Home > Tools > News > Profits For Shipping Grain Are Down

Profits for shipping grain are down

May 12, 2016 at 10:11 AM CST


The reduction in oil prices has made the dollar stronger and has impacted the profitability to ship grain.
Farmers and grain elevators alike are losing money because of it.
Ray Strickland reports.

Trucks hauling grain come to Southwest Grain elevator almost 175 times a day.

But since commodity prices dropped the agriculture sector has been struggling .

Oil prices fell and the U.S dollar became stronger making it harder for the agriculture industry to compete globally.

At the height of the oil boom grain prices were higher.

Prices right now are below the price of production for the farmer, making it less profitable to move grain.

"It's got the farmer in a bad situation right now. Really bad" says Jim Bobb of Southwest Grain.

Southwest Grain's Jim Bobb says farmers are waiting to move their grain..

"We're seeing a lot of producers hold grain longer, a lot longer some are holding grain for a year in a half after they produce it" says Bobb.

The BNSF Railway company recently reduced grain $100 per rail car, but Bobb says that isn't enough.

"The sad thing is, it's a rate reduction of roughly 3 cents per bushel but where prices are it doesn't encourage the movement of grain" says Bobb.

The fallen commodity prices has also sent farmers back to the drawing board when it comes to budgeting for this growing season.

"Many of them have reduced their cost structures as much as they can" says Bobb.

Bobb says there is going to have to be some changes.

"If it doesn't, it will impact everybody on main street, the whole state is going to be under distress from what's going on" says Bobb

He says it's either going to take a softened dollar or a dramatic change in weather to increase the demand for grain.

Jim says they load about 10,000 rail cars a year and about 23,000 trucks unload at Southwest grain a year