Interest rates may not be high, but they are going higher. And what growers must understand is that whether interest rates are high or low, incremental costs of higher interest rates don’t change.
“It costs $24 a day to keep 50,000 bushels of corn in the bin at 4.25% interest rates,” explained Chris Barren from C&B Farms and AgView Solutions on Wednesday’s edition of AgriTalk After the Bell with Chip Flory. “That may not sound like much, but it adds up in a hurry. Interest rates at 8% means it costs $42 dollars a day to store those 50,000 bushels.”
Barron explained, “At 4.25% interest, it costs $720 per month to store that grain. You’ve got to determine, based on price expectations and what you think basis will do, if it’s worth that $720 to store it for a month, let alone three or four more months. The costs add up in a hurry… it might make more sense to move the physical grain and, if you are optimistic on price, to re-own those bushels on paper.”
For the full AgriTalk After The Bell conversation click the player below