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Prairie Farmer - September 2006

Tally Top Grain-Delivery Option

Travis Farley
Department of Agricultural and Consumer Economics
University of Illinois at Urbana-Champaign

The leaves are starting to change colors, the days are getting shorter and high school football is in full swing. Yep, it's starting to feel like fall and that means harvest. With harvest comes grain delivery and storage decisions.

There are probably multiple local elevators that will gladly take that grain off your hands to either sell on delivery or store for future sales, but which one should you deliver to? What revenue and cost items are important to consider in making this decision? Because elevators have different storage moisture levels, charge different amounts for drying and charge different storage rates, it can be hard to get a good handle on which one will net you the highest return for your grain.

Ag economists at the University of Illinois have designed a FAST tool to help you compare the net revenues associated with delivering grain to different locations. The Grain Delivery Comparison tool calculates the net returns from alternative delivery points based on expected sales prices and various grain-handling factors.

To operate the tool, enter specific information for each grain delivery location. Data entered includes number of bushels delivered, sales price, month of sale, moisture and shrink factors, transportation costs, drying charges, and storage costs.

The program generates a comparison table, which allows you to evaluate the revenues and costs associated with different grain delivery options. Based on delivering 1,000 bushes of wet corn, the two delivery alternatives examined in the example are: 1) sell to Atlanta Grain on delivery for $2.44 or 2) store at Pacific Grain for a January sales price of $2.64. Next, the Grain Delivery spreadsheet reports the total costs associated with each alternative based on the information you entered: transportation, drying, storage, and interest. Given these two sales options and the different storage costs charged by the two elevators, which alternative earns you the highest net revenue?

The “net revenue” line reports that selling on delivery for a cash price of $2.44 at Atlanta Grain is the preferred option because you earn the highest net return of $2,134.20. For storing at Pacific Grain until January to be worthwhile, you need a sales price of at least $2.66 per bushel.