Manage corn moisture discounts

Fall 2009 corn came out of the field at much higher moisture levels than in recent years. Especially in the eastern half of Iowa, farmers harvested a lot of corn approaching 30% moisture during the early part of harvest. Much of Iowa’s crop was harvested at 20% to 25% moisture.

The high moisture levels resulted in shrink and drying costs for grain delivered to commercial elevators and processors topping $100 per acre. These higher drying costs further hiked the total cost of production in a year in which per-acre costs were some of the highest in history.

Early frost on the late-planted crop and adverse fall weather reduced corn test weights. Development of mycotoxins and a lot of corn going into on-farm storage at moisture contents too high for safe storage create corn-quality time bombs that farmers need to be defusing this winter and early spring.

Key Points

• Corn harvested in 2009 was much wetter than normal due to cool growing season.

• Wet grain resulted in shrink losses and drying costs much higher than expected.

• Farmers consider expanding on-farm drying, handling and storage facilities.

Shrink, drying costs add up

With less potential field drying beyond mid-November, waiting to harvest corn at lower moisture levels proved to be challenging. Large discounts for high-moisture and low-test-weight corn deterred farmers from harvesting the corn in poor field conditions during a soggy October. Many elected to let corn stand in the field to dry down naturally.

Unfortunately, some of it is still in the field. Huge amounts of high-moisture crops taxed capacity of both off-farm and on-farm drying systems this fall and into early winter. Snow, driven by high winds, ended ideas for harvesting the balance of the state’s remaining corn crop in early December.

Table 2 shows how per-acre shrink losses and drying costs add up, starting with corn at three different moisture contents that end up yielding about 190 bushels per acre of 15% moisture corn.

Most elevators adjust the quantity of wet corn purchased to the number of bushels you’d deliver if it was at 15% moisture. The table reflects values for corn with initial moisture contents of 30%, 25%, 20% and 15%.

Moisture-only shrink, when going to a final moisture content of 15%, is 1.176% of the weight or bushels for each point of moisture removed. Buyers typically use a higher shrink factor, often 1.4% of the bushels for each point of moisture removed to cover handling losses during the drying process.

For example, 215.35 bushels of 25% moisture corn will “moisture shrink only” to 190 bushels. That’s simply a quantity adjustment to convert the number of wet bushels the acre yields to the number of bushels the acre would yield if the corn was 15% moisture.

A buyer, using a 1.4% shrink factor would “pencil shrink” those 215.35 bushels of 25% corn to 185.18 bushels. The 4.82 bushels beyond the moisture-only shrink reflect handling losses. At $3.50 per bushel, those extra 4.82 bushels are worth $16.88. Suppose the buyer charges 4.2 cents per point of moisture removed to dry the 25% moisture corn. Drying charge would be $90.45 (215.35 wet bushels x $0.042 x 10 points). The handling shrink and drying charge would total $107.33 per acre.

“The $90.45 drying charge is about $48.05 per acre higher than the $42.40 charge for a more typical harvest moisture content of 20%,” points out Steve Johnson, Iowa State University Extension farm management specialist who helped construct the table.

Field drying trade-offs

Shrink losses and drying costs will decline as moisture levels decline, notes Johnson. The table shows harvesting at 25% moisture, rather than 30% moisture, will reduce per-acre handling shrink and drying costs from $173.23 to $107.33 per acre, $65.90 per acre less. Combining at 20%, rather than 25% moisture, trims shrink losses and drying costs from $107.33 to $50.31 per acre, or $57.02 per acre less.

Last fall many farmers waited to harvest the grain to allow for more infield drydown to occur. Some of them waited too long, and that corn is now in a snowbank. ISU grain quality specialist Charles Hurburgh says the moisture content for corn left standing in the field this winter will not drop significantly and any quality issues will still remain. This standing corn will need to be harvested and likely dried to maintain quality. Waiting until spring to harvest could mean corn lodging, yield loss and soil compaction issues.

Another consideration regarding price discounts on corn left standing in the field is the USDA grading standard for No. 2 yellow corn that says the corn must have 3% or less cracked kernels and foreign material to meet that grade.

Reductions in shrink losses and drying costs should be weighed against infield yield losses of grain and other quality issues that may occur by leaving corn standing in the field.

“Drying charges and shrink losses were much higher in 2009 than in recent years due to high moisture levels of harvested grain and adjustments made in drying charges,” sums up Johnson. “In addition, low test weights and grain quality issues may result in further grain discounts. Farmers can do little to reduce these costs once the wet grain is harvested and delivered directly to processors and commercial facilities.”

2010: grain moisture vs. higher yield

Last fall’s corn harvest nightmare has some farmers contemplating switching to earlier-maturing corn hybrids. They want to boost the odds they’ll get more drydown of corn in the field and therefore save on drying costs.

“The key trade-off is: Does potential higher yield from a longer-maturity hybrid offset the drying cost savings from the expected better field drydown of a shorter maturity hybrid?” notes Charles Hurburgh, ISU grain handling specialist.

For example, suppose you can get a 30 bushel-per-acre yield increase for an extra five days of corn maturity — say 113-day corn vs. 108, or 118 vs. 113. Will you get enough extra yield to more than pay for the higher drying and shrink cost?

Running the numbers

Suppose a 118-day hybrid would yield 215.35 wet bushels (190 equivalent dry bushels) at 25% moisture. If the buyer uses a 1.4% shrink factor to also cover handling losses, you’d have 185.18 bushels for sale. At $3.50 per bushel, gross sales value would be $648.12 per acre (see Table 1).

Also suppose a 113-day hybrid would yield 170 wet bushels (160 equivalent dry bushels) at 20% moisture. If the buyer uses a 1.4% shrink factor to also cover handling losses, you’d have 158.1 bushels for sale. At $3.50 per bushel, gross sales value would be $553.34 per acre.

Drying the 113-day corn would cost $35.70 (170 bushels x 5 points x $0.042) per acre vs. $90.45 (215.35 bushels x 10 points x $0.042) per acre for the 118-day hybrid. Drying cost for the earlier maturity corn is considerably less than half the drying cost for the longer hybrid. Why? You’re only removing half as much moisture per bushel. Plus, you’re starting out with 45.35 fewer wet bushels to dry.

You save $54.75 ($90.45 minus 35.70) in drying costs. But the $517.64 return above drying costs for the 113-day corn still falls $40.03 per acre short of the $557.67 return for the 118-day corn.

“I’m coming to the view that with today’s corn prices and propane prices for drying grain, a farmer would be wise to invest in drying, accept the higher moisture corn, and just dry it,” says Hurburgh. “That’s assuming you can get enough of a yield increase.” With corn in the $3.50 to $4 price range, this is a good question to put to seed company representatives. What is their estimate of the yield increase vs. moisture trade-off for additional days of maturity with a longer-maturing corn hybrid in a more typical growing season?


This article published in the February, 2010 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2010.