A new grain elevator is under construction in Julius Schaaf's hometown, and his eyes light up as he lists off the technology that will make it one of the most efficient in southwest Iowa.
Double pits will minimize truck lines during harvest, and it will have high-speed load-out capability for when it sends just-in-time corn shipments to the local ethanol plant.
It will be the closest delivery point to his farm, and those efficiencies could help keep Schaaf's combines moving at harvest time. It's also one more buyer competing for his corn and soybean crops.
Countless farmers share Schaaf's excitement of having a new buyer in the neighborhood. More than 500 high-speed shuttle elevators capable of loading 110-car trains now dot the countryside. Older elevators added storage and upgraded aging technology to stay competitive. A new export terminal opened in the Pacific Northwest, and all its competitors updated and expanded, resulting in a 30% increase in the PNW's export capacity. A frigid winter and North Dakota's oil shipments are testing rail's reliability now, but few discount the significance of recent upgrades.
After 25 years of struggling with having more capacity than grain, companies looked at the source of future demand -- growing populations and the growing middle class in developing nations -- and put their money on infrastructure necessary to get crops there. Billions of dollars' of boom-time profits were channeled into vital upgrades to grain origination, storage and port facilities.
Schaaf thinks exports will drive farmer profits in the future, even though much of his crop goes to ethanol and local feeders. As chairman of the U.S. Grains Council, he's spread the news about U.S. infrastructure upgrades to customers overseas, touting the quality of U.S. crops and the efficiencies of the supply chain.
"We've had a good run in corn with ethanol and in soy with biodiesel. They've been the drivers of demand domestically, but it looks like the ethanol market has reached its peak in the U.S," Schaaf said. "Yields are still expanding, and as we continue to raise more grain, grain exports and exports of value-added products are going to be critical to the profitability of farming going forward."
ETHANOL STALLS, GLOBAL POPULATIONS SET TO SURGE
USDA expects corn use for ethanol to hover around 5 billion bushels with growth limited by the 10% ethanol blend wall and lower gasoline consumption. Increases in corn use for ethanol will be much smaller than from 2000 to 2010 and will be reliant on expanded exports and infrastructure for E-15 and E-85 blends.
The global demand picture holds more promise for growth.
The United Nations expects the global population to reach 9 billion people by 2050. More than 1 billion people are expected to join the middle class -- with some of the largest gains in Middle East, Africa, China and Southeast Asia -- a trend that correlates with higher meat consumption. Grain production would need to double to meet the world's need.
Global coarse grain trade, primarily corn, is expected to increase 25% over the next decade as livestock production expands in feed-deficit countries. At the same time, demand for vegetable oils and biodiesel will drive a 36% increase in global soybean trade. USDA expects wheat, rice and barley trade to expand as well.
Double pits will minimize truck lines during harvest, and it will have high-speed load-out capability for when it sends just-in-time corn shipments to the local ethanol plant.
It will be the closest delivery point to his farm, and those efficiencies could help keep Schaaf's combines moving at harvest time. It's also one more buyer competing for his corn and soybean crops.
Countless farmers share Schaaf's excitement of having a new buyer in the neighborhood. More than 500 high-speed shuttle elevators capable of loading 110-car trains now dot the countryside. Older elevators added storage and upgraded aging technology to stay competitive. A new export terminal opened in the Pacific Northwest, and all its competitors updated and expanded, resulting in a 30% increase in the PNW's export capacity. A frigid winter and North Dakota's oil shipments are testing rail's reliability now, but few discount the significance of recent upgrades.
After 25 years of struggling with having more capacity than grain, companies looked at the source of future demand -- growing populations and the growing middle class in developing nations -- and put their money on infrastructure necessary to get crops there. Billions of dollars' of boom-time profits were channeled into vital upgrades to grain origination, storage and port facilities.
Schaaf thinks exports will drive farmer profits in the future, even though much of his crop goes to ethanol and local feeders. As chairman of the U.S. Grains Council, he's spread the news about U.S. infrastructure upgrades to customers overseas, touting the quality of U.S. crops and the efficiencies of the supply chain.
"We've had a good run in corn with ethanol and in soy with biodiesel. They've been the drivers of demand domestically, but it looks like the ethanol market has reached its peak in the U.S," Schaaf said. "Yields are still expanding, and as we continue to raise more grain, grain exports and exports of value-added products are going to be critical to the profitability of farming going forward."
ETHANOL STALLS, GLOBAL POPULATIONS SET TO SURGE
USDA expects corn use for ethanol to hover around 5 billion bushels with growth limited by the 10% ethanol blend wall and lower gasoline consumption. Increases in corn use for ethanol will be much smaller than from 2000 to 2010 and will be reliant on expanded exports and infrastructure for E-15 and E-85 blends.
The global demand picture holds more promise for growth.
The United Nations expects the global population to reach 9 billion people by 2050. More than 1 billion people are expected to join the middle class -- with some of the largest gains in Middle East, Africa, China and Southeast Asia -- a trend that correlates with higher meat consumption. Grain production would need to double to meet the world's need.
Global coarse grain trade, primarily corn, is expected to increase 25% over the next decade as livestock production expands in feed-deficit countries. At the same time, demand for vegetable oils and biodiesel will drive a 36% increase in global soybean trade. USDA expects wheat, rice and barley trade to expand as well.