Connection Fall/Winter 2014 | Page 11

POV RECAP GRAIN Moving fast POV emptying tanks in record time t 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. 11