U.S. grain merchandisers are beginning the new-crop growing season facing significant challenges, according to a recent research report by CoBank. Low price volatility, ample grain and oilseed inventories, slow farmer selling and an anemic export program suggest elevators are in for a difficult 2016-2017 season.
With no relief immediately in sight, grain merchandisers will undergo further belt-tightening in the year ahead,” says Tanner Ehmke, senior economist with CoBank’s Knowledge Exchange Division. “Most grain elevators have solid balance sheets thanks to multiple years of strong revenues. Nonetheless, pressure for consolidation will likely intensify in an environment of slimmer profit margins.”