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ADM boosts grain storage, adds to U.S. capacity

03/28/2011 @ 3:24pm

U.S. grain storage capacity continues to trend higher as farm production grows, with Archer Daniels Midland Co. (ADM) becoming the latest company to announce expansion plans.

The Decatur, Ill.-based grain processor and merchandiser said its elevators in Novelty and Center, Mo., will triple their storage capacity, while a barge-loading terminal in Quincy, Ill., will add grain storage as well. Construction at the facilities will begin this spring with the expanded capacity ready for the fall harvest. The expansion projects will add nearly 1.7 million bushels of storage capacity, the company said. In the U.S., ADM operates 191 elevators with an aggregate storage capacity of more than 420 million bushels.

Driving the increases in storage capacity is higher crop yields and rising production amid growing global demand for U.S. crops, said Chad Hart, agricultural economist with Iowa State University.

U.S. storage capacity reached all-time highs in 2010. Off-farm commercial grain storage capacity in the U.S. as of Dec. 1 totaled 9.74 billion bushels, up 3% from a year ago and up 15.7% from 2001, according to data from U.S. Department of Agriculture.

The largest increase occurred in Iowa where an additional 50 million bushels of capacity was added since Dec. 1, 2009, bringing the state's total to 1.375 billion bushels, the USDA said. Other notable increases were seen in Illinois, where capacity increased 40 million bushels, and Nebraska, where capacity increased 26.9 million bushels, over the same period.

Grain storage capacity not located off farm includes elevators, warehouses, terminals, merchant mills.

Adding to the interest in expanding commercial storage capacity is low interest rates decreasing the cost of funding construction projects and an increase in the number of plants that produce corn-based ethanol.

In the past, the agriculture industry has relied a lot on temporary storage facilities to store grain, but as corn production ratchets up, the threat of lost revenue from corn quality degrading in temporary facilities has fueled investment in more permanent storage, said Darrell Good, agricultural marketing specialist with University of Illinois in Urbana.

At the same time, seasonal swings in price creates an incentive for farmers to store grain, increasing the need for on-farm storage, Hart said.

U.S. on-farm storage capacity is growing as well, totaling 12.5 billion bushels on Dec. 1, 2010, up 2% from a year earlier.

-By Andrew Johnson Jr.; Dow Jones Newswires; 312-347-4604;

andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

March 28, 2011 16:16 ET (20:16 GMT)

Copyright (c) 2011 Dow Jones Company, Inc.

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