LINCOLN, Neb. (DTN) -- An expected record grain harvest means less storage compared to 2024, pressing elevators to prioritize grain storage and prompting farmers to store more soybeans and sorghum on farms, if possible.

A new report from CoBank on Monday paints a challenging picture for farmers and elevators as they roll through harvest and China has yet to buy new-crop soybeans.

"The U.S. is estimated to be short 73 million bushels of upright grain storage this year versus last year's surplus of 1.8 billion bushels of capacity," CoBank said in its report, Grain Logistics Outlook: Record Crop Meets Trade Uncertainty.

"Among the top 12 corn-producing states, storage is figured to be short by 1.4 billion bushels versus last year's surplus of 361 million where elevators will rely more on bunkers and emergency storage like ground piles."

CoBank said farmers and elevators are expecting what would be a 21.5-billion-bushel(bb) corn, soybean and sorghum harvest, on the heels of the highest wheat harvest in five years.

"Storage will be tight with grain merchandisers charging higher storage fees on scarce capacity and strained infrastructure," CoBank said.

"Grain elevators, though, will benefit from capturing wider carries in the futures markets while buying cheaper basis."

Because of an ongoing tariff war with China, DTN Basis Analyst Mary Kennedy said, farmers will struggle logistically, especially with the soybean crop.

"Even though the tariff war between the U.S. and China has been extended to Nov. 10, the damage has already been done," she said.

"China has not purchased any new-crop soybeans from the U.S. and because of that, farmers are suffering, especially in the Northern Plains, where their soybeans would head to their local elevator and then be bound for the Pacific Northwest for shipment."

Kennedy said there are other storage options and that is to bag crops, especially with dry, good quality crops.

Though PNW exporters have "finally" published a soybean bid, Kennedy said, it is still at least $1 per bushel lower than normal. Basis for farmers at the elevator level is currently below minus-$1.50 per bushel.

"Farmers face storage issues and so do elevators with some piling beans; but piled beans cannot sit out as long as piled corn," she said.

"The solution for farmers would be to bin their beans and sell their corn -- the opposite of what they usually do at harvest."

DTN Lead Analyst Rhett Montgomery said there's an important storage difference between corn and soybeans that will affect how the crops are handled.

"Beans also do not like being moved more than absolutely necessary, so I would think from pile to upright storage then shipped later is not really an option to sustain the storage life as is often the strategy with corn piles," Montgomery said.

"It's an interesting and difficult decision to balance space constraints, which is made more complicated by the size of the corn crop."

SECONDARY SHUTTLE FREIGHT

When it comes to rail costs, Kennedy said, while some tariffs have been reduced by the railroads the secondary shuttle freight market has become expensive.

As of Oct. 3, Burlington Northern's secondary shuttle freight for the first half of October was not bid against offers of $600 over tariff per car, she said.

The last-half bid for October is $500 over against offers of $1,000 over. Union Pacific's secondary freight for the first half of October was bid $400 over against no offers and the last half of October was bid $300 over against offers of $600 over, Kennedy said.

"On top of all this, the Mississippi River is falling at Memphis and as of today (Oct. 6) is minus 6.28 feet below zero gauge with expectations that as of Thursday, Oct. 9, the level there will be at minus 8.3 feet below zero gauge," she said.

"In fact, the lower Mississippi rivel levels starting at St. Louis are falling as well. Because of the low water, the U.S. Coast Guard requires drafts to be cut, meaning limiting how much grain can go on a barge. There are also tow-size restrictions, especially around Memphis, meaning there is a limit as to how many barges a tow can push. This means shippers loading barges will have to pay the same freight with less product moving. That loss can be reflected in the basis and/or barge freight costs."

In addition, she said, as water levels fall, dredges are sent to trouble spots because of shoaling, and this can delay transit both south and north bound until they finish.

"That means unloaded barges at the Gulf can be stalled from getting upriver as well as loaded barges heading down river," Kennedy said.

GRAIN EXPORT PROGRAM

CoBank said in its report so far the export program for corn and wheat is heading into this fall with "historically strong sales" because of lower prices, a weakening dollar and "favorable" transportation costs.

As of Oct. 6, corn sales are up 94% year-over-year while all-wheat sales are up 41% since 2024.

Soybean sales, however, are down 51% from 2024 and sorghum sales down 58%, CoBank said.

"Elevators that are struggling with tight storage may prioritize corn and wheat over soybeans and grain sorghum due to the lower risk of corn and wheat, which have more reliable export flows," CoBank said.

The report said during peak harvest, rail companies have planned for a "general increase" in grain rail capacity especially in the western and central U.S. Rail capacity is expected to be reduced in the east because there will be less grain imported from the central U.S., CoBank said.

Todd Neeley can be reached at todd.neeley@dtn.com

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