POV RECAP GRAIN
Moving fast
POV emptying tanks in record time
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By Joe Kelley
his year has been unique on several levels: a strong
yielding crop, a corn crop with little or no aflatoxin,
a fast-moving crop. United Ag’s Port of Victoria
location completely emptied its sorghum much earlier
than normal, opting to take advantage of strong basis levels
being shown by the export market across the Corpus and
Houston markets. The high basis levels enjoyed by grain
sorghum this year were a direct result of the strong and
steady demand from foreign markets with China in the
driver’s seat.
Although many exporters have been cautioning that demand for U.S. grain sorghum
could drop off any moment, U.S. grain
sorghum producers have been in a strong
position for almost the past year. The concern
expressed by some in the grain exporter industry is that China may raise concerns over
U.S. grain sorghum quality, citing GMOs
even though grain sorghum is a non-GMO
crop. If one follows the argument that China
makes with regards to U.S. corn, when DNA
testing is done on corn shipments to test for
GMO cross-over contamination, it isn’t a
stretch of the imagination for U.S. producers
to assume that similar testing will be done
on grain sorghum. It is important to note
that this is not to beat up on China or any
foreign buyer, but rather to highlight the fact
that there can exist an environment where a
heightened level of verification needs to be
done by both buyer and seller so both parties
are comfortable with a deal. As with anything
in life, there can be “bad actors” on any street
corner — buyer side and/or seller side — so
it is not to say the blame rest fully with the
buyer when there have been occasions where
U.S. exporters have shipped below contract
specifications in terms of grain quality.
As exciting as the sorghum export market
is, especially China and other foreign markets,
there is reason to believe that soon on the horizon we will see more excitement in the U.S.
domestic market(s): cereals, pet foods, animal
feeds, commercial food service industries and,
to a lesser degree, industrial uses.
As for yellow corn, the Port of Victoria
location expects to be completely empty
before Thanksgiving. Again, this is a record
for emptying the commodity out of storage.
This is an event that we can take advantage
of by performing scheduled maintenance to
the grain tanks earlier in the year and not
be pressed for time. Additionally, emptying
out earlier will enable United Ag to perform
some heavier maintenance items as well.
Growth in relation to the Eagle Ford Shale
remains strong in Victoria and surrounding
areas. Victoria is seeing a construction boom
across the building sector with new housing
developments, apartment communities and
industrial projects. Road improvements are
in full swing with the I-69 corridor expansion of frontage roads and new overpasses in
Victoria. The Zac Lenz Parkway, or 463 Loop,
is also seeing much needed improvements to
handle the increased traffic from the area’s
rapid growth.
Even as oil prices are dropping, Victoria and
surrounding areas from the Crossroads region
and South down to the Lower Rio Grande
Valley are expected to see benefits from Eagle
Ford Shale and other oil / gas bearing zones.
This is because drilling is beginning to switch
over from oil to natural gas, and infrastructure
such as pipelines and Liquid Natural Gas conversion facilities that will be located at Texas’
deep water ports will require a huge supply
of natural gas and supporting infrastructure.
We have seen this to one degree or another
already with Formosa’s power plant conversion from coke to natural gas.
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