BROOKINGS, S.D. - For many South Dakota crop producers, grain storage is top priority this harvest.
"Over the past year, low commodity prices have caused some farmers to hold over more grain than in previous years," said Sara Bauder, SDSU Extension Agronomy Field Specialist. "In addition, according to some experts, the current tariff situation may effect grain markets into growing season 2019."
Bauder added that these issues, in conjunction with high yields, high humidity, the need for harvest efficiency and commercial storage limitations/fees may cause some significant storage issues.
"There are a few storage options available to farmers, but the main priority is a facility that is safe, keeps grain dry, and has aeration for temperature control," she said.
Below, Bauder, along with Jack Davis, SDSU Extension Crops Business Management Field Specialist, outlines some options to consider.
This is a good time to consider exit strategy or marketing plan for grain.
"Every operation is unique, a marketing plan helps growers determine what the best storage option is for them; whether it is at-home storage, paid storage or direct sale," Davis said. "A producer's storage decision is based on their storage capacity, ability to manage grain in storage, and the expected returns from storage."
The current projection for 2018-19 marketing year corn supply is 16.879 billion bushels, 228 million bushels smaller than last year's supply.
The 2018-19 ending stocks-to-use ratio is the lowest it has been in recent years.
Corn harvest bids are currently running at $0.55 below December futures.
The soybean supply is projected at 5.113 billion bushel, 302 million bushel larger than last year's supply. According to September 12, 2018 data, the 2018-19 ending stocks-to-use ratio are at 19.8 percent.
"This is the largest it has been in recent years," Davis said.
Soybean harvest bids are currently running $1.50 below November futures.
Current commercial storage rates vary from $0.05 to $0.07 per bushel per month.
To pencil out what the best option is, Davis suggested producers compare storage rates with their on-farm storage costs; include interest cost, shrink, handling cost, and drying costs.
"Returns to storage can be captured by selling the crop for later delivery at a price that exceeds the spot cash price plus the cost of owning and storing the crop," Davis said.
This can be accomplished by use of:
Forward cash contract: This type of agreement eliminates all uncertainty about the return to storage. Forward pricing eliminates downside price risk but also eliminates a return from higher price levels.
Selling deferred futures contracts: When selling a deferred futures contract to price the stored crop, the basis levels will still have to be set, which can impact the actual return to storage.
Storing the crop unpriced in anticipation of higher cash prices: Storing a crop unpriced allows the producer to capture higher prices, but provides no protection from lower prices.
Alternative storage options
If a crop producer is determined to store more grain than they have traditional storage space for, there are a few options.
Ken Hellevang of NDSU Extension is a regional grain storage expert. Much of the following alternative storage information is adapted from his recommendations for the upper Midwest. Old grain bins: Bins are an opportune storage facility due to their ability to shield grain from precipitation and allow controlled aeration for temperature and moisture control.
In a pinch, some farmers may attempt using old bins that have been out of service for many years. This can be done, but safety and functionality are key.
Not every bin has a perforated floor; however, they may include in-floor aeration. If no aeration exists in bins more than 3,000 bushels, aeration tubes should be added for temperature control in long-term storage situations.
Additionally, fan covers and proper aeration of bin roofs (i.e. roof vents) are often overlooked, but considered highly useful tools in keeping grain cool for long periods of time as well.
Be sure old bins are assessed for structural integrity, tight seals - especially between the floor and base of the walls - and are sanitized.
Grain piles: Commonly seen at grain elevators and cooperatives, piles can be a short-term solution to a grain storage issue. However, open piles are completely vulnerable to moisture damage.
Although many believe that wind blowing on an open pile can aerate it, this is simply not the case. A 1-inch rain can increase a 1-foot layer of corn by 9 percent moisture.
Covers are available for grain piles that can help shield grain from the elements and direct drainage away from the pile.
In addition, aeration systems can be added to piles.
Sometimes producers have to weigh the cost of spoiled grain against the cost of a cover and aeration system based upon intended length of storage.
Be sure to prepare the ground surface with a substance that has low permeability (lime, asphalt, cement, etc.) and add a crown for proper water drainage.
Consider locating piles away from possible flood areas and near electricity if aeration will be used. Grain placed in piles should be dry to control temperature; ideally corn should be at 13-14 percent and soybeans at 11-12 percent moisture.
Bag storage: Poly bag storage is often considered a wet grain storage option, but in reality can be used for dry grains as well.
Grain should be put in bags dry at the following percent of moisture:
- Soybeans: 11-12 percent
- Corn: 13-14 percent
Poly bags do not stop insect infestations, mold growth or heating, making it imperative that grain is properly dried before using bags.
Running bags north to south can help reduce moisture issues and keep heat more even throughout the day. Because, if heating within the bag occurs, this type of storage does not allow for controlled aeration.
Other farm facilities: Some farms may have older granary spaces or buildings that could be repurposed or put back into service.
Remember that grain can push against walls. Buildings may need extra reinforcement. With this in mind, look for bowed walls or other structural issues before attempting to fill such structures.
Consider the load the building was designed to withstand before moving any grain.
If using a facility not originally intended for grain storage, it's best to hire an engineer to complete a structural analysis or, at the very least, limit grain coverage to the floor only, which will avoid adding a load to the exterior walls.
Preparing to store grain in any of the above facilities should include thorough cleaning and preparation.
"Remember that new grain should never be stored on top of old grain," Bauder said.
For a specific list of sanitation procedures that should be performed every year, before any grain is stored, visit iGrow.org and search "How to Prevent Stored Grain Pests."
For specific information regarding different grain storage, visit North Dakota State University Extension's Grain Drying and Storage website.