Trading Corn Silage Guide

Traditionally farmers traded corn as dry shelled or dry ear and priced it by the bushel – 56 or 70 pounds. This is simple when the commodities are in these stable and uniform forms.
Trading Corn Silage Guide - Articles
Trading Corn Silage Guide

But in the Capital Region of Pennsylvania more than half of all corn acres are harvested as corn silage and high moisture grain.

Trading corn in these forms can be helpful to both the grower and the feeder. Growers can save the drying cost, and they can get some return for the added nutrients in silage or the ear. In a drought year growers can get some return for stalks that might otherwise not be worth combining. Feeders can eliminate corn growing from their tasks and sell corn equipment.

The problems

How do growers and feeders arrive at a price that is fair?

If there were an auction where willing buyers could meet willing sellers of silage and high moisture corn, then that market could establish a "going price" at that location. But these commodities are unstable and subject to rapid spoilage, so they cannot practically be run through an auction. This characteristic reduces the market options and the value for corn in these forms.

Also, there is no standard or required moisture content for these products, so they need to be reduced to a Dry Matter (D.M.) basis and traded accordingly. But there is also an ideal moisture range outside of which feed quality suffers. Then there is the transport cost of all that water.

The "market price" for dry shelled corn should be an important component of any silage pricing calculations. But which "corn price" can also be debated. Should it be the local mill price on the day of harvest or should it be the contract price for grain delivery to the mill in November or December?

Then there is the question of how the added value of cob and or stem in the product will be valued? Also, how price will be adjusted for droughted silage or long-stem, low-energy silage?

How is quantity to be measured?

Weighing an occasional wagon load, and doing one moisture test can be very misleading when applied to the entire harvest. Using reliable Dry Matter capacity tables for silo or bag storages is usually more accurate over the normal ranges in moisture.

How are adjustments to value to be computed?

If the buyer also pays grower for harvest and delivery to storage how much more should grower get than if a third party harvests and delivers?

Corn Silage Spreadsheet

We can do the complex calculations to answer many of these questions quickly using a spreadsheet to arrive at values for corn silage. We should use a conservative farm-gate value for alternative feeds. That means market price less commission, less the cost of getting them to the selling point. If the auction sells a single ton of hay for $150, buyers might only offer $110 for each of your 300 tons of hay equivalent at your farm.

To illustrate here are some expected figures for corn silage based upon 2001 assumptions:

Normal

Droughted

Shelled Corn yield (Bu./ac.)

120

20

Corn Silage yield (Tons / acre)

20

7

Corn Silage Moisture %

65

58

Corn Silage NEL

0.74

.68

Shelled corn harvest contract /Bu

$2.20

$2.20

Grass hay price / Ton

$80

$80

Field to Grain Mill - miles

5

5

Field to Silage Silo - miles

3

3

Grower harvests and delivers

Normal Silage

Grower's viewpoint

After harvesting, hauling and drying the shelled corn grower could be left with $211 per acre. But his silage harvest and hauling costs, plus his stover losses add up to $120 an acre. To break-even with shelled corn the grower needs $331 per acre or $16.57 per Ton of 35%DM corn silage.

Buyer's viewpoint

It would cost the buyer $608 for ear corn and hay to furnish the feed equivalents from one acre of corn silage. But buyer has ensiling costs and losses estimated at $83 which makes an acre of the delivered silage worth $525. This calculates to $26.26 for the 35%D.M.T of silage.
Buyers need to realize that if this material were 30% D.M. (70% moisture) the value would be $22.51, while at 40% D.M. it would be worth $30.

Price negotiation

In this case the parties have a range between $16.57 and $26.26 where they are both better off than going after the alternative. This suggests that a price of $21 per ton green delivered 35%D.M. silage would be a good deal for both. If the buyer meets the cost of harvesting and hauling buyer should get it for $4.00 per ton less or $16 in this example.

Droughted Silage

In the second situation the field might return $16 per acre for shelled corn after costs. To break even on corn silage grower should get $78 per acre or $11.11 per ton. The buyer gets silage with only 77% of normal feed value. This is based on NEL and DM according to the latest Penn State adjustment tables. After ensiling costs and losses this calculates to a maximum price for buyer of $24.23 for 58% moisture silage. The range for negotiation is now wider. The supply and demand for such silage will determine what the price will be. If buyers have the option to buy good silage do so. Otherwise seek to get the droughted stuff for $14 rather than $24.

Need help with silage calculations?

If you would like to have a specific situation computed, please call your extension agent.

Other High Moisture Feeds

Haylage: Consider each Dry Matter Ton of haylage to be worth no more than a ton of hay made from the same cut. The cost and risk of making the haylage reduces the value of the standing field to about one half of the in-storage value.

To convert high-moisture shelled corn to its dry bushel equivalent use the formula: Pounds wet * D.M (as decimal) / 47.36. Example: (50 tons at 70% D.M.) is 100,000 pounds * 0.7 / 47.36 = 1,478 bushels.

For high moisture ear corn use the divisor 59.2 in the formula.

Roland P. Freund, retired Farm Management Agent

Authors

Dairy Business Management Dairy Nutrition

More by Timothy Beck