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Better but not yet good enough. That sums up grain transportation in the northern Plains. Shippers and farmers are worried that pressure will be felt nationwide by barge lines as well as railroads struggling to move record crops to export.Statistics that railroads give to the federal Surface Transportation Board (STB) show big gains, from a backlog last March of 16,000 grain cars in the BNSF Railway Company system and 8,000 in North Dakota alone. By summer, cars more than three days past due fell to 1,000 in North Dakota but crept back up to about 3,000 in October.Through summer and fall, BNSF continued work to boost service. It now has 130 grain shuttles of 110 cars, a record, says John Miller, agricultural products group vice president for BNSF. “From Fargo, North Dakota, and west is really going to feel like a different railroad,” Miller says.That’s due to $5 billion in capital investments by BNSF this year, with nearly $1 billion of that in the North Dakota region. It includes 55 miles of new double track between Minot, North Dakota, and Glasgow, Montana. BNSF has installed nine new or expanded sidings in North Dakota and six in Montana, along with better signaling. In farm fields, the improvement isn’t obvious. Southwest of Grand Forks, North Dakota, when Rick Ostlie started combining soybeans this fall, the corn basis at his local elevator was still 95¢ under futures, for a cash price of $2.29 a bushel.“It’s costing me 50¢ to 60¢ a bushel on corn because of the oil boom,” says Ostlie. “I’m competing with the Bakken area for railcars. I can’t compete with oil when it comes to shipping.”Without adequate pipelines for oil, shipping in tanker cars has ballooned. In 2009, U.S. railroads carried 11,000 carloads of crude. By 2013, they shipped 400,000, says Mike Steenhoek, executive director of the Soy Transportation Coalition in Ankeny, Iowa. Landlocked North Dakota depends on rail. Corn Belt states have more processing and river barge terminals, but Steenhoek says they’ll feel North Dakota’s pain. “Our system is so interconnected that if there’s an issue in one place, the ripple effects will be felt elsewhere,” he says. In states near North Dakota, “people are going to be willing to assume more trucking costs to get to the river. I think it’s going to increase demand for river services, as well.”Barge rates are generally slower to rise, says Dan Mack, vice president of rail transportation and terminal operations for the cooperative, CHS, “but the market is starting to respond to that.”“I don’t anticipate anything to the degree that we saw on rail, but there will be more demand for barges as we get into winter,” he adds. As 2014 crops are marketed, “we probably are going to see more exports finding their way out of the Gulf Coast,” he says.Oil is a big player but not the only one pressuring railroads. A recovering economy is boosting demand for intermodal trains that carry containers for trucks, Mack says. Demand for coal has bounced back. Even agriculture is adding pressure in the northern Plains region. “If you look at the growth of corn and soybean production over 10 years, it’s pretty significant,” he says.
With the exception of a few showers in parts of the region -- some of which added up to an inch of rain -- the harvest weather window in the central third of the U.S. remains open, keeping corn and soybean harvest progress running along well, while the end of winter wheat planting edges closer in the Plains.Rain has fallen in the first half of the week, with most of it isolated to the southeastern portion of the Corn Belt, namely southern Indiana where up to 1 inch of rain fell Tuesday, according to Freese-Notis Weather, Inc., meteorologist Wayne Ellis. However, a combination of warm temperatures in that same region and an outlook favoring drier conditions will likely keep any weather delays minimal. Beyond the weekend, most of the Midwest will see average or below-average rain -- or snowfall -- totals."Some rain totals were in the .50- to 1.00-inch range and anywhere from a few hundredths of an inch to .5 inch elsewhere in the rain band," Ellis says. "A few light showers will fall on Thursday, mostly north and east with a light mix of rain and snow on Friday in the Southern Great Lakes and far eastern areas. The weekend looks dry across the region. The six- to 10-day outlook features above-normal temperatures for the west and near-normal east. Rainfall will be above-normal for roughly the southwest quarter of the region, below normal far northwest, and near normal rain elsewhere."The Plains, where farmers are inching closer to the end of wheat planting, will see some showers by midweek next week, but a window of mostly dry weather should get wheat farmers at or near the end of planting."The drier pattern in central and western areas will allow fieldwork there to progress well. The drier pattern across the Plains through the weekend will allow winter wheat planting to finish up," says MDA Weather Services senior ag meteorologist Don Keeney. "However, dryness is building again in western and southern areas, which is stressing wheat growth. A notable upturn in showers is expected in the central and southern Plains next week, though, which would improve