A new report from CoBank warns that the U.S. agricultural sector is heading into harvest with a severe grain storage deficit. The country is expected to produce a 21.5 billion-bushel crop of corn, soybeans, and sorghum, coming directly after the largest wheat harvest in five years. However, grain elevators are short 73 million bushels of upright storage capacity compared to last year. In the top 12 corn-producing states, the shortfall rises to 1.4 billion bushels, forcing a greater reliance on bunkers, ground piles, and on-farm storage.

Meanwhile, tensions in the U.S.-China trade relationship have left the soybean export program stagnant. Soybean sales are down 51% year-over-year, and sorghum exports are down 58%, while corn and wheat exports are up 94% and 41% respectively. Without fresh demand from China, especially through Pacific Northwest routes, soybeans are at risk of spoilage and may be de-prioritized by elevators.

The consequences are already visible in grain basis levels, where soybeans are trading at more than $1.50 per bushel below futures prices, with weak or absent bids from exporters. Elevators are instead focusing on corn and wheat, which offer more stable export flows and are easier to handle in temporary storage. Analysts suggest that farmers should consider binning soybeans and selling corn, reversing traditional harvest strategies.

Logistics challenges further complicate the picture. Rail freight premiums have surged, with shuttle tariffs exceeding $1,000 per car in some cases. On the water, the Mississippi River is falling, reaching over 6 feet below zero gauge near Memphis and expected to fall further. This low water level triggers barge draft restrictions and tow-size limits, reducing the volume of grain that can move and raising freight costs sharply.

These transport constraints also create export delays, with dredging operations slowing down barge traffic in both directions. With limited capacity and high storage fees, many elevators may choose to refuse soybean deliveries altogether, focusing instead on crops with faster throughput and higher margins.

Despite these challenges, CoBank notes that corn and wheat export demand remains strong, aided by a weak dollar, low prices, and competitive freight in certain corridors. However, infrastructure weaknesses risk undermining these advantages. For now, both farmers and elevators are left balancing cost, quality risk, and tight space, as they navigate one of the most complex harvest logistics seasons in recent memory.