Pricing High-Moisture Grain
As harvest approaches, a main concern for farmers may be storage and crop drying. If you’re worrying about moisture levels, there are a few different options you can take this fall.
“One possible solution is harvesting the crop as high-moisture grain and marketing it to livestock producers,” says Bob Fanning, Extension plant pathology field specialist at South Dakota State University. “For example, high-moisture corn is an excellent feed for ruminant animals that is used quite frequently in South Dakota feedlots.”
Advantages to this approach include:
- No drying costs
- Earlier harvest
- Use of an immature crop
- Lower field losses
- Earlier availability of crop residue grazing
Disadvantages of high-moisture harvest include:
- Less marketing flexibility (only through livestock)
- Need for specialized storage facilities and equipment
- Potentially higher spoilage and storage losses
“Alternatives to high-moisture corn can include high-moisture ear corn (earlage) and snaplage (includes the grain, cob, and shuck or husk),” says Fanning. “Producers could choose to harvest a portion of their grain as high-moisture while waiting for the remaining crop to dry sufficiently to store safely. The dilemma with selling high-moisture grain is how to arrive at a value for the crop.”
You can apply an adjustment to the cash price at the local grain elevator – this should be based on the industry-standard moisture content. With earlage or snaplage, additional adjustments would need to be made.
“Grain buyers may use a variety of methods to calculate shrink,” says Fanning. “One method to adjust for excess moisture is to mathematically remove the water and calculate what you are buying and selling on a dry matter basis.”
Below is an example of corn marketed as a high-moisture crop by Fanning.
- The industry standard moisture content is 15.5%, and the weight per bushel is 56 pounds. To calculate the dry matter in one bushel of 15.5% moisture corn, we would use the following formula: (1 - 0.155) X 56 = 47.32 pounds of dry corn/Bu.
"The same principle can also be used to calculate the bushels of 15.5% moisture corn in a load of high-moisture corn,” says Fanning.
- To keep the math simple, we will assume a load of 25% moisture corn weighs 1,000 pounds. By using the formula: (1 – 0.25) X 1,000 = 750, we have mathematically removed the water, and determined that 75% of the load of corn is dry corn, which weighs 750 pounds. By dividing 750/47.32 (pounds of dry corn/Bu) = 15.8, we know that the 1,000 pounds of 25% moisture corn contains the equivalent of 15.8 bushels of 15.5% moisture corn.
“If the buyer and seller agree on this method of adjusting for the excess moisture, they can determine the value of the 1,000 pounds of high-moisture corn by multiplying the cash price per bushel of corn on that day by the equivalent bushels of 15.5% moisture corn in the load,” says Fanning.
Keep in mind the buyer and seller may agree to make additional adjustments due to handling losses, storage requirements, and who is incurring the trucking costs, says Fanning.