RP92-217 #2 Producer Marketing Mangement: Deferred Pricing Alternatives for Grain

Grain producers must make marketing decisions every day. First they must decide whether to price or hold grain. If they decide to price grain, they must then choose the most appropriate method of pricing: cash sale, forward contract, or hedging. If they decide to hold grain (not to price), they must choose the most appropriate method of retaining ownership. This fact sheet presents some guidelines to help producers choose the least costly method of owning grain or speculating on price level changes.

RP92-217 No. 19 Cost of Grain Storage

Grain marketing decisions are among the toughest the farm owner/operator or manager must make. Grain producers store grain to speculate on receiving higher prices, earn a return above storage costs, or to take advantage of government programs. Prices must increase enough to cover the additional costs, or forward contract prices must exceed current prices by more than the cost of storage in order to justify forward pricing. The gain in prices received can come from both changes in price level and changes in basis. This research publication discusses all the areas of the cost of grain storage.

Grain Storage Costs and Rental Rates

Trends in Grain Storage - Commercial grain storage eliminates the need to monitor grain conditions and, hence, offers the peace of mind that unsold grain will remain in condition. There may be a cost trade-off between this reduced storage risk and the cost of on-farm storage.