2013 LOGAN COUNTY FARM OUTLOOK MAGAZINE LINCOLN DAILY NEWS.com October 25, 2013 Page 25
Actively changing the game:
On-farm storage
Farmers might be some of the most competitive
people on the planet. Stand around the elevator
office at coffee time and you hear stories about who
got the biggest production, the biggest ears of corn,
the heftiest beans, the earliest harvest, the lowest
moisture, and so on and so on. From the outside, it’s
very funny to hear. But the ones telling these stories
are very serious.
The real competition in farming is passive: Farmers
are at the mercy of the weather and the markets.
Market prices are based on the size of the harvest
and the current availability of corn and beans. If
most producers in the country have a good harvest,
the price per bushel at harvest is low. What a Logan
County farmer hopes for is a high price and a good
yield, but that is only accomplished if farmers in other
production areas don’t fare as well on yield because of
regional weather conditions. The local farmers aren’t
hoping other farmers will fail, but that is the only way
to win passively in the price-per-bushel game.
One of the options to actively hedge is to put a portion
of your crop in storage at the local elevator. The
elevator charges a price to dry the grain to healthy
storage levels and a fee per bushel to store the grain,
and the producer gets to choose the time to sell. The
downside to storing at the elevator is that you will
sell to that facility, and there can be a significant
difference in bid price between different co-ops on
certain days.
Another active hedge is to store grain on your own
farm in your own storage bins. Exercising this option
allows you to capture carry in the market and expands
your marketing opportunities. With your own storage,
you get to choose when to sell and where to sell.
