Two factors that can influence the price that a corn grower receives are the moisture content of the crop at harvest and the associated drying costs to reach a desired moisture content specified by the local elevator. Collectively, these factors can be considered harvest losses expressed as a portion of the price per bushel.
Estimating these two factors against the projected price received are key determinants at to when a corn grower might begin their corn harvest operations.
The first factor associated with corn harvest losses relates to the removal of moisture from grain during the drying process that causes a reduction in grain quality, referred to as moisture shrink. For example, assume that the initial moisture content is 25% and the final desired moisture content is 15%.
Using the aforementioned equation, moisture shrink (%) is calculated to be 11.76%. The second factor considers the cost of drying. Grain drying costs are based on either dry or wet grain and can be estimated with the following equations expressed as dollars per dry bushel.
Grain elevators often charge corn growers a per bushel fee to dry grain based on the moisture level and their costs of running and maintaining drying equipment at the facility.
Figure 1 shows a chart of the shrinkage and drying costs based on the corn moisture at harvest and the costs of propane and electricity for corn priced at $4.00 per bushel.
Assuming that an elevator prefers to accept corn at 15% moisture, a grower can infer from the figure that harvesting corn at higher moisture content can negatively affect the price received. Meaning that a moisture levels of 23%, the price risk is $0.83 cents ($0.38 from shrink and $0.46 for drying charges) from the original $4.00 corn price (net price of $3.17).
As the moisture content of the corn is reduced, the grower price increases.
A decision tool was developed by the LSU AgCenter through which a producer — by inputting their initial expected price of corn at harvest, estimated harvest and target moisture levels, price per gallon for liquified petroleum gas and price per KWH for electricity — can calculate their risks or potential losses associated with moisture, shrinkage and price risk.
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The user-specified decision tool also contains a worksheet that allows a corn grower to enter their initial moisture content and the final desired moisture content so that the total cost per bushel can be calculated on a per bushel basis. Cells containing blue font in both worksheets can be changed by the grower.
The grower can also enter their gas and electricity costs to estimate the drying costs. To access a detailed report and accompanying decision tool, please visit the LSU AgCenter corn production webpage.
Appreciation is extended to the Louisiana Soybean and Feed Grain Research and Promotion Board for their support of this applied farm management research.
This graph shows the effect that higher moisture content has on the corn price a grower received. At higher moisture levels, greater that 15%, the corn price is reduced, assuming the desired level is 15%.
The effect that higher moisture content has on corn price. At higher moisture levels, greater than 15%, the corn price is reduced, assuming the desired level is 15%.