Corn Drying, Shrink And Storage Decision Tools Available

Corn Drying, Shrink And Storage Decision Tools Available

Compare potential cost of field-drying corn vs. drying charges and discounts.

By Steve Johnson

EDITOR'S NOTE: Steve Johnson is an Iowa State University Extension farm management specialist. Contact him at 515-957-5790 or [email protected].

The near ideal growing conditions to close out the 2014 corn and soybean growing season benefitted both yields and quality. However, the crops matured later than normal this year and are being harvested later than normal. This leaves much of Iowa's corn harvest to stretch from October well into November. Higher corn moisture levels are adding to shrink losses and drying costs with depressed cash market prices.

COMPARE COSTS: A new decision tool from ISU Extension lets you compare selling corn at harvest versus shrink loss, drying and storage costs you would incur by storing the corn. Calculating corn drying cost and shrink is important, particularly with wetter than normal corn coming out of fields this fall.

Rather than take discounts for delivery of corn that is above 15% moisture content, many farmers will let their crop dry down naturally in the field before harvesting. Iowa State University research indicates that unharvested corn could dry at a rate of 0.3 points of moisture per day in wet, cool weather during the fall. Dry down improves to 1.0 points of moisture per day in hot, dry weather. This reduces the cost of artificially drying the crop, but it may delay harvest and result in additional stalk lodging and potential ear loss.

Big crop and lack of adequate on-farm storage this fall
Cash flow constraints and lack of adequate on-farm storage are two reasons why some farmers may choose to deliver corn at harvest above 15% moisture content. Lack of adequate on-farm and commercial drying capacity are other possible reasons for making cash sales. Farmers may choose to deliver corn above 15% moisture, accepting a discounted price but avoiding additional shrink losses as well as drying costs. Commercial storage requires that the corn be adjusted to 14% moisture to be placed under warehouse receipt.

The farmer making cash corn sales could still choose to use a minimum price contract to improve the final settlement price. This marketing strategy anticipates a futures price rally in the deferred contracts, likely May or July 2015 corn futures.

Comparing cash sales with a moisture discount
ISU has a new online decision tool you can use to compare selling your corn at harvest versus the shrink loss, drying and storage costs you would incur by drying and storing corn.

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Using the ISU Extension Ag Decision Maker Decision Tool A2-32, Corn Drying and Shrink Comparison, you plug in your own information and assumptions. Here's how it works.

Step 1 - Variable cost estimate for on-farm drying: Choose a drying system and input your variable costs. Those are propane, electricity, drying time labor, drying capacity, average points of moisture removed per bushel, total bushels per year and total investment in drying system.

Step 2- Yield and moisture projections for unharvested corn: Input your own decisions regarding acres harvested, wet gross bushels yield, corn moisture in field, days before harvesting and expected cash grain price at harvest.

Step 3 – Compare your grain sale alternatives at harvest: You can 1) Sell wet corn and incur a moisture discount; 2) Dry the grain commercially and then sell; 3) Dry it on-farm and sell it.

Step 4 - Input your own final moisture level for commercial sale, moisture discount for wet corn sale, commercial drying charge and shrink factor. You might want to consider additional on-farm costs for drying and hauling.

Step 5 - Input your own sales alternatives for after storage. This includes for the number of months grain will be stored, cash price paid after storage, moisture level for storage, minimum charge for commercial storage, base rate in months, monthly minimum charge commercial storage after minimum, quality deterioration on-farm storage, fans, electricity and labor on-farm storage and short-term interest rates.

Summary: This new Corn Drying and Shrink Comparison, available on ISU's AgDM website, is a decision tool that uses assumptions and compares net revenue after storage costs and the breakeven selling price needed to pay storage costs.

The new ISU information files (pdfs) and decision tools (Excel spreadsheets) were developed by retired ISU ag economics professor William Edwards and are posted to the ISU Extension Ag Decision Maker web page. They are:

Estimating the Cost for Drying Corn - A2-31

Corn Drying and Shrink Comparison - A2-32

Cost of Storing Grain - A2-33

For farm management information and analysis visit ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at www.extension.iastate.edu/polk/farm-management.

TAGS: Extension
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