storing costs rise
Send a link to a friend
[October 10, 2008]
URBANA -- Corn producers face a double whammy
this harvest season, said a University of Illinois Extension farm
financial management specialist.
"Commercial drying and storage charges for grain will be higher
in 2008 than in recent years," said Gary Schnitkey. "Moreover, corn
will likely be harvested at higher moisture levels, further
increasing drying costs this season."
and Storage Costs in 2008: Comparing Alternatives with the Grain
Delivery Model," is available on U of I Extension's farmdoc
For corn, Schnitkey believes commercial drying costs
could approach 50 cents per bushel for corn harvested at 25
percent moisture. Drying costs for 20 percent moisture corn will
range from 15 to 25 cents per bushel. Commercial costs for
storing corn for January sale can range from 15 to 30 cents per
"As usual, each elevator uses different factors, storage
moisture levels, drying charges and storage charges, thereby
causing net revenues farmers receive for grain to vary across
elevators," he said. "Given higher costs, differences across
elevators could widen this year relative to previous years."
To help producers, a FAST Microsoft Excel spreadsheet called
Grain Delivery Model has been developed.
"It compares net revenues across delivery points," he
explained. "This program is demonstrated for three elevators
typical of charges in central Illinois. Also, storage economics
given higher costs are discussed."
[to top of second column]
For producers, Schnitkey said it is important to note that increased
costs for storage in 2008 mean that it will take higher commodity
prices to warrant storage.
"While it is possible that grain may increase by these amounts,
current futures prices and forward bids do not indicate price
increases of the magnitude needed to cover storage costs," he said.
"This presents a dilemma. Current prices are low in the $3.70 range
for corn. Price may increase after some settling of concerns about
the economy. At this point, it is too early to say.
"Storing grain while speculating on price increases has become
more costly this year."
[Text from file received from