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Sell Grain at Harvest; Store Only if Necessary

September 4, 2012
grain bin elevator system
  
 
 

Skip storage and head straight to the elevator before prices drop

By Steve Leer, Purdue University

Economic trends and concerns over the condition of grain because of the drought suggest there's little incentive for farmers to store grain this fall. But those who do will need to quickly dry it down to a proper moisture content and watch for contamination, Purdue University specialists say.

As farmers prepare to harvest a poorer-than-expected corn and soybean crop, they have to consider whether to hold onto their grain and hope for higher prices or sell it right out of the field. In most cases, farmers should skip storage and take their grain directly to the elevator, said Corinne Alexander, agricultural economist.

"From an economics perspective, in short crop years one of the things we tend to see is that prices peak early, either before or during harvest, and then decline through the remainder of the marketing year," Alexander said. "The market is giving a strong signal to farmers to deliver early and at harvest because storage will not be profitable. This is true for both corn and soybeans."

Markets reacted strongly to a pair of Aug. 10 U.S. Department of Agriculture reports. One report estimated a 2012 national corn crop of just 10.8 billion bushels and a soybean crop of only 2.69 billion bushels, down 13% and 12% respectively, from 2011. Another report projected lower world grain supplies for the 2012 marketing year.

That news, along with a continued decline in crop condition as a summer-long drought dragged on, sent prices for corn and soybeans soaring. In recent weeks corn has eclipsed $8 a bushel while soybeans have shot past $16 a bushel.

Farmers considering waiting out the market for even higher prices could be leaving money on the table if they put their grain in a bin, Alexander said. Prices are likely to come down in the first quarter of 2013 as South American farmers harvest their corn and soybeans and provide some relief for stressed world stocks.

There are only two reasons farmers should store grain in a short crop year, Alexander said.

"Those would include livestock producers who are supplying their own feed or producers who have contracts with either food or ethanol processors where the contract specifies a later delivery date," she said.

Storing grain could present a host of challenges this fall, including drydown methods, mold, leftover fine material in bins and insects, said Richard Stroshine, a grain quality specialist.

Grain could be going into bins at higher moisture levels and temperatures because many farmers planted early and could be harvesting later this month or in September when temperatures are hotter than in the typical harvest months of October and November, Stroshine said.

Unless farmers work fast to get grain dried down to appropriate levels, their crop could spoil in the bin. If grain is placed in a bin dry it needs to be cooled using aeration, taking advantage of cooler nighttime temperatures, Stroshine said.

That is especially true of corn.

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RELATED TOPICS: Corn, Soybeans, Marketing, Crops, Harvest, drought

 
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COMMENTS (8 Comments)

PullMyFinger - Chappell, NE
Ah wonders if'n ah was to sell my in tire crop off de combine fur de first price I's offered if ah could raise enuff moneys to git me a Perdew idgeekation so I could offer dis brilliant advice in de future?​
10:59 PM Sep 4th
 
aeromsithpink
Here we go again with the sky is falling. "prices" All i know is we have no subsoil motisure so we are behind the 8 ball already for next year. The CPC never forcasted this worst drought in History this year so why trust any long term forcast. My Gut tells me its going to be dry next year. Im stickig with that. Im not putting anything in the Bin but Im not selling at the scale either. Im going to pay the 5 cents per month storage charge. I think we are not done going up. Once again im trusting my gut.
9:11 PM Sep 4th
 
aeromsithpink
Here we go again with the sky is falling. "prices" All i know is we have no subsoil motisure so we are behind the 8 ball already for next year. The CPC never forcasted this worst drought in History this year so why trust any long term forcast. My Gut tells me its going to be dry next year. Im stickig with that. Im not putting anything in the Bin but Im not selling at the scale either. Im going to pay the 5 cents per month storage charge. I think we are not done going up. Once again im trusting my gut.
9:11 PM Sep 4th
 
Roebke - Alexandria, MN
The best reason to wait with both delivery of contracts and sells is the crop insurance price period. Why deliver anything until the market sets the harvest price period as high as possible. For surely that is what big oil and corporate America would do! Alan
8:01 PM Sep 4th
 
Iowa55
Come on Faust sooner or later they will be right. Most have been wrong for 6 years. The law of averages is going to say they will be right eventually.

Brazil is going wall to wall beans, just one little problem ...1/2 of there top soy region is drier than that popcorn f**t you get after all that beer and corn you eat. they are all ready 45% sold of a bumper crop they haven't planted yet. It didn't work out too well last year for them.

The other thing is what do prices ALL ways do when the traders have at least 75% control of the product?
That' s right "moon shot".

Go ahead "make my day" sell out. The prices are good ...till you go to the parts counter or price new.
5:15 PM Sep 4th
 
Iowa55
Come on Faust sooner or later they will be right. Most have been wrong for 6 years. The law of averages is going to say they will be right eventually.

Brazil is going wall to wall beans, just one little problem ...1/2 of there top soy region is drier than that popcorn f**t you get after all that beer and corn you eat. they are all ready 45% sold of a bumper crop they haven't planted yet. It didn't work out too well last year for them.

The other thing is what do prices ALL ways do when the traders have at least 75% control of the product?
That' s right "moon shot".

Go ahead "make my day" sell out. The prices are good ...till you go to the parts counter or price new.
5:15 PM Sep 4th
 
PullMyFinger - Chappell, NE
Yeah boy, drying down this crop will be a REAL problem all right!!!!
4:17 PM Sep 4th
 
Faust100F
You want to send me some of what you are smoking! It is clear that hiding out in the hallowed halls of higher education has cut you off from the REAL world. We are headed into a series of drouth years just like the 50's, perhaps you had better catch up on your reading and stop trying to stampede the Muppets. You see when you hand out advice from a place where you assume none of the risk, it is easy to point farmers in the wrong direction and suffer no consequences. You see you have found your spot, just like cattle in a feedlot, and the government is your caretaker and provider from cradle to the grave. You serve at our expense on the public dole, I do not believe you have paid the price to even voice a decision where you have nothing at risk. John Foust J.D. CPA Farmer
9:07 AM Sep 4th
 



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