USDA’s June Grain Stocks report estimated 37% more corn and 44% more soybeans stored on-farm than last year (Maples, 2024). Many producers are still sitting on unpriced old crop corn trying to decide whether to sell or hold through harvest hoping for prices to improve. This article discusses three potential options for a farmer deciding what to do with old crop held in storage. The three options – using 100,000 bushels of corn and a current cash price of $4.00 – examined are:
- sell corn at the current market price;
- continue to store corn with operating loan utilization; or
- store corn with cash resources.
Selling corn at the market price is the most straightforward option. Selling would result in collecting $400,000 that could be used in other areas of the operation – including paying down opertating debt or covering expenses – or it could be invested. Additionally, making sales would free up storage for the new crop and shift the focus to marketing the 2024 crop.
If an operating loan with a 9% interest rate is being used, continuing to store corn until February would incurr interest expense of $21,000 ($400,000 × 9% × 7/12). Dividing by 100,000 bushels, the per-bushel interest expense would be $0.21 or $0.03 per bushel per month, meaning cash prices from now until February would need to increase to at least $4.21 for the farmer to be better off than selling at today’s prices.
If the farmer is using cash reserves, rather than an operating loan, to carry corn until February, forgone interest should be estimated.
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