Issue 31
Marketing Guide 2000
 

Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc. and the Minnesota Barley Growers Association.

Copyright
Prairie Grains Marketing Guide
2000

Sizable price jump needed to justify storing corn, beans

You'll need a price jump of over 24 cents/bu to justify storing newly-harvested corn for six months, and over 36 cents to store soybeans the same amount of time, according to Erlin Weness, University of Minnesota extension educator.

"If you store it in an elevator warehouse, a normal charge is three cents per bushel per month," says Weness. "In addition, you will incur an interest cost on having the money tied up. Holding $2.00 per-bushel corn at 10% interest costs 1.6 cents per month. Holding $5.00 soybeans at 10% interest is 4.17 cents per month.

"It's easy to see that holding corn and soybeans in commercial storage can cost up to 4.6 cents per bushel per month for corn and up to 7.2 cents per bushel per month for soybeans." Interest is a major storage cost. If you sell rather than store, notes Weness, you can pay off loans and stop accruing interest on them. Even if you owe no money, if you sell the grain you could invest the cash and earn interest.

Storing corn in bins you already own is easier to justify than storing at an elevator. Your costs for the bin are fixed; they will be there if you put grain in the bin or not. These fixed costs include payments of principal and interest, insurance, and property taxes. Thus you will need less price improvement to justify storing grain in bins you already own than you'll
need to justify elevator storage or putting up new bins.

If you are thinking about buying a storage bin, include the costs of paying for the bin in your decision to store or sell your grain, says Weness.

"If you store grain on your farm, there are several in and out costs you will incur in the first month of storage," he says. "Once the grain is in the bin, in/out charges are not a factor in whether to store or not."

The in/out charges are the costs of moving grain into and out of storage. They include equipment fuel and repairs, labor costs, shrink of the corn during drying and storage, and the extra drying costs to get the crop to a storable moisture content. Weness says in/out charges can run from 6-10 cents per bushel on corn and wheat and 5-8 cents per bushel on soybeans.

Cumulative variable storage costs per month on the farm relevant to storage decisions prior to harvest — these include in/out charges.