moisture and wheat conditions. Continued mild temperatures across the Plains will favor wheat establishment."Looking beyond the normal fall harvest window for the Corn Belt, there's been a noticeable shift in predictions, especially for temperature. A weak El Niño system continues to dominate the southern oscillation index, giving little or no guidance to temperature projections heading into winter. And now, an outlook that a couple of weeks ago featured warmer-than-normal temperatures has that outlook trending the other direction."The latest 31- to 60-day temperature outlook has trended cooler across the Midwest, central and northern Plains, and Delta," Keeney says. "The cooler conditions across the Plains would slow wheat growth and begin to push the crop into dormancy in northern areas."See more of the latest weather data
Recent projections have already foreshadowed the likelihood of higher returns for soybeans than corn next year. Now, the numbers are pointing to that same scenario much quicker than the 2015 crop.Based on projected costs and the median prices projected in USDA's World Agricultural Supply and Demand Estimates (WASDE) report earlier this month, soybeans will net more per-acre revenue than corn this fall, says University of Illinois Extension ag economist Gary Schnitkey. Neither crop will light the world on fire this fall, returns-wise, but the cost side of the equation will likely make soybeans the winner, provided yields wind up where the latest estimates have them."Unlike most years, soybeans are projected to be more profitable than corn in 2014. Those farms raising more soybeans this year will tend to be more profitable than those raising more corn," Schnitkey says in a university report. "Total costs equal $588 per acre for corn and $372 per acre for soybeans. Operator and land return equals gross revenue minus total costs and represents a return to both the farmer and landowner. Operator and land return equals $210 per acre for corn and $328 per acre for soybeans. Soybeans are projected to have a $118 per acre higher return than corn."The economist projects, for the highest productivity land in his home state, gross revenue will be about $100 higher per acre for corn, but costs for that crop will exceed those for soybeans by more than $200 based on 2014 crop budgets and a 50-50 rotation between the two crops. "Operator and land return equals gross revenue minus total costs and represents a return to both the farmer and landowner. Operator and land return equals $210 per acre for corn and $328 per acre for soybeans," Schnitkey says. "Given projections, soybeans are projected to have a $118-per-acre higher return than corn."Join the Chat: What will net you more revenue this fall? There's wiggle room in the numbers that make these projections less than a sure thing, though: If corn yields exceed 250 bushels per acre or prices range closer to $4.00 a bushel, for example, corn will end up the winner. The same goes for soybean prices and yields. Schnitkey's projections use an average soybean yield of 65 bushels per acre, but if those yields are closer to 50 bushels an acre -- or prices slide south of $10 a bushel -- corn will be the revenue leader this fall. But as the economist points out, these swings are fairly wide and will make it tough for corn to come out on top this fall."Differences in prices, yields, and costs impact relative returns between corn and soybeans. The sizes of [these] changes illustrate that soybeans will be more profitable than corn in most situations," he says, adding cash rents will also have a profound effect on the revenue balance. "At a $300 cash rent, farmers receive a return for corn equal to $90 per acre. The farmer return for soybeans equal $28 per acre. At a 50% corn and 50% soybeans, operator and land return equals $269 per acre. Overall, a $31 loss occurs for a farmer given a $300 cash rent. Without soybeans, the return would have been much larger."These numbers could have implications well beyond when this year's crop is in the bin and marketed. There's already been a lot of talk among ag economists and market analysts that soybean acres could see a boost in 2015 from an increasingly imbalanced revenue picture for that crop vs. corn. Now, the numbers for this fall further affirm the assertion that farmers will plant more soybeans next fall. "Unlike most years, soybeans are projected to be more profitable than corn in 2014. Those farms raising more soybeans this year will tend to be more profitable than those raising more corn. Having a higher return for soybeans is unusual and may have implications for 2015 planting decisions," Schnitkey says, adding that local crop potential will remain critical in 2015 planting decisions. "The 2014 projections may hold implications for shifts in acres in 2015. Similar to 2014 returns, return projections for 2015 suggest that soybeans will be more profitable than corn. Central Illinois has a larger comparative advantage in corn production over soybean production than many other areas of the U.S. Hence, relative return differences between corn and soybeans likely are larger outside of central Illinois. Hence, economic incentives to switch acres outside of Illinois likely will be larger than those for central Illinois."