmers decide to sell or store crops amid low commodity prices

GRAND FORKS, N.D.--North Dakota grain facilities continue to add storage capacity, a much-needed addition as farmers decide what to do with their crops in the wake of low commodity prices and the prospect of a large corn harvest.

Walsh Grain Terminal in Park River, N.D., is in its fifth season and has storage capacity of 1.8 million bushels and the ability to load shuttle trains. photo by Eric Hylden/Grand Forks Herald
Walsh Grain Terminal in Park River, ND, is in it's fifth season and has storage capacity of 1.8 million bushels and the ability to load shuttle trains. photo by Eric Hylden/Grand Forks Herald

GRAND FORKS, N.D.-North Dakota grain facilities continue to add storage capacity, a much-needed addition as farmers decide what to do with their crops in the wake of low commodity prices and the prospect of a large corn harvest.

Licensed grain storage in the state has been on a sharp increase since the mid-2000s, according to the North Dakota Public Service Commission. The trend continued last year, with licensed grain storers adding about 20 million bushels of storage capacity, a 4.5 percent increase from 2015, according to numbers released Sept. 9.

"In 13 years, it has gone up 90 percent," PSC Commissioner Randy Christmann said. "Since the early 2000s, it has really shot up."

The PSC licenses 383 grain warehouses and 81 roving grain bins for a total of 471 million bushels of storage capacity. The past decade has seen rapid growth with storers increasing their capacity by 69 percent.

Christmann attributed the increase in storage space to advancements in science and technology, adding producers are managing much larger operations than even a decade ago.

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"Our farmers are able to produce so much that it just became needed," he said.

The trend contradicts the decline of licensed elevators. North Dakota had more than 2,000 elevators in 1915. That number was cut in half by the 1960s, and elevators have continued to close and merge since then, bringing the total count to just fewer than 500, according to the PSC. It's a trend Christmann said he expects to continue, but he doesn't foresee a lot of closures.

Elevators built 100 years ago had less storage capacity than today's licensed facilities, averaging 30,000 bushels apiece for a grand total of 60 million bushels.

Today, the average storage space for a licensed facility is more than 1.23 million bushels. With the advancements in technology, Christmann said he doesn't expect growth in storage capacity to stop.

"I don't think we've peaked," he said. "I think our ag producers are going to continue to produce more and more, and hopefully the grain business continues to respond and provide the facilities that are necessary for them."

Storage shortage

The PSC doesn't track private storage capacity, such as bins found on individual farms, but there is no doubt farmers have continued to add storage to their operations, Christmann said. That's the case for farmers in the Grand Forks area, said Willie Huot, a North Dakota State University Extension Service agent for Grand Forks County.

"They've made very large investments in grain storage facilities both on the elevators and on farms in the last 10 years," Huot said. "It's historic, the increase in grain storage capacity."

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But despite the increase in storage, farmers this year face the tough decision of selling crops at low prices or holding onto grain until prices rise. If they choose the latter, they have to find options for storage - which is limited because last year's unsold crops are still in the bins, Huot said.

"We have a really severe shortage for grain storage this year," he said.

Commodity prices have been on the decrease since 2012, with some crops selling for lows that haven't been seen since 2009, according to the U.S. Department of Agriculture.

Wheat prices have recovered slightly since the end of August, when the Chicago Board of Trade's prices dipped below $3.70 per bushel. As of Tuesday afternoon, wheat for December contracts was at $4.04 per bushel, down from the 10-year high of $8.07 in 2012.

North Dakota farmers are wrapping up the small grains harvest, with overall harvested bushels expected to be down from last year, according to the National Agricultural Statistics Service. Even so, the ag industry is expecting a large corn crop this year, Huot said.

Farmers are trying to get into cornfields, though it has been difficult with rain shutting down most operations. As of last week, 2 percent of the North Dakota corn harvest was in the bin. Farmers are forecast to produce 439 million bushels of corn, up 34 percent from last year. The average yield will be slightly up from last year to 135 bushels per acre, a record high for the NASS forecast.

Corn has recovered slightly since prices fell to near $3 a bushel in August. Corn was at $3.32, down from $6.46 in 2012.

With a large corn crop likely on the way, elevators are reluctant to take wheat for storage this time of the year, Huot said.

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"It's going to be very difficult for any movement of wheat until after the corn harvest is done," he said.

The soybean crop also will be up 11 percent from last year to 205 million bushels, according to NASS. Sugar beet production is forecast to be 5.96 million tons, up 4 percent from last year. Yields should reach a record high with 28.4 tons per acre.

Sell or store?

A small percentage of the wheat harvest has been sold as farmers wait for better prices, Huot said. Producers may look to putting wheat on the ground or using temporary storage with plastic bags, Huot said.

"We've seen a significant increase in that over the last four or five years," he said. "People do it because it is better than having grain in a pile-certainly not as good as having grain in a steel bin, but it's better than having it out in the open."

Each producer will have to decide how he or she moves forward with this year's harvest-sell or hold out for better prices-but they should expect storage to be tight, Huot said.

Farmers will try to store as much as possible on their home operation before turning to elevators for storage, said Tom Burchill, general manager for the Walsh Grain Terminal in Park River. He noted farmers who bring crops in are opting to price grain out for later dates, adding he is confident his terminal will be able to take grain throughout the corn and soybean harvest.

"I think we will be able to continue to take grain in," he said.

For some, storing grain until prices increase is not an option, Christmann said.

"You can't afford to hold onto it sometimes, but at least for those who can, or to the extent that they can, then grain storage gets to be a big deal," he said.

It's hard to guess if the added storage space will be enough for farmers, Christmann said. There are multiple unknown factors that will play a role in answering that question, including whether producers will sell or store their crops and what yields will be once crops are fully harvested.

"We really don't know what those yields will be until it is in the bin," he said. "Certainly, another 20 million bushels of storage capacity is going to help a great deal. Only time will tell for sure if it is the right number for this year."

A load of wheat is probed at the Walsh Grain Terminal in Park River, ND, recently. photo by Eric Hylden/Grand Forks Herald
A load of wheat is probed at the Walsh Grain Terminal in Park River, ND, recently. photo by Eric Hylden/Grand Forks Herald

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