Challenges of Grain Merchandising

(Jamie) We’re back! Let’s join Kyle and Carrie as they discuss the challenges that come with grain merchandising.
(Kyle) Hi this is Kyle Bauer, have the opportunity to visit with Carrie Williams. She is the Grain Merchandising Manager for AgMark. Just real quickly tell the folks that aren’t from north central Kansas, what AgMark does. (Carrie) Sure, we’re a grain merchandising company and our owners are a cooperative, so we do all the grain merchandising for the cooperatives. (Kyle) And today we’re at Kansas Farm Bureau, you talked to the group about the challenges that come with grain merchandising and all the different issues. Right now, it’s probably really challenging. (Carrie) It has been, yes. So much has changed in the last couple of years going from deficit commodities to almost every commodity having surplus, and surplus stocks and so it’s a completely different situation than what we’ve had for awhile. (Kyle) Truly the thing that sets our prices though, besides demand, we have a lot of different issues, whether it’s international exchange rates, or international freight rates or local freight rates. (Carrie) Agree, yes. Transportation costs are a huge part of that, there’s no doubt. You can throw in the dollar and the value of the dollar too, we’ve just a lot of outside influences that are encouraging or discouraging exports right now and that’s having a big impact on the usage of our transportation, as well as just our competitiveness in the world markets. (Kyle) When you’re moving grain long distances that has to do with rail. And a few years ago the railroads were getting a bad reputation of not being able to move the grain. That’s really changed. (Carrie) It has, yea. Actually right now they’ve gone to, just because of the lack of exports in the marketplace, a surplus of cars available in the market and a lot of the investments that they’ve been making are not being fully utilized right now because we just aren’t seeing the business happening. So, it’s a complete shift from what we had seen. (Kyle) And we’re seeing that in shipping or ships on the ocean as well. Hundreds of ships just at anchor. (Carrie) That’s true yea. If you look at the Baltic Index, it’s a solid indication of just the ocean freight and the utilization of it. And we continue to hit new lows, which obviously is not a healthy situation for ocean freight usage. (Kyle) Well when you have railroads sitting idle and ships sitting idle, when that machine has to crank back up, it doesn’t crank up overnight either. (Carrie) No that’s a good point. The whole system runs much better when we have a balance of usage and availability and everything is being utilized, versus when you have things shut down and have to fire them back up, much less have personnel that they have to hire in order to have them come back and run. Those aren’t things that happen overnight, certainly. (Kyle) As a merchandiser, I’m not sure that people understand that you have to find a home for whatever the farmers sell to you. And sometimes that is domestically. Sometimes it’s overseas. Sometimes it’s even local. (Carrie) That’s right. I mean, the function of the market is basically for price to work itself and figure out exactly what homes we do find. Which right now is a challenge. We’ve got a finite amount of domestic usage that we’ve got and we rely on exports to utilize the surplus and today we’re just not competitive and so we’re just gradually seeing an abundance of grain continue to pile up in the country. (Kyle) We’re visiting with Carrie Williams, she’s with AgMark in north central Kansas. This is Kyle Bauer reporting. Back to you Jamie.
(Jamie) Thanks, Kyle. Next up is this week’s Kansas Soybean Update.

No Comments Yet.

Leave a reply

You must be logged in to post a comment.