Economics Of Drying Corn
DAVID REINBOTT
BENTON, MO.
Corn harvest is just beginning and will be in full swing in the next two weeks. With harvest brings questions about the economics of drying. Some of the questions include should the corn be harvested at a high moisture and dried down to 15 percent? Others include is it more economical to let the corn dry down to 18 -19 percent moisture in the field and take the moisture dock or dry to 1 percent? In addition, harvesting early allows corn producers to capture price premiums and reduces field loss from shattering and lodging. I will try to answer some of these questions. I have two spreadsheets that can also help.
Before you harvest or deliver wet corn to the elevator, you should contact the elevator first to see if they have a maximum moisture they will accept and their moisture discount rates.
Drying 22 percent moisture corn to 15 percent.
Drying Costs
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 22 percent moisture corn to 15 percent and LP gas at $2.00 per gallon.
Fuel: .02 X $2.00 LP gas/gallon X 7 points of moisture (22% to 15%) = 28.0 cents per bushel Electricity: = 3.0 cents
Cost of Handling and Transportation: = 5 cents Total variable costs to dry corn from 22% to 15% = 36.0 cents/bushel Fixed Costs The above costs do not include the fixed costs (DIRTI-5) of depreciation, interest, repairs, taxes, and insurance on the grain bins and drying equipment. It also does not include any additional cost for labor and management. In addition, there is the cost of over drying and the in and out costs from corn going in and out of the bin and dryers. These additional storage costs could easily run an extra 20 – 40 cents per bushel.
Moisture Dockage
Moisture dock will vary among elevators, but most will be charging approximately 1.5 percent cents for every 1/2 point of moisture over 15 percent. Based on a corn price of $5.75 and 22.0 percent moisture, the moisture dock per bushel would be $1.21 per bushel. However, you will gain back some of the discount from the weight of the wet corn.
The value of the moisture in the wet corn would be worth 50 cents. To be economical to dry corn, you would need to do it for less than 71 cents per bushel ($1.21 – 50 cents).
Net Returns.
From this example, the net return over variable drying costs from 22 percent to 15 percent moisture is 35 cents per bushel (71 cents – 36.0 cents). I think it is obvious that if your corn is 22 percent moisture, you will harvest it and dry it to 15 percent or just let it dry down in the field to a more economical moisture level.
Drying 19 percent moisture corn to 15 percent.
Drying Costs
Following is an example of drying19% moisture corn to 15% and LP gas at $2.00 per gallon. Fuel: .02 X $2.00 LP gas/gallon X 4 points of moisture (19% to 15%) = 16.0 cents per bushel Electricity: = 2.0 cents
Cost of Handling and Transportation: = 5 cents Total variable costs to dry corn from 19% to 15% = 23.0 cents/bushel Moisture Dockage Moisture dock will vary among elevators, but most will be charging approximately 1.5 percent cents for every 1/2 point of moisture over 15 percent. Based on a corn price of $5.75 and 19.0 percent moisture, the moisture dock per bushel would be 69 cents. However, you will gain back some of the discount from the weight of the wet corn. The value of the moisture in the wet corn would be worth 30 cents. To be economical to dry corn, you would need to do it for less than 39 cents (69.0 cents – 30 cents).
Net Returns
From this example, the net return over variable drying costs from 19 percent to 15 percent moisture is 16 cents per bushel (39.0 cents – 23.0 cents). At 18 percent moisture, the net return over variable drying cost is 11.0 cents. When the moisture is in the 19 percent to 18 percent range, delivering the corn to the elevator and taking the moisture dockage could be a better option.
Remember, before you deliver wet corn to the elevator, you should contact the elevator first to see if they have a maximum moisture they will accept and their moisture discount rates.
I have two Excel 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. I can email these spreadsheets to you. ∆
DAVID REINBOTT: Field Specialist in Agricultural Business, University of Missouri