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High corn forecasts not expected to cause another railway backlog

Despite high corn forecasts for 2016, a railway backlog is not expected to return to South Dakota. In 2014, a lack of rail cars caused by shipping demands in the Bakken oil fields and high corn yields combined to delay the average rail shipment b...

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Corn (Republic file photo)

Despite high corn forecasts for 2016, a railway backlog is not expected to return to South Dakota.

In 2014, a lack of rail cars caused by shipping demands in the Bakken oil fields and high corn yields combined to delay the average rail shipment by more than seven days, but one grain elevator manager doesn't expect the high forecasts for corn and soybean production to bring back the railcar shortage in South Dakota.

"With the oil prices dropping where they have, you see coal cars and oil cars everywhere," said Todd Yeaton, chairman of the South Dakota State Railroad Board and manager of Gavilon Grain in Kimball. "With that being the case, that freed up cars along with the BN (Burlington Northern Santa Fe) and the UP (Union Pacific) putting a bunch of money into infrastructure and upgrading their equipment."

Yeaton doesn't see the backlog causing concern like it did throughout 2014, and he said rail efficiency has steadily returned to normal since the substantial backlog. According to Yeaton, train times are currently some of the best he's seen in years.

While he didn't see a return to the congestion and lack of cars seen in 2014, South Dakota could see a slight backlog due to the 6.4 percent increase in corn planing expected in 2016, according to a United States Department of Agriculture report issued Thursday. Yeaton said there could be some storage issues in the fall at harvest time, but the reduction in traffic since the slowdown of the work in the Bakken oil fields and increased rail capacity should negate some of the hardship caused two years ago.

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"It may be short-lived, but I don't see the long-term stress and struggle that it was here a couple of years ago," Yeaton said.

The railway backlog and increasing corn yields in recent history didn't caused one Ethan producer to change his methods. Jeremiah Freidel, a board member on the South Dakota Corn Utilization Council, said he still plants around 1,000 acres of corn.

Freidel also didn't increase his storage capacity by any significant measure, but he said some neighboring farms have reacted to the recent experience with high yields and railcar backlogs by added storage sites on their properties. But Freidel said some of that increased storage capacity can be attributed to more producers wanting to sit on their product until prices rise.

Since Freidel transports most of his corn to ethanol plants by truck rather than rail, the backlog didn't affect his operations as much as it did for others. He also expected the industry to bounce back after the concerns in 2014.

"We figured it would pass, as all things do," Freidel said.

With the railways now performing as expected, Yeaton and the Railroad Board are looking ahead to avoid a similar situation to the one that arose in 2014 by making infrastructure improvements on the state's rail lines, including siding repairs on the Rapid City, Pierre & Eastern Railroad.

"We're looking to the future to help increase the efficiency of the railroads within South Dakota," Yeaton said.

Related Topics: CORNAGRICULTURE
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