Surging futures prices have U.S. farmers smiling but have left many grain elevators facing a cash crunch.
As futures prices soar to levels not seen in over a year, farmers have been selling their newly harvested winter wheat bushels at a faster pace than usual, leaving elevator operators that have hedged their purchases with futures with large margin calls.
“It’s a good thing for the producer to have an opportunity for price gains at a higher level, but it throws some stress on the elevators,” said Oklahoma-based Hydro Co-op Association manager L.G. Gilbert.
The pricing action is tied to a drought in Russia.
Still, a persistent wide divergence between U.S. cash wheat prices and futures prices continued to be noted through the country.
Both companies said the merger would deliver cost-savings of more than $40 million a year.