Open Letter to Patrons regarding wet crop and ground conditions – October 2013

The calendar has rolled into the last half of October and with it we have been provided with some abundant moisture. This has been a good recharge for our subsoil moisture as well as its positive impact on crop quality. Soybean moistures alone are adding 4-5% more to the yield this harvest vs. last year’s extra dry beans! Despite the lack of late summer precipitation, most would agree that they are pleasantly surprised with the yields experienced so far.

However, there are some challenges Wheat Growers faces with the moisture we continue to receive. Our challenges are not around drying capacity as most of that concern was addressed with the Connecting to Tomorrow projects in 2010. The question we face today is “where to go with all the dry grain?”

When we plan for harvest we forecast how much grain we will receive, what will be in the elevator at the end of harvest, how much can be piled on the ground, and how many trains we will need to ship. The cost and risks associated with each of these options are evaluated and an initial plan is determined and adjusted as market and weather conditions dictate.

At harvest time, demand for railcars is at the highest point and costs more than in other times of the year. Shuttle freight is typically $0.20 – 0.50 per bushel higher at harvest than other times of the year. Another way of looking at that is if we are able to store that grain (that is why we pile) and wait to ship it in December or January when the cost of those cars are back to non harvest levels, we avoid having to pass that higher cost thru to producers. Our better bids for January/February are reflecting the lower freight costs.

Due to wet ground conditions (leading to spoilage and inability to get trucks to piles) it looks like we will not be able to pile as much as we initially planned, which leaves us two options. We can slow harvest down by reducing dumping hours, or we can buy more freight and keep your combines rolling.

Our intention is to keep your elevators fluid and maintain the ability to dump your grain! We can’t guarantee railroad performance, but we have adjusted our plan and positioned ourselves for the remaining 40% of soybean harvest and the 85% of corn harvest that is still in front of us by proactively buying rail freight. This freight does come at a higher cost and rail performance is always a challenge (we are currently experiencing 30% slower train placements from the BNSF than anticipated), but rest assured we will do everything we can to help you get your crop out of the field as quickly as possible!

In addition to extending dumping hours well into the night, we also offer many Grain Marketing Programs to help you maximize your returns. It is more than just offering a DP program and a cash bid. It is about offering marketing tools that fit an individual producer’s need. Wheat Growers offers both short and long term storage options, tools to protect against lower prices while allowing upside participation, or Target Price Agreements that watch your orders around the clock are just a few of the programs we offer.

Have a safe remainder of harvest.