22 March 26, 2015 2015 Logan County Farm Outlook Magazine Lincoln Daily News.com
Storage at the elevator
is also an option. But
in considering this,
there is still going to
be the transportation
and payroll costs, and
also charges assessed
by the elevator.
The producer should
assess cost of storage
regardless of where
the physical crop
is located. Off-site
storage should be
compared against
on-farm to get a fuller
picture of the crop profitability.
This past fall, harvest was late for many. Those
who left the corn crop in the field until later in the
season gained an advantage in that they reduced
their drying costs. Those who worried about
downed corn and an early winter brought the crop
in and bore the burden of selling wet corn, or
drying before selling or storing.
Prices between October 15th and November 15th
rose. The central Illinois cash average price of
corn went from $3.08 per bushel in October to
$3.53 in November. This season, prices peaked
in December with the average cash price for
corn at country elevators being $3.88 per bushel.
Since that time, the price has danced a bit, but is
generally in a downward trend with the price at
the end of February being $3.67.
The University Of Illinois College Of ACES
recently announced their expectation that corn
prices for the 2015 season are not going to rally.
The U of I is projecting corn at $3.50 per bushel
by harvest.
So, did using on-site storage as a hedge work
out for the farmer this year? It’s debatable and
contingent upon whether or not area farmers saw
the writing on the wall and sold their surplus in
December. Looking strictly at the cash price
fluctuation, it appears that many may have
because as the supply hit the market in December,
prices fell.
One local elevator
this year charged
$0.20/bushel through
the end of the year.
Corn stored there
in November and
December lost a
total of $0.40 per
bushel, dropping
the net cash value
of the crop to $3.48
using the December
central Illinois
average. That still
equates to a 40-cent
gain over October cash if sold in December.
After January 1st, the charge dropped to
$0.025 per month, accrued daily. Corn held on
January 31st then accrued total storage costs
(Nov+Dec+Jan) of 42.5 cents per bushel and 45
cents per bushel if held to the end of February.
With January cash being $3.51 at the end of the
month, the net after storage would be $3.085/
bushel, very close to the October cash.
On March 2nd, the central Illinois average cash
on corn was $3.645. Take from that 45 cents
and the net selling price would come to $3.195,
approximately 11 cents over the October Cash.
Those who sold in December, using the Logan
County yield average of 230 bushels per acre,
would have gained gross revenue of $92/acre to
this year’s harvest. For several that would have
been enough to bring this year’s bumper harvest
into a “break-even” position.
For those who missed that high, selling on March
1st would have yielded an additional $25.30 per
bushel.
So the bottom line, hedging through storage may
be profitable this year, but it is not going to make
anyone a millionaire.
Story by Nila Smith
