Tool figures corn drying, shrink
The near-ideal growing conditions in late summer and fall benefited Iowa’s corn and soybean yields, as well as crop quality. However, the crops are maturing later than normal. This leaves much of Iowa’s corn harvest to stretch from October well into November. Harvest is a week or two late getting started, and higher corn moisture levels are adding to shrink losses and drying costs.
Rather than take discounts for delivery of corn above 15% moisture, many farmers will let their crop dry down naturally in the field before harvesting. Iowa State University studies indicate unharvested corn could dry at a rate of 0.3 point of moisture per day in wet, cool weather during the fall. Drydown improves to 1 point of moisture per day in hot, dry weather. This in-field drying cuts the cost of artificially drying the crop, but it may delay harvest and result in more stalk lodging and ear loss.
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 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 likely anticipates a futures price rally in the deferred contracts, likely May or July 2015 corn futures.
Sell at harvest, or dry and store?
ISU has a new online decision tool that compares selling corn at harvest versus the shrink loss, drying, and storage costs from drying and storing corn. Using this ISU Extension Ag Decision Maker decision tool “Corn Drying and Shrink Comparison,” File A2-32, you can plug in your own information. 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 of 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 sell wet corn and incur a moisture discount; dry the grain commercially and then sell; or dry it on-farm and sell it.
• Step 4. Input your moisture, drying and shrink information. This includes 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 sales alternatives for after storage. This includes the number of months that 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 for commercial storage after minimum, quality deterioration on-farm storage, fans, electricity and labor on-farm storage and short-term interest rates.
Available on ISU’s AgDM website, the decision tool uses assumptions and compares net revenue after storage costs and the breakeven selling price needed to pay storage costs. This one and two other new information files (pdfs) and decision tools (spreadsheets) were developed by retired ISU economics professor William Edwards and are posted at the ISU Extension Ag Decision Maker at . They are:
• “Estimating the Cost for Drying Corn,” File A2-31
• “Corn Drying and Shrink Comparison,” File A2-32
• “Cost of Storing Grain,” File A2-33
Considerations when using these tools are wet grain at harvest resulting in higher shrink losses and drying costs; concerns for adequate on-farm and commercial drying and storage capacity; and moisture discounts if selling corn at harvest.
Johnson is the ISU Extension farm management specialist in central Iowa.
Higher quality this fall
Grain management tips
• Uniform drying and cooling of grain in bins is goal. Using adequate aeration (0.1 plus cfm/bu.) is a must.
• A cooling cycle should be completed with every 10 to 15 degree change of outside air temperature vs. grain temperature.
• Cool down stored grain to below 40 degrees F quickly after drying.
• Remove the center core of fines immediately from the center of the bin.
• Regular inspection of stored grain, and temperature monitoring, is a must.
• Monitoring grain and watching for temperature changes is important (a 3 degree increase in two weeks without aeration being run, is significant).
• Stay within “temperature-moisture” guidelines for storage.
This article published in the October, 2014 edition of WALLACES FARMER.
All rights reserved. Copyright Farm Progress Cos. 2014.