WASHINGTON, D.C. (RFD-TV) — Higher diesel prices are putting pressure on agricultural transportation costs, even as demand for grain shipments remains strong.
USDA projects fall grain supplies will be 4% above the recent average, including carryover stocks and new corn, soybean and sorghum crops. Barge transportation costs rose 50% during the third quarter, while ocean freight rates also increased.
USDA economists warn that strong shipping demand, higher fuel prices and global transportation risks could keep freight costs elevated.
Grain elevators are also facing higher expenses. According to CoBank, rising grain prices and interest rates are making crop storage more expensive, with financing $5 corn requiring more capital than $3 corn, particularly for elevators holding millions of bushels.
Wheat faces the greatest financing pressure, while soybeans offer limited returns on storage.
Beyond rising expenses, limited storage space is creating another challenge for grain elevators, which may need to move crops faster this year to remain profitable.
Kansas State University grain specialist Guy Allen says some states are facing greater storage pressure than others.
“This year, Missouri is really a fairly tight space. They’ve got 117% of grain looking for capacity, so we’re a bit of an overflow there. Look at Kentucky, it comes in at about 113. Ohio’s coming in at about 110. Indiana and Iowa are about 109 to 108 in that sort of range. Illinois and Nebraska, surprisingly, are looking at pretty much even space to storage.”
Allen says Kansas, the Dakotas and Minnesota remain below 100% of available storage capacity.
