The last two years have been difficult for grain elevators. Farmers and the agricultural industry have seen prices increase since October 2006, but with prices soaring, so were the input costs and margin expenditures.

When commodity prices soar — such as corn at $7 a bushel — grain elevators have to send more money to the Chicago Board of Trade, according to Watonwan Farm Service Grain Division Manager Craig Kilian. Every day the market goes up, he said, more money is sent to Chicago.

On the flip side of that equation, every time commodity prices go back down, grain elevators see their money returned. But a big jump in prices one day, Kilian said, can mean several million dollars the grain elevator companies have to “shell out.”

At one point, he said, credit lines for seasonal credit packages were 300 percent to 500 percent over what they normally were, “so it was quite a crunch for capital” when commodity prices were on the climb.

According to Kilian, the last 60 days have seen a peak in commodity prices, and they are now starting to come back down. According to Mike Kalis, WFS location manager at Wells, corn Tuesday was selling for $4.32 and soybeans were selling at $11.25.

“We’re certainly not out of the woods on this by any means,” he said. “It’s been a tough year for us in the grain business.”

High commodity prices are good for farmers, or at least good for the farmers who were able to cash in on the prices at the time — at one point corn was more than $7 a bushel and soybeans were selling for more than $15 a bushel. But along with rising corn and soybean prices, input costs for production also went up.

“We’re definitely seeing our input costs skyrocket,” Kalis said.

Input costs — such as seed, chemicals and fertilizer as well as any natural gas needed for production — for both the farmer and grain elevators rose steadily right along with commodity prices, he said.

Now that commodity prices have dropped slightly, input prices are still high and taking a toll on the agricultural industry. It used to be that farmers bought their farm supplies with the credit from futures sold to the grain elevator, but Kalis said farmers are buying fertilizer for next year’s crop and have to pay immediately for it. That’s putting a hardship on the farmer, who in turn has to ask the bank for a loan.

On top of high input costs and lowering commodity prices, some grain elevators have ceased or slowed buying and selling futures. WFS was one grain elevator company that slowed buying futures for a short period of time, according to Kilian.

At one point, the company bought futures out through March 2009 and then stalled. But recently, Kilian said, the company picked up futures again and is buying out to the new crop.

“I don’t know what the end result of all this is going to be,” Kilian said. “It’s a little too volatile for my liking.”

Kalis said the economic downturns haven’t hit the grain elevators too hard in southern Minnesota.

“Basically, it’s going good,” he said.

The area is “blessed” with good yields, Kalis said, and higher commodity prices. The rain and warmer temperatures this growing season are treating the crops well.

“Our crop looks wonderful,” he said. “In this area, we’re sitting perfect.”

Kilian said with commodity prices lowering and some input costs — such as the price of fuel — coming down, it is starting to help the bottom line.

“We’re not back to normal levels or anything like that at all, but it’s getting better,” he said.

“If we can get prices to stay down a while, it is going to take some of the capital needs down substantially at the grain elevators.

“It’s not where we want it yet, but it’s getting better,” Kilian continued. “It seems like the industry is going to make it through this time period in pretty good shape.”

Currently, grain elevators are trying to empty before harvest season starts up, which could be as early as the last week in September.

Kalis manages the grain elevator in Wells, which handles 6 million bushels of corn and soybeans a year. The entire facility holds 2.2 million bushels in multiple bins. The elevator draws grain from a 10-mile radius of the city, he said. Most of the corn leaving Wells’ WFS elevator goes to Tyson Foods.

In the Albert Lea area, WFS also has grain elevators in New Richland, Clarks Grove, Bricelyn, Kiester and Freeborn. The company is based in Truman.