By PJ Huffstutter and Karl Plume
CHICAGO (Reuters) – South Dakota farmer Eric Kroupa received a flood of calls from grain traders and ethanol plants asking him to buy the corn stashed in his bins as prices approached a four-and-a-half month peak last month .
He has sold some, but is waiting for buyers to increase their bids to sell more. Prices have since eased and are hovering just above a three-year low in February.
“There is a lot of corn, but it is in the farmers’ bins and not in the hands of the end users,” Kroupa said.
After stockpiling crops for most of this season because of low prices, many farmers in the world’s largest corn-producing country continue to shun buyers despite little sign that prices will improve. Grain supplies are ample and early assessments of summer crops are the best in years.
A larger-than-normal volume of grain remains unsold, according to Reuters interviews with 15 grain farmers in the U.S. Midwest. U.S. corn inventories are expected to reach a six-year high by September 2025, according to the U.S. Department of Agriculture.
Uncertainty about whether and when farmers will liquidate their inventories could lead to choppy grain prices in both the spot and futures markets.
Farmers risk waiting too long to sell as a flood of newly harvested grain is likely to push prices lower in October and November. Buyers aware that harvest is coming still need enough supplies to keep processing plants running and exports flowing this summer.
An economic showdown between growers and grain buyers is taking shape, said Angie Setzer, a partner at Michigan-based Consus Ag.
“I’ve never seen anything like this in my life. No one is engaged, not the farmer and not the consumer,” Setzer said.
Many growers sold just enough this spring to cover short-term cash flow needs, Setzer said. Some are betting that unfavorable weather will cause price increases this summer, although nothing is guaranteed.
Three farmers told Reuters they have convinced seed and chemical suppliers to reduce late fees so they can preserve their crops. Others, including Kroupa, use the futures market to hedge the risk of further price declines.
Meanwhile, commercial buyers are expecting lower prices this summer due to grain surpluses, analysts said.
USDA will provide an update on the amount of corn on farms in a quarterly equity report on June 28.
U.S. corn inventories held at the farm level stood at just over 5 billion bushels as of March 1, the second-highest on-farm inventories ever recorded for that date, according to USDA. On-farm shares represented 60.85% of total US corn supply, the largest share since 2005.
Some buyers try to take grain from farmers by offering premiums for immediate deliveries to meet short-term needs, but cut prices once those orders are filled.
Archer-Daniels-Midland offered farmers a 7 cents per bushel premium Friday for corn delivered to its Decatur, Ill., processing plant before Sunday, compared to later in the month. At ADM’s Cedar Rapids, Iowa, plant, that premium is 15 cents.
Such offers of a few extra cents per bushel can amount to thousands of dollars per grain transaction.
Samuel Ebenkamp, an Indiana crop and livestock producer, emptied one corn container of sales during a rally in early May, but chose to hold on to the rest. He will sell more when prices rise again, but he is hanging in there to ensure his feed needs are covered until the fall harvest.
His neighbors are making similar financial calculations, he said.
“There’s an insane amount of storage space here on the farm,” Ebenkamp said. “It doesn’t seem like anyone is in a hurry to sell.”
Farmers are still holding onto a larger-than-normal share of their latest crop, while corn demand is fairly solid, analysts said.
“Ethanol margins are still relatively good. Feed margins are good. So there is demand. And if you look at the export sector, it will improve,” said Dan Basse, president of Chicago-based consulting firm AgResource Co.
How they will meet that demand this summer is unclear, Basse said. “They were bought too short and the farmer still long. Who will blink first?”
(Editing by Caroline Stauffer and Rod Nickel)
