Grain bins springing up across Iowa
It’s a good time to be a grain farmer, especially a corn farmer. Prices per bushel hit a 23-month high last September at $4.49 and have been climbing ever since.
No wonder then that Jeff Reints, of Shell Rock in northeast Iowa’s Butler County, planted more than two-thirds of his 1,900 acres in corn this year. He also built on-farm storage units so that he can be more flexible in how he markets in the booming market.
“Say the month of June I want to sell corn, I can forward price that instead of taking their fall price, I can book that for say, March or July delivery, typically that’ll give me that 20 to 25 cents extra compared with the fall price. We call that carrying the market,” Reints said. “The elevator or the ethanol plant says ‘hey we don’t need any more fall corn, so we’re gonna give you a little extra incentive to leave that in your bin to a future delivery point.’ ”
The U.S. Department of Agriculture’s perspective plantings report released in late March predicts farmers will plant more than 92 million acres of corn this spring, the second highest in history. Reints isn’t alone in considering what to do with those additional bushels.
In Iowa, the largest corn producing state, many producers are opting to keep the grain close to home.
Charles Hurburgh, grain operations specialist at Iowa State University, said because the state’s ethanol plants use about 60 percent of the crop it makes good financial sense to keep the product on the farm
“We need the corn here in Iowa instead of shipping it away , and as processing plants inherently need so much grain every month, there has to be a steady flow of grain in Iowa from the start to the finish of the growing season. Market prices are changing to reflect that, so bins can be good money,” he said.
Hurburgh said a change in the tax structure has allowed some producers to take advantage of a limited economic stimulus incentive that lets farmers deduct the expensive of the grain bin all at once instead of using at depreciation over a number of years.
“Particularly in the past couple of years, it was possible to write off things like grain bins pretty rapidly against some pretty good income, so that in itself is gonna put more people with the ability to pay that’s for sure,” Hurburgh said.
And it takes some pretty good income to invest in the storage systems. Hurburgh estimated about $100,000 for 50,000 to 100,000 bushel storage. Then it’s another $60,000 to $75,000 for the drying system.
The demand for grain storage bins has also meant a boost to north-central Iowa’s Sukup Manufacturing Co., one of the state’s few grain bin factories.
“As our customer base switched their buying tendencies, we switched with them and we’ve grown from the late ‘90s from a workforce of 120 employees up to 400 employees and now we’re adding another 100,000-square-foot manufacturing building,” said Steve Sukup, chief financial officer. “We just see there’s tremendous opportunities for products and our customer’s grain products across the world.”
And now, market speculators say as rain and cool weather delay planting, corn futures prices could top $8 a bushel in the next few weeks. That means on-farm storage units will likely be springing up at an even faster clip.