Janesville68.3°

Rock County corn farmers enjoy ‘A very good year’

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JAMES P. LEUTE
November 20, 2011

A truck pulls up, pauses on a scale and then rumbles into the grain elevator to dump its load.


It’s a scene playing out countless times this fall as nearly 30 million bushels of Rock County corn and soybeans are delivered to the rest of world.


“We are more or less the connection between the farm and the end user,” said Tim Buchheit, operations manager at Farm City Elevator in Orfordville.


Farm City and other elevators have been busy places in recent weeks as Rock County farmers harvest what should be about 140,000 acres of corn and 85,000 acres of soybeans.


“We work long hours,” said Buchheit, whose elevator is normally open from 7 a.m. to 7 p.m. six days a week and from 8 a.m. to 6 p.m. on Sundays.


Between late September and early November, however, the hours start earlier and end later as Buchheit and his crew work around the clock to take deliveries and coordinate outbound shipments of grain.


With the exception of corn held for feed, farmers deliver their grain to local elevators or area ethanol plants.


On the national level, about 28 percent of last year’s corn crop went to ethanol production, according to the U.S. Department of Agriculture.


Jim Stute, Rock County’s UW Extension crops agent, has heard that in Wisconsin, the percentage of corn shipped to ethanol plants is about 40 percent.


“In Rock County, we might even be higher than that, given our proximity to the ethanol plants in Milton, Monroe and Jefferson,” he said.


In some cases, local farmers will contract and deliver all or a portion of their crop directly to an ethanol plant.


In others, however, they make contracts with the local elevators, which in Rock County include Farm City, The DeLong Co. and Landmark Services Cooperative and some smaller operations.


From that point, the elevator or shipper makes and fulfills contracts to push the grain in one of three directions: area ethanol plants, Chicago or the Mississippi River.


Chicago-bound corn is used primarily for the production of cornstarches, sweeteners, cereals, high-fructose syrup and alcohol.


Grain that moves to the river system ultimately makes its way to the Gulf of Mexico for export.


Last year, about 45 percent of the nation’s corn crop was used for feed, while 36 percent was targeted to food, seed and industrial uses. The remainder is exported.


Where the elevators ship their grain typically is determined by demand and price, Buchheit said.


“We really don’t have a predominant shipping point this year, but that changes from year to year,” he said.


This year, Buchheit said Farm City is shipping about 75 percent of its grain by rail, with the remainder being delivered by truck.


Last year, the split was about 50/50.


“It all depends on the destination,” he said. “We pick the best end use and determine the best way to get it there.”


Farm City has a capacity for 3 million bushels of grain, Buchheit said, and it will dry grain if farmers don’t have that ability.


The elevator will either move the grain immediately or hold it for the future, Buchheit said, adding that such a decision is based on variables such as the timing and volume of arriving trucks, the ability to secure outbound rail cars or trucks and market prices.


Elevators, he said, often hold grain if they think the market may go up in the near future, just as farmers hold grain in bins at their farms.


“There is a shelf life for it,” he said. “We do empty our storage from year to year.”


Year in review

Rock County grain farmers faced a far different set of challenges in producing a 2011 crop that should mirror last year in yield and price.


A wet spring delayed planting, and weather throughout the summer was less than ideal.


As this year’s harvest wraps up, however, the results should be very similar to last year, when local corn and soybean yields easily hits highs.


“I would say this year’s crop will be slightly better than last year’s, and the prices are good, too,” Buchheit said.


As commodities, corn and soybean prices vary throughout the year.


Stute said most farmers lock in contracts early in the year for at least a portion of their grain to minimize risk. Corn and soybeans also are often sold at harvest, and some is held in reserve in case prices go up.


“It all depends on an individual’s willingness to take risk,” Stute said.


Fixed contracts can remove uncertainty, but if a farmer doesn’t grow enough grain to meet his contract, he’ll have to pay the difference. That can present a significant financial problem.


For example, one local farmer said he expects his futures contracts on corn to average about $4.80 per bushel. He sold some corn at harvest and has about 150,000 bushels in his bin.


Last week, corn was trading at more than $6 per bushel.


“Prices vary all throughout the year, but on average, they’ve been very good again this year,” Stute said.


Soybeans

Stute said the county is unique in its production of food-grade soybeans.


Bo DeLong, who heads the grain division of his family business, said only a few pockets in the Midwest soybean belt produce beans that are not genetically modified.


Most of DeLong’s food-grade corn and soybeans are grown under production contracts in Wisconsin, Illinois and Ohio.


DeLong said that about 70 percent of Rock County’s soybeans end up in the export market.


Genetically modified beans typically end up in Chicago, where they’re loaded into containers for shipment to China, Taiwan and Southeast Asia.


About 90 percent of the area’s non-modified soybeans go to South Korea and Japan, where there are big markets for edible products such as tofu.


“We make the market with people who want those soybeans and will pay a premium for them,” DeLong said.


This year’s premium for non-genetically modified beans is about 10 percent.


Earlier this year, Gov. Scott Walker and the Stateline World Trade Association recognized The Delong Co. with the “World Trade Award.” The company, which has 15 locations in three states, has exported more than $2 billion in agriculture products in the last three years.


“This year will be a very good year,” DeLong said. “Our soybean yield is better than last, and corn will be very close but at a price that’s greater than last year.”



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