SHIFTING GRAIN FLOWS DURING COVID-19

Apr 30, 2020


While orders to stay at home sweep across the nation with the spread of COVID-19, consumer habits have changed drastically as well.

With many adults working remotely from their houses and students learning completely online for the rest of the school year, there is rarely a need to leave the house. In addition, with social distancing guidelines in place, many businesses have closed their walk-in doors to keep employees and customers safe, meaning trips to the store are much less frequent too.

With measures in place to slow the infection rate of the virus across the U.S. and the world, fewer people are on the road, meaning less gasoline, including ethanol, is being used. With a nationwide slowdown in ethanol production, corn has to find a new home, according to Agtegra Director of Grain Origination Travis Antonsen.

“South Dakota consumes about half of its corn in ethanol typically.  As some plants have slowed down their grind, we’ve been shifting more bushels to exports destination, as other countries are still buying corn right now,” Antonsen said.

Grain flows are changing as demand sources are changing.  The premiums to keep corn moving at ethanol plants in the last year have changed, meaning alternative market destinations have become something to consider now more than ever.

“Not being dependent on one market is a positive attribute that a system like Agtegra brings,” Antonsen said. “Our corn can move as ethanol markets decline, and we can shift to hit other markets and not be soley focused on one demand point.”

With so many unknowns as to when the country can return to “normal” again, the unknowns in agriculture continue to drive uncertainties in the market as well, creating some volatility. As Antonsen notes, it is important to remember that markets will find equilibrium, just like there will be better days ahead once the market finds the certainties again.

As always, weather continues to drive uncertainty in grain markets as well. With many agricultural products depending on each other, the weather continues to impact not only what can be planted each year, but the products in livestock rations and more.

“With potentially half the US ethanol production offline, that makes some big holes for distillers grains that would normally go into rations,” Antonsen said. “Everything is related, and everything has an effect on something else.”

However, with all the uncertainties come some positives. With U.S. corn as the cheapest source of corn in the world right now, China, Japan, Korea and Mexico are all actively buying. Agtegra is able to hit those markets, change as the market conditions change and not be held hostage to one market over another.

With planting season on its way, there will continue to be volatility and market opportunity through the month of May.

Agtegra is here to find the marketing program that best fits each operation; contact your local Agtegra Grain Marketing Specialist today.
 

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