North Dakota Marketing Challenges

Farmers Typically Sell Soybeans at Harvest, But May Have to Scramble to Store Them

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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BNSF cars wait to be loaded at a grain elevator near Edgeley, North Dakota. Farmers this year are going to have to figure out how to store soybeans because of a lack of exports out of the Pacific Northwest. (DTN file photo by Elaine Shein)

OMAHA (DTN) -- A shutdown in soybean exports from the Pacific Northwest is sounding some alarms in North Dakota as farmers who typically sell soybeans at harvest directly for export likely face the prospects of storing those beans for several months.

"Storage space both on-farm and in commercial storage is really going to be at a premium this harvest," said Frayne Olson, an Extension crops economist and marketing specialist at North Dakota State University. "Because of the tariffs, in particular on soybeans, moving into China, the flow of soybeans has essentially been halted, especially from this region."

North Dakota State University held a press conference Thursday to highlight how the current trade dispute largely between the U.S. and China will end up disrupting normal harvest, rail shipping and storage for farmers in the Northern Plains.

Farmers are going to have to change the way they store, as well as their marketing plans moving through the winter months. Historically, North Dakota farmers store corn and wheat, and sell their soybeans at harvest for cash flow. This year they will have to shift their plans because elevators are going to be more likely to move corn through the system.

"It can also mean a big difference in the way they manage the flow of grain on their farm. They are going to have to store their soybeans and maybe take their corn to town," Olson said. He added, "What I don't think they are prepared for is how long they are going to have to store the soybeans."

In a typical year, about 75% of North Dakota's soybeans move on rail to the Pacific Northwest (PNW) and its eight soybean export terminals, but local grain elevators have not had bids since June to export soybeans out of the PNW.

"Based on the current bid sheets, there's no bids for soybeans to the PNW through February 2019," Olson said.

As a result, Olson said grain elevators are trying to allocate space for grain and soybeans that farmers have already presold for harvest delivery. North Dakota farmers are expected to harvest 6.5 million acres and draw in nearly 249 million bushels of soybeans, according to USDA.

At the same time, elevators are trying to maintain space for all the other fall-harvested crops, including an estimated corn crop of nearly 459 mb and a spring wheat crop projected at 312 mb that is about 80% harvested already.

While it might seem rationale for North Dakotans to move their soybeans east, Olson said that's still going to be difficult to do, because grain and oilseeds in the state are set up to move west. The Dakotas in general have limited soybean crushing capacity. AGP is building a new facility in Aberdeen, S.D., but it will not come on-line in time to make much of a difference with the fall crop.

DTN's Soybean Index for North Dakota shows the average spot cash price is $6.72 a bushel, compared to the National Soybean Index price, which is $7.42 a bushel. In May, the regional index price in North Dakota was running around $9.35 a bushel.

"The local elevators have dramatically dropped their prices to try to provide an incentive for farmers to store it on farm," Olson said. "Some of these elevators have gone to no-bids, meaning they are literally not offering a bid for harvest delivery. Others have dramatically lowered their prices. They are going to be able to accept some grain at harvest, but it's really going to be very, very minimal."

All of this changes the set of tools North Dakota farmers have to cash-flow their bills, but also what to store and what to sell. And the real kicker is that even if the tariffs were eliminated tomorrow, it could take several months for grain and oilseed logistics to ramp back up. Olson said farmers need to be prepared to store soybeans not just for a few months, but possibly as far as into next summer.

"As we look at this, you need to start to adjust your system or adjust your handling and grain storage, as well as your marketing plans to compensate for the fact soybeans likely will not flow at all at this harvest," Olson said. "And it will take quite a bit of time to move even when the tariffs come off."

The problem also filters into soybean production in South Dakota as well, but Olson said South Dakota does have more soybean processing capacity and eastern South Dakota farmers can take their beans to some Minnesota facilities as well.

Storage is going to be a problem throughout major corn and soybean production areas because of both ending stocks and projected bumper crops. "One of the things we have heard this year is farmers are looking more to buy bags and baggers versus rather than wanting to buy steel and put it up," Stephen Nicholson, a grain and oilseed analyst for RaboResearch, told DTN at the Farm Progress Show this week.

DTN's View from the Cab farmers this week in Ohio and Kansas also both raised concerns about harvest storage capacity.…

Nicholson reiterated some of Olson's concerns. "The PNW hasn't been bidding for soybeans for the past two months," Nicholson said. "If there's no bid out there and nobody wants it, then what do you do with the beans?"

The Dakotas, in general, do not have the processing capacity locally to take up most of the soybeans. "So they have been depending on the rail and the PNW to take their beans, but that's not going to happen anytime soon. I am concerned you are going to have a lot of beans sitting in places people don't want them, just in the wrong spot."

Ken Hellevang, an agricultural engineer professor and NDSU Extension specialist, said North Dakota farmers are going to need to get more up to speed on some soybean storage issues they may not have worried about in the past. Seed coating breakage increases dramatically below 11% moisture. Ideally, soybeans should be harvested at 11% to 12% moisture, Hellevang said.

Oil also is very sensitive to temperature. Whatever storage option is used, the temperature needs to be cooled with some kind of aeration system. A lot more people are looking at options such as bags, but they need some ventilation as well. Then ensure the bags are pointed north-to-south instead of east-to-west because the lack of sunshine would be uneven and create moisture accumulation on the north side of a bag.

Storing on the ground would require a prepared surface, some type of aeration, a cover and a way to handle water runoff from the pile, Hellevang said.

"What we don't want to do is just pile beans on the ground," Hellevang said.

NDSU officials also are worried about farmers dealing with more stress because of this storage and marketing situation that is largely out of their control. Farmers need to take time to deal with their own wellness and manage their stress levels.

Chris Clayton can be reached at

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Chris Clayton