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U.S. Crop Storage Capacity Increased in 2017 as Supplies Grew

By Michael Hirtzer

CHICAGO, Jan 12 (Reuters) - U.S. grain storage capacity grew by about 1 percent in 2017, the Department of Agriculture said on Friday, as swelling crop stockpiles and low prices made holding commodities such as corn an attractive bet for farmers and commercial handlers.

A five-year glut in global grains supply has led to record stockpiles of corn and soy in the United States, forcing farmers to store grain in open fields and even in parking lots and on airport runways.

Stockpiles of corn, soybeans and wheat - the three most widely grown crops in the United States - also limited volatility in prices, squeezing profits for both farmers and grain handlers who make money by shipping and processing crops.

Prices for corn, soybeans and wheat all encourage storage. Prices are in what is known as contango, when prices in future months are higher than now. That is an incentive for farmers and merchants to store supplies in the hope of selling at a higher price later.

"By being able to hold more grain on-farm, (farmers) can sell a greater portion of their crop when prices increase to a desirable level," said Alex Norton, an analyst at Beeson & Associates Inc in Kentucky.

The USDA said that as of Dec. 1, corn stocks of 12.516 billion bushels and soy stocks of 3.157 billion bushels were the biggest ever.

"The lack of volatility in the agriculture markets have given farmers fewer opportunities to sell, so adding to storage to enable more holding of grain is a prudent strategy," Norton added.

On-farm storage in 2017 grew by about 65 million bushels to 13.45 billion bushels, with increases in Iowa, Missouri and Arkansas, USDA said in the annual report.

Off-farm storage capacity expanded to a record of 11.24 billion bushels, with the largest increase of 40 million bushels added in the top corn-growing state of Iowa and storage also added in Indiana, Ohio and the top wheat-growing state Kansas.

The agency does not specify whether the storage is in permanent structures such as steel grain bins or temporary such as tarp-covered concrete pads. (Editing by Simon Webb and Rosalba O'Brien)

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