On October 20, 2022, Iowa State University Extension priced one load of corn two ways: 1,000 bushels at 20 percent moisture and $6.50 a bushel, a gross of $6,500. Under one buyer’s discount schedule the load paid $5,850, and under another’s it paid $5,795, so $650 to $705 of the $6,500 went to moisture. A discount schedule is the table of cuts a buyer applies to a load for moisture above the buyer’s base, for foreign material and for low test weight. If you sell grain that the buyer grades on delivery, ask each buyer for the schedule in writing and price the same load under each before you haul.
Three terms recur below. Base moisture is the level above which the buyer starts to cut. Foreign material is the dirt, cobs and trash mixed into the grain. Test weight is the weight of one bushel of the grain, in pounds. A bushel of corn is 56 pounds, about 25.4 kilograms, and a bushel of soybeans is 60 pounds, about 27.2 kilograms.
How much does a discount schedule take off one load?
Iowa State’s example is the load above, with a base moisture of 15 percent. The corn carries five points of excess moisture. Under the first schedule, the buyer cuts 2.0 percent of the price for each point, which is 65 cents off a $6.50 bushel.
Under the second schedule, the buyer charges 5 cents a bushel for each point of drying and takes 1.4 percent of the weight for each point as shrink. Shrink is the weight the buyer takes off for water. A third case dries the corn on the farm, at 4 cents a bushel for each point.
Price the same load under every schedule before you pick the buyer.
How much of the moisture cut is water?
Part of the cut is water, and the water leaves with any buyer. In the Iowa State example, 56,000 pounds of corn at 20 percent moisture holds 11,200 pounds of water and 44,800 pounds of dry matter. Dried to 15 percent, the dry matter is 85 percent of the weight, so the load weighs 44,800 divided by 0.85, which is 52,706 pounds.
That is 3,294 pounds gone, 1.18 percent of the weight for each of the five points. The shrink schedule takes 1.4 percent of the weight a point and also charges for drying. The discount schedule takes 2.0 percent of the price a point.
Above the 1.18 percent, the schedule may pay for drying and handling, or it may be margin. The schedule does not say which, so ask the buyer what the extra covers. Whether to dry and hold the grain on your own farm is a separate sale decision, covered in is it worth waiting to sell.
What does the national grade decide, and what does cleaner grain earn?
In the United States, the federal standard for corn grades on four factors: test weight, heat-damaged kernels, total damaged kernels, and broken corn with foreign material. The grade table has no moisture column. The moisture cut comes from the buyer’s own schedule, and Penn State Extension says the price paid varies with how each buyer handles moisture and contaminants.
| Grade | Minimum test weight (pounds per bushel) | Heat-damaged kernels, max (percent) | Total damaged kernels, max (percent) | Broken corn and foreign material, max (percent) |
|---|---|---|---|---|
| U.S. No. 1 | 56.0 | 0.1 | 3.0 | 2.0 |
| U.S. No. 2 | 54.0 | 0.2 | 5.0 | 3.0 |
| U.S. No. 3 | 52.0 | 0.5 | 7.0 | 4.0 |
| U.S. No. 4 | 49.0 | 1.0 | 10.0 | 5.0 |
| U.S. No. 5 | 46.0 | 3.0 | 15.0 | 7.0 |
Espinosa and Goodwin modeled the price of Kansas wheat from 1970 to 1987. They describe buyers as usually discounting test weight below a level and moisture above a level, and usually paying no premium for heavier or drier grain than average. That is the authors’ description of the market they modeled, not a result of their model.
Their model put the discount at 3.13 cents a bushel for each additional point of total defects and 5.45 cents a bushel for wheat above 12.86 percent moisture. It put a premium of 4.92 cents a bushel on each additional point of protein. These are Kansas wheat prices in 1987 dollars, so read the pattern and leave the cents. Look in each buyer’s schedule for a line that pays for grain better than the limit. Where none exists, better grain earns nothing extra and worse grain costs you.
How far apart can two buyers land on the same load?
Penn State Extension priced one ticket of soybeans at two mills. The ticket shows 30,000 pounds net, which is 500 bushels at 60 pounds, with 16.1 percent moisture, 3.1 percent foreign material and a test weight of 53.9 pounds a bushel. The spot price is $9.00 a bushel, so the gross is $4,500.
The first mill cuts in shrink: 3.5 percent of the bushels for moisture, 4 percent for foreign material, and a drying charge of 14 cents a bushel. The second mill cuts in money: 91 cents a bushel for moisture and nothing for foreign material below 3.9 percent. Both take $5 for the test weight, which is 0.1 pound under the 54-pound minimum.
The order of the cuts matters too. The first mill takes both shrinks from the 500 gross bushels. Had it taken the moisture shrink from the 480 bushels left after foreign material, that shrink would be 16.8 bushels and not 17.5. Ask each buyer which weight the cuts start from.
What do you ask each buyer for first, and when?
Ask for the discount schedule now, before harvest, since Penn State Extension suggests reviewing schedules in winter, ahead of the next harvest. Ask for it in writing, with the base moisture, the cut for each point above it, the foreign material limit and the test weight minimum. Penn State says a mill should readily share its schedule and explain any part of it.
Build the standard load from your last settlements: the bushels in a typical truck, and the moisture and foreign material it usually carries. Price it under each schedule and write the net beside each buyer’s name. Compare the nets, with hauling added, against the lowest price you can take, the