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Area grain buyers hold onto hope

The soaring new elevators of Liberty Grain near Kimball loom behind a wilting, heat-stressed stand of corn earlier this year. (Marcus Traxler/Republic)

As crops across the Corn Belt continue to wilt under the strain of drought, area buyers are still confident they'll have supply this fall. Chuck Jepson, a partner in the newly constructed Liberty Grain facility between Kimball and White Lake, said corn production will not be as good as anticipated but will still be OK.

He said Liberty Grain, which will load large trains bound for the West Coast export terminals, is well-financed and can sustain a weak start-up year. The project cost exceeds $30 million and is backed by Gavilon, an Omaha-based company that Jepson said owns 200 elevators.

"I think a lot of our local crop here beat the heat," Jepson said. "We're still optimistic, and we've still got some time to get a rain, but we're not looking at a bin-buster at this point."

Jim Morken, general manager of the CHS Farmers Alliance elevator in Mitchell, said he's confident his operation will have enough corn to meet its obligations, but yields will be down. Prices, which shot up 20 to 30 cents a bushel on Monday, are reflecting the anticipated shortages, Morken said. Corn closed at $7.49 a bushel in Mitchell.

"We're definitely seeing the markets reacting to the fact that we're in a pretty strong drought. The tricky part about this year is that it's not just a local drought; it's pretty much across the heart of the corn and bean belt. It has affected a lot of different producers this year."

Morken said the crops on farms north of Interstate 90 have fared better this year since they were able to take advantage of heavy early rains that weren't available farther south, which he called "our more challenging area."

"Soybeans still have a chance to come back," he said, "but there's a fair amount of corn that will be beyond repair."

Nearly 20 percent of South Dakota was in severe drought and 77.5 percent of the state was experiencing moderate drought when the most recent U.S. Drought Monitor Map was released last week. The U.S. Department of Agriculture crop report released Monday shows that adequate topsoil moisture in South Dakota fell to 11 percent this week from 71 percent a year ago. Surplus moisture -- zero percent this week -- was at 25 percent at this time last year.

The Liberty elevator bought heavily during the recent wheat harvest, which Jepson said has been the sole bright spot thus far in an otherwise tough summer. Jepson said Liberty filled its bins and has temporarily stored wheat on the ground.

It was the right thing to do during the elevator's first year of operation, he felt.

"We decided to keep buying new to get to know our customers," said Jepson, who was pleased with the reception the new grain market received.

The USDA's National Agricultural Statistics Service shows that 82 percent of the state's wheat has been harvested.

Dean Frederickson, general manager at the Poet ethanol plant in Loomis, said his plant has contracted sufficient corn to continue operations. To date, no Poet plants have shut down, he said. The Loomis plant will soon be processing corn oil as another value-added product in addition to ethanol and dry distillers grain, a high protein feed source popular with stock producers. With corn costs going up, the cost of DDGs will also follow, said Frederickson, but he gave no percentage increase.

Larry Wagner, agronomy and crops specialist with South Dakota State University Cooperative Extension's Regional office in Sioux Falls, said soil type is becoming the telling factor in crop survival, with crops planted in lighter sandy soils faring especially badly at this time.

Wagner said some producers, especially in the hard-hit southeast sections of the state, are beginning to send in tests for nitrate levels, a prelude to giving up on the corn crop and cutting it for silage. Silage with high levels of nitrates can be harmful if fed to cattle, he said.

The good news is that 70 to 80 percent feed vaalues can be salvaged from a normal crop even if no corn ears are produced, Wagner said.

"Silage cutting has already begun in the worst areas," Wagner said.