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Keep stored grain at peak quality

Roy Wendte was pleasantly surprised by the 220-bushel corn yields on his Altamont, Illinois, farm. His early soybeans also were better than expected. By harvest, he was about 65% sold on corn and 75% sold on soybeans. “I priced more ahead this year, faced with the possibility of $4 corn,” he says.

Wendte, who has ample storage for a bin-busting crop, is eyeing January and February sales. “Farmers who haven’t sold by harvest will hold tight and wait it out after January 1,” he says.

Farmers have aggressively added on-farm storage capacity, and it will be fully utilized this year as they hasten to harvest a late and high-moisture crop.

Just as crop insurance protects against the downside price risks prior to planting, storage is a key component of this year’s postharvest corn marketing plan. Producers who can top off their on-farm bins down to their last bushel are in a better position to select optimal marketing strategies.

“If the national corn yield goes up and FSA lowers total acres planted, a $5+ hedge looks pretty good now,” Wendte says.

Like many other farmers, Wendte says it was tough to get out of the spring-planting starting blocks. The singular hallmark of the 2013 crop is its striking variability, spawned by uneven growth during the late, wet spring, followed by a moisture-starved summer.

“Weather has been the driving force behind yield and quality this fall,” says Charles Hurburgh, Iowa State University agricultural and biosystems professor, and head of the Iowa Grain Quality Taskforce. “Moisture and test weight variation are the norm. That means there are storage issues.”

In early September, the Cargill wet milling facility in Eddyville, Iowa, offered incentives to bring in high-moisture corn (28% on a half-rate moisture scale).

Farmers near Manhattan, Kansas, also were courted. “Elevators offered free deferred pricing to entice farmers to pass title,” says LaVell Winsor, a grain broker with Loewen and Associates, Manhattan, Kansas.

“You lose negotiating power and basis opportunities, but for some, it was worth it,” she says. “This is the wettest crop in a while, and it’ll need to be monitored closely.”

It’s a different storage story for beans. The market sent signals that it wanted beans, although the September 30 stocks report was a setback.

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Managing storage

Farmers made some sales after harvest to cover short-term cash flow needs, but for those who feed their crops or have food or ethanol contracts with processors, storage is a given.

Storing unpriced grain for several months puts renewed emphasis on quality control. Inconsistency in this year’s crop maturity, test weight, and moisture content will challenge management skills. Crop insurance, of course, stops short of the grain bin.

The corn crop is characterized by small kernels and low test weight (52 to 54 pounds per bushel). It’s likely to have more fines. Soybeans also are small, dry, and lack protein content. Some had green stems.

“We’re bringing some hot corn out of the fields, and we need to get it cool as fast as possible or lose storage time right off the bat,” Hurburgh says. “Be prepared to separate and to manage large differences in quality, moisture, and maturity, as well as possible frost damage.”

Drying corn to consistent levels is the holy grail of grain storage. Mingling 15% moisture corn with corn at 30% is a recipe for hot spots.

[Editor’s Note: Out-of-condition grain is a major risk factor in grain-bin entrapments and engulfments.]

Back to basics

Hurburgh offers a few other guidelines to protect the value of the crop. “Hit the basics hard,” he says. “This isn’t a year to push the window of good storage practices. The window will push back, and you won’t get good results.”

  • Keep good records. Note where specific grain is stored so you can track wet grain.

  • Separate grain by test weight. Sell light grain first, as well as grain with large moisture variations.

  • Expect storage hot spots. Nonuniform grain is a risk.

  • Drive around late replanted acres during harvest. Don’t store replanted grain in the same tank as the more mature crop.

Storage price tag

Finally, don’t overlook the opportunity costs of long-term storage vs. selling the crop and paying down debt. Your market price must cover total ownership costs to make storage worthwhile. This includes:

Interest. Calculate the interest charge on the money you’ve invested in storing the crop. It needs to be covered by the higher price you anticipate you’ll net by storing the grain for several months. Add up your commercial loan interest fee if you don’t have enough on-farm storage for your crop.

Drying. Grain quality begins to decline as soon as it’s harvested. This year’s crop is likely to require greater management to preserve quality and to maintain value. Propane costs are trending lower.

Aeration. It’s vital to cool grain during winter and to warm it in spring to maintain an even moisture balance with outdoor air.

Shrink. It’s a factor in determining the number of bushels you’ll sell, based on the weight of the grain. Bob Wisner and Don Hofstrand, Iowa State University economists, calculate that it’s about 1.25% for on-farm grain and 1.4% for commercial facilities.

Handling. Wisner and Hofstrand estimate the charge for moving grain in and out of the bin is about 2¢ to 3¢ per bushel.

Facility. On-farm bins must be depreciated, maintained, insured, and produce a return on investment. These are fixed costs, whether your bins are empty or full.

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