University Outreach and Extension

Text Box: Farm Management Newsletter

 

Text Box: David Reinbott, Agriculture Business Specialist
P.O. Box 187, Benton, MO  63736
Phone:  (573) 545-3516 Fax:  (573) 545-3517
E-mail:  reinbottd@missouri.edu
Web Site: http://outreach.missouri.edu/seregion/fmmkt.htm
Text Box: David Reinbott

Text Box: September 4, 2009

 

 

Economics of Drying Corn 

With corn harvest just beginning, the question is should you sell your corn wet and take the dock or dry it down to 15%? 

The following is the rule of thumb I use in calculating the drying costs for corn: 

Fuel:  .02 gallons of LP for each 1% of moisture removed X price of LP Gas/gallon X points of water removed

Electricity to run motors and other equipment:  1 5 cents/bushel

Cost of extra handling and transportation:  5 cents per bushel.
 

Following is an example of drying 25% moisture corn to 15% and LP gas at $1.50 per gallon. 

Fuel:  .02 X $1.50 LP gas/gallon X 10 points of moisture (25% to 15%)  =   30.0 cents per bushel

Electricity:         =     3.0 cents

Cost of H&T:    =     5 cents

Total variable costs to dry corn from 25% to 15%         =   38.0 cents/bushel    

The above costs do not include the fixed costs of depreciation, interest, repairs or taxes on the grain bins and drying equipment or labor.     

Moisture dock will vary among elevators, but most will be charging approximately 1 percent of the current price for every 1/2 point of moisture over 15%.   Based on a corn price of $5.00 and 25.0% moisture, the moisture dock per bushel would be $1.38 but the value of the moisture in the wet corn would be 62.0 cents. To be economical to dry corn, you would need to do it for less than 76 cents ($1.38 62 cents).   The cost is 38.0 cents and the returns to fixed cost, labor and management is 38 cents/bushel.

 Drying 30% moisture corn to 15%  

Fuel:  .02 X $1.50 LP gas/gallon X 15 points of moisture (30% to 15%) =   45.0 cents per bushel

Electricity:         =     5.0 cents

Cost of H&T:    =     5 cents

Total variable costs to dry corn from 30% to 15%         =   55.0 cents/bushel  

Based on a corn price of $5.00 and 30.0% moisture, the moisture dock per bushel would be $2.13 but the value of the moisture in the wet corn would be 91.0 cents. To be economical to dry corn, you would need to do it for less than $1.22 ($2.13 91 cents).   The cost is 55.0 cents and the returns to fixed cost, labor and management is 67 cents/bushel.

Before you deliver wet corn to the elevator, you should contact them first to see if they have a maximum moisture they will accept and their moisture discount rates.    

I have three spreadsheets that can help calculate these costs.  One calculates the returns to drying versus selling corn wet with a table of the returns at different moisture levels.  The second spreadsheet includes four worksheets:  a moisture shrinkage table, shrinks wet bushels to dry bushels, grain moisture discounts, and the net returns to drying with LP gas.  The third spreadsheet calculates the drying costs based on energy prices, points of moisture removed, crop yield, and drying systems.  I can email these spreadsheets to you or you can go to my web site to download them.

Economic Returns to Grain Drying

Grain Shrinkage Table and other Grain Moisture Calculations

Grain Drying Costs based on energy prices, moisture levels, crop yields, and drying system

Spreadsheets  

Extension Publications on Grain Drying  

Purdue 

Purdue Fact Sheet 

Mississippi State University 

Kentucky 

Wisconsin

North Dakota State
    
Calculating Grain Drying Costs

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