With the heat and dry conditions that have continued from late August into September, Iowa corn fields are maturing quickly. Farmers might want to take advantage of an unusual marketing opportunity this September, says Iowa State University Extension farm management specialist Steve Johnson.
By harvesting some of their corn early and delivering directly to local corn users--such as processors, livestock feeders and ethanol plants--farmers could potentially earn a premium of 50 cents per bushel or more over cash prices offered in October.
That premium price, he says, is likely to disappear quickly in early October, when the 2013 fall harvest begins to pick up more momentum.
An opportunity to earn a price premium and help your cash flow situation
"It's really going to be a win-win situation for grain users and farmers," Johnson says. "Corn users are just begging for corn now after last year's short crop, and farmers could use this opportunity to earn premium prices and help their fall cash flow situation."
There could also be a few marketing opportunities on early-harvested soybeans, Johnson notes. Like corn, processors and river terminals are looking to secure a local supply of soybeans after last year's drought-reduced harvest.
Iowa farmers are fortunate because there is a strong demand for corn and soybeans in the state. That can create marketing opportunities that are not available in all states.~~~PAGE_BREAK_HERE~~~
A good strategy for Iowa farmers this month, Johnson suggests, is to keep a very close eye on the grain moisture content and quality of corn in their fields during September as well as bids from local buyers. If the moisture content of the corn drops down toward 15%, or if there are signs of stalk rot or other problems that could trim yields, take action. It may make sense to harvest some of the driest fields early and try to take advantage of a cash bid premium, he says.
Price premium for early delivery may more than make up for a dockage discount on moisture content
Even if the grain is still above the target moisture level of 15%, the premium for early delivery may more than make up for the discount.
In years when the crop is less than ideal, there is a tendency for Iowa farmers to store corn and wait for higher bids later in the marketing year. But those higher bids may not materialize in the upcoming marketing year because other parts of the Corn Belt have experienced better growing weather and may have more corn to market.
"I think it will be good to take an aggressive marketing approach this year and look for early opportunities," says Johnson.
Grain quality concern is another reason to consider harvesting drought-stressed corn earlier than planned
Another factor to consider is grain quality. In some of these cornfields the stalks have already fired and plants are dying. "My concern is the kernels are going to be smaller and that will pull down potential yields," says Johnson. "But also, grain quality is adversely affected by drought conditions as corn development is speeded up and the corn on the stalk dries down a lot faster than it normally does in the field."~~~PAGE_BREAK_HERE~~~
He adds, "I don't think that's the kind of corn you want in your grain bin anyway. Drought-damaged corn is more difficult to store and to maintain grain quality. That's another reason to go ahead and get some of this drought-damaged corn harvested early and get it off the farm and into the marketing channel."
Thanks to hot, dry weather there's probably going to be some corn that Iowa farmers won't have to artificially dry this fall. But the majority of Iowa's 2013 corn crop is still going to have to be dried. "Because many fields were planted so late this year, I think we're still going to see a lot of corn standing in fields in late October and maybe into November," says Johnson.
Given all the variable factors leading into harvest this fall, should farmers be concerned about how corn will store in bins through winter?
"I would be," says Johnson. "Look at the wide variability, not only in yield but also grain moisture and quality differences across fields. That's why I say there might be some advantage to harvesting some of this dead corn early. Last year, the 2012 drought year, farmers picked some damaged corn with variable test weight and stored it in on-farm bins. They realized later that they should have moved that corn into market channels right away and not hung onto it."
Johnson adds, "I think it's probably the corn that's now alive and still growing that is probably going to produce the best quality grain this fall. Of course, much depends on when the first killing frost occurs this fall. However, while most of the market is now focused on yield—the quantity being produced across the Corn Belt--we had better start thinking about quality issues for 2013 corn, and soybeans as well."