Drought brings lower bushels of grain, affecting grain elevators and markets

KELOLAND.com Original

ONIDA, S.D. (KELO) — Grain elevators rely on bushels of grain to stay in business. But with a drought comes less bushels, which means the elevators take a hit.

Tim Luken, General Manager and Senior Merchandiser of Oahe Grain said this year, the bushels are going to be a lot less than they were in years past.

“It’s going to be struggle for us elevators this year,” Luken said.

Right now, the spring and winter wheat are the commodities that are struggling the most, he said. Acres of winter wheat are up from last year.

“Like three years ago, we were so wet here there was enough water to float Noah’s ark, but this year it just dried up and we just don’t have a lot of bushels here to work with,” Luken said.

They have seen a lot of price differences and variation in commodity prices between spring wheat to winter wheat because the winter wheat was good in the southern part of the country, he said. The crop in Onida is running anywhere from 20 to 60 bushels per acrea. On a normal year, it would produce 50 to as high as 100.

Luken says grain prices will be affected into next year. A lot of that will depend on world stocks world-wide wheat prices.

“There’s ample wheat in the world, but domestically, it’s going to affect us a little bit, which in turn could affect us down at the grocery store as far as higher prices go,” he said.

Luken says South Dakota and North Dakota grow most of the spring wheat and they’re the first to harvest it.

“North Dakota has a drought. South Dakota has a drought,” he said. “So, we have short crop which is going to bring higher prices.”

The elevator is going to have the grain, it’s just going to be a lot less, he said.

“I guess my biggest concern is on the spring wheat, when we get into it, that’s the one that’s really going to make a difference,” Luken said. “Normally, you see 40 to 70 bushel spring wheat, I’m looking at zero to maybe 25 at best.”

They haven’t seen any spring wheat come in, he said, but the quality is going to be an issue and he is concerned about the test weight.

“Because when we sell it to flour mills, they want number one milling, so that’s going to be a concern coming down the road,” Luken said.

Recently, the Sully County area saw some rainfall, anywhere from a half inch to two inches, Luken said, which did help the row crops.

“Corn looked like a bunch of pineapple fields going home every day, but now they are lush, they are really growing fast,” he said. “Should be tasseling here in a week a ten days.”

Sunflowers and soybeans also look good right now, but they are still going to be relying on timely rains to carry this crop to harvest, Luken said.

Some producers in the area have grain contracted and some are taking it home and storing it for higher prices down the road, he said. Right now, farmers who are bringing their grain to the elevator are putting it on open storage so they can sell it later.

“[The drought] not only affects the elevators, but it affects the community,” Luken said. “You know, the farmers are going to have the cash too like they had to spend in the community.”

It’s also going to affect the railroads when it comes to hauling grain to flour mills or exports, he said.

This drought is going “to have a long tail to it”, Luken said. They won’t have another small grain harvest until next year.

The drought will have an effect on next year’s crop, he said, but timely rainfall and the conditions this fall will make a big difference.

“Our soil profile is pretty short,” Luken said. “We used to have some good subsoil, but that’s gotten utilized and used up. So, we are going to definitely need some snows this winter to charge our subsoil profile. Our soils out here hold it very, very well.”

Last year, Sully County hardly had any snow, he said.

“I’ve lived out here 30 some years and it’s the least amount of snow that I’ve ever seen since I’ve been out here,” Luken said. “While talking with the older guys in the area, it’s the least that they’ve ever seen also.”

The worst drought that Luken has seen in his 42 years of working in grain was the drought in 2006.

“A lot of people are trying to compare this to it, but it was a lot worse back then,” he said. “Our farming practices are different. We no-till, which saves a lot on water that we can produce more with less.”

With no-till, the ground is not touched and the rain that does fall stays, he said. There is no evaporation and it helps farmers use the water that they have for a longer period of time and it can be utilized 100-percent.

The corn hybrid technologies are more drought tolerant now, and they have better crops with less water, Luken said.

“This year, I’ve seen it worse, it’s not going to be good, but time will tell,” he said.

Crop rotation is also something that farmers in Sully County utilize, Luken said. The main rotation in the area is sunflowers, then spring wheat, winter wheat and then corn. Some producers also add soybeans to that rotation. ‘

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