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DXMancMttr Farming Saturday, October 1, 1988
I
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MANAGEMENT
BY ROLAND P. FREUND
Regional Farm Management Agent
Pricing High-Moisture
Corn Grain
High-moisture com has become a very popular
feed for dairy cattle, beef and even hogs in our pan
of the world. Because of the labor convenience, the
savings in drying costs, simplification of grinding,
and apparent improvement in palatability, many far
mers have chosen to invest in high-moisture-grain
structures. Even “cattlemen” (here used to refer also
to dairy farmers) who normally grow little of their
own grain have chosen to buy and store their grain
as high moisture.
This situation has created a considerable trade in
high-moisture com. In a dry year the demand is
increased because more com acres than normal are
used to fill the com silage needs. So we can expect to
see many cattlemen negotiating with their grain
producing neighbors to buy wet com this year.
The problem these people have is that there is no
market quotation or other easy reference on which
to base prices. There is normally enough confusion
in the grain business because we are probably the
last country in the world to still price grain on a vol
umetric measure (bushel) but trade it by weight over
the scales. Then there is the problem of the high
moisture level of this grain, which is well above the
levels at which farmers normally harvest grain for
delivery to mills for dry storage.
Two steps can be used to simplify the process of
pricing grain. First, calculate how many dry shelled
bushels the high-moisture grain in question would
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be equivalent to, and then, negotiate a fair price for
those bushels.
1. Calculate Dry Shelled Bushel Equivalents
There are many complex shrink and other tables
used in the grain industry into which grain mer
chants have built cost of drying and other charges to
determine how much they will pay farmers for a
given weight of grain.
These tables should be avoided when trading
grain for high-moisture storage.
There are two very simple formulas which can be
used to calculate what a weight of grain at any given
level of DRY MATTER would equal in dry bushel
equivalents. As long as you can remember two fac
tors this can be calculated quickly with a pocket cal
culator (or a pencil and paper if you can still remem
ber how to multiply!).
For High-Moisture Ear Corn:
Pounds of wet ear com
X dry matter (expressed as a decimal)
X .0164
=Bushels of Dry Shelled
Example:
9.000 pounds of ear com
X .65 dry matter (35% moisture)
X .0164
=96 Bushels dry shelled equivalent
For High-Moisture Shelled Corn:
Pounds of wet shelled com
X dry matter (expressed as a decimal)
X .0205
=Bushels of Dry Shelled
Example:
35.000 pounds of wet shelled com
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X .7 dry matter (30% moisture)
X .0205
=502 Bushels dry shelled equivalent
Now we have the quantity of grain expressed in
the industry standard dry bushels.
2. Establish PRfCE for high-moisture corn
In this process three factors need to ho consid
ered. These are harvest season price drops, the nor
mal drying costs for the grower, and, in the case of
car com, the additional feed value to the cattle. It is
assumed that the grower will be paying the harvest
cost, and the buyer will haul the grain from the
grower’s field.
The com price normally drops about 35 cents a
bushel from first harvest, bottoming out late in the
harvest period when local storages are full. Very
early in the season the price may be even higher.
Pricing high-moisture com at the mill price when
high moisture com is harvested can give the grower
a big price advantage.
Normal diying costs can reduce the return by 15
to 30 cents per bushel. At current commercial dry
ing charges, growers could loose $l.OO a bushel to
dry 30% kernel moisture grain. Under these condi
tions if price were to remain constant during the
harvest season growers would be better off to let
com grain dry in the field and take higher field
losses.
So taking these two factors together, growers
have to compromise between getting an early higher
price but having higher drying costs, and saving
with lower drying costs but getting a lower price
later in the season. It would be very reasonable
therefore to expect that early season high-moisture.
Shelled Corn Sales should be priced at least 15 to
20 cents below the pre-harvest market price for dry
shelled bushel equivalents.
With Ear Corn there is about 10% more nutrient
per dry shelled bushel equivalent. Cattlemen should
therefore be willing to pay the full market price for
the dry shelled bushel equivalents when buying ear
com.
Buyer beware!
Many buyers have paid for some very expensive
water when buying high-moisture com. If the above
suggestions are followed, careful calculations
should ensure that a price is struck which is advan
tages to both parties.
An alternative to these computations is to use the
Penn State Extension computer template. It takes a
slightly different approach to arrive at a range of
prices for the wet product that can be used as the
basis for haggling. Do not hesitate to contact your
office and request that your figures be run through
the “High Moisture Com Pricing” program.
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