2012 Grain Elevator Survey Data Illustrates Volatility
As 2011 came to an end, the outlook for grain elevators in 2012 was strong. Many parts of the country saw good production in 2011, which led to continued strong sales and margins for elevators in 2012. However, as the planting and growing season progressed, much of the country suffered from a severe drought. In the end, the drought resulted in smaller harvests in 2012 and will most significantly impact grain elevators, processors, and livestock producers in 2013.
More concerns are on the horizon in 2013, particularly in the northern Midwest. The late winter and persistent spring rains reduced the acres of corn planted. Later plantings in the rest of the country will result in a later harvest and the risk of reduced production due to an early frost. Processors, like ethanol plants, and livestock producers that were counting on an early harvest and September new crop corn, may be looking in September for remaining old crop corn.
The grain industry for 2013 will have a volatile year as we struggle to meet demand with the short 2012 crop and the uncertain yield of the late planted 2013 crop.
Volatile summer weather throughout the Midwest will continue to cause uncertainly for the rest of the growing season. On July 11, the United States Department of Agriculture released their monthly World Agricultural Supply and Demand Estimates. Projected 2013/2014 U.S. feed grain supplies are lower again this month with reduced beginning stocks for corn and sorghum. Projected corn production remains just below 14 billion bushels.
How we can help
Keeping good records and understanding your costs, rates of return, and break-even analysis is essential for success. A well-documented risk management policy is also critical. While unpredictability brings risk, it also emphasizes the need to plan, so that grain farmers and grain elevator owners are prepared when opportunities arise. CliftonLarsonAllen's Grain Elevator Survey Report will help you find out how your key financial ratios compare to the competition.