Mega Harvest Leaves U.S. Farmers Battling Bugs in Storage Bins

Features Reuters

With record harvests depressing prices, U.S. farmers are holding tight to their corn and soybeans and binging on chemicals that protect stored grain from critters or even leaving corn standing in fields over winter to avoid storage charges.

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Still flush with cash after years of record income and with shipping rates near record highs, farmers have resources to store grain rather than sell into a down market.

"The last several years we have not held on very long," said Mike Brzon, who raises corn, soybeans and wheat on his farm in Courtland, Kansas. "This year we might be in a little different situation."

Knowing they could store their grain well into 2015, many farmers and grain elevators are pre-treating storage bins with insecticides capable of keeping grain bug-free for 18 months.

"We treat the bins before we ever put a kernel of grain in it," said Kent Moore, a farmer from Iuka, Kansas.

A record U.S. harvest of an estimated 14.5 billion bushels has corn trading recently around $3.50 a bushel, down 56 percent from record highs set in August 2012. Soybeans have fallen more than $8 per bushel, to around $9.65, on a record harvest of 3.9 billion bushels.

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Paul Drache, regional manager at insecticide maker Central Life Sciences, said some are delaying the decision, planning to treat the grain later if need arises.

"In an environment where the commodity prices are down, they will typically try do a rescue rather than a preventative, because they don't want to spend the money now," Drache said.

Central Life's Centynal is applied to grain as it is being put in storage bins. Increased sales could be a boon Central Garden & Pet Co, which owns Central Life, as well as Dow AgroSciences, which is part of Dow Chemical Companies and sells another leading insect regulator, ProFume.

The applications of the pesticides are carefully calibrated to fall within government standards to keep the grain safe for human and animal use.

With grain stored in bins and on the ground, elevators and farmers need to prioritize which will move out first once prices are right. Grain stored in sausage-shaped polyethylene bags in lengths of 100 yards (91 meters) will be the first to go. The bags are believed susceptible to insect invasions.

"That is the first thing that gets shipped," said Wes O'Bannon, chief operations officer at FarmWay Co-Op in Beloit, Kansas.

Some farmers are leaving their corn standing in fields, hoping higher spring prices will make it worth harvesting. They risk seeing winter storms destroy its value.

"Even though you are going to encounter some yield loss, it still might not end up being a bad economic play at the end of the day," said Tregg Cronin, a market analyst at Halo Commodities who also works on his family farm in Gettysburg, South Dakota.

"You can store it in the field for free," Cronin added.

(By Mark Weinraub; Editing by Lisa Shumaker)