Wheat storage a winner, says analyst

Winnipeg | CNS – As yields grow throughout North America and the physical size of the crop becomes larger, farmers who invest in storage bins now, stand to reap the rewards later.

“Guys with space are winning,” said Kurt Ahrens, founder of Grainbot in Omaha, Nebraska.

Speaking at the Grain World Conference in Winnipeg, he pointed out that storage capacity utilization in the United States last year was record high. That caused many to offer cash purchases only or deferred pricing contracts.

Ahrens says many have started to play both sides of the market too.

“Once they own the grain at harvest there’s likely to be a large carry in the market,” he said.

Ahrens says anytime the carry in is over 2.2 billion or 2.3 billion bushels in the U.S., storage companies will make money.

“But when it’s one million or below, they won’t likely make money carrying it but they can make money trading it,” he explained.

Ahrens thinks wheat is the commodity that will get carried the most, as it is the most abundant.

He says farmers in Iowa may not want to invest in storage facilities, because they are flooded with corn and soybeans, both of which are moving quicker than wheat.

“Like in Kansas, wheat is very common right now. If you have a big bin, you can take advantage of the carry year over year,” he said.

At the same time, he says there will likely be some advantages for almost everyone if they can store their crop.

“I think storage will be a very good investment. I think it will outpace the return on land-investment in many parts.”