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Corn and soybean stocks rise as producers decide not to sell

With prices low, farmers are taking their products off the market. Mark Andres, location manager of CHS Farmers Alliance in Ethan, said farmers are storing more grain this year because of low prices. "It's more prominent to do that now than it ha...

Wayne Kaufman, 64, of Delmont, operates a combine Oct. 25 on cropland south of Delmont. (Jake Shama/Republic)
Wayne Kaufman, 64, of Delmont, operates a combine Oct. 25 on cropland south of Delmont. (Jake Shama/Republic)

With prices low, farmers are taking their products off the market.

Mark Andres, location manager of CHS Farmers Alliance in Ethan, said farmers are storing more grain this year because of low prices.

"It's more prominent to do that now than it has the last few years because of the price," Andres said.

According to the United States Department of Agriculture's National Agricultural Statistics Service, amount of corn stored in South Dakota as of Dec. 1 - when stocks are at their highest - has risen over the past few years.

In 2015, South Dakota farmers stored 630 million bushels of corn and 161 million bushels of soybeans. That's compared to lows of 387 million and 80 million in 2012, when a drought caused yields to fall and prices to jump.

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The price of corn received in August in South Dakota was $3.07 per bushel, sharply below prices over $6 and $7 in 2012 and 2013. The price of soybeans was $9.41, also significantly lower than highs in recent years.

National storage has also risen since 2012 to 11.2 billion bushels of corn and 2.7 billion bushels of soybeans.

Andres said many farmers are trying to store as much as they can in hopes prices will rise, but he said that's a bit of a gamble. USDA predicted record yields in areas across the country, so as supplies continue to rise, prices will likely remain low.

To mitigate risk, he recommends looking at futures and contracting with buyers to sell grain at a fixed point in the future when prices may be more favorable, but he also said it's important to sell at different times throughout the year.

"That way, they aren't always looking to hit a homerun," Andres said. "If you just try to sell all your grain at one time on one sale, you're missing out on maybe some other options."

Andres said storing grain is actually somewhat beneficial for his elevator, as it spreads business throughout the year, instead of buying a large amount immediately after harvest and struggling to store it before winter.

"You hope to get it bought at some point. Right now, it does relieve a little bit of the pressure going into winter, as to having piled grain on the ground and everything," Andres said.

Wayne and Brett Kaufman, father and son farmers from Delmont, are planning to store whatever they can. They plan to keep about half the soybeans they harvest this year and about one-third of their corn.

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Wayne said harvest has run later this year than usual, as farmers in the Delmont area received too much rain to plant early in the spring, and rain and fog has delayed harvesting late in the fall. But from what he's seen, soybean yields have been very good.

"The good yields make up for the lower price. It helps a lot," Wayne said. "We're storing what we can and then taking the rest to town. We sell what we have to make the bills, and then keep what we can and hope the price will go up a little bit."

But space is also a concern, as many farmers are holding on to grain from previous years. Storage as of Sept. 1 - just before harvest - has greatly risen from a 10-year low in 2013, according to NASS.

As of Sept. 1, South Dakotans stored 104 million bushels of corn, more than 11 million bushels higher than in 2015. In 2013, only 42 million were stored at the same point of the year.

Nationwide trends follow the same pattern. Farmers in the United States stored more than 1.7 billion bushels as of Sept. 1, the highest total since 2006.

Brett Kaufman said some farmers' bins are already filled with other crops, like wheat, so they may be forced to sell. The Kaufmans said they'll have to sell some grain due to lack of space and upcoming bills, but they'd like to hold on to as much as possible.

"It's smart to hold to a better price, to a price where you're comfortable that covers all of your bills," Brett said.

"I'm not sure that's going to happen this year," his father added.

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The Kaufmans have found another way to combat low prices. The pair also raise cattle, which require silage to feed. The Kaufmans have always cut their own silage, but in 2012, they came to a crossroads.

Because of the drought, they faced 600 acres of crops that were only suitable for silage, and their man-powered machine couldn't handle the load, so they decided to purchase a self-propelled silage machine, which drew attention from their neighbors.

The Kaufmans founded Kaufman Forage Harvesting and continued attracting customers, leading them to twice upgrade their silage machine and hire some help.

Brett said silaging makes up between one-quarter and one-third of their total revenue, and they hope the business continues to grow. While they're still feeling the sting of low commodity prices, the silage business has helped to numb the pain.

"It's a help. Every little bit helps," Wayne said.

"We're not going to starve, but we're not going to be out buying a new Mercedes or nothing," Brett said.

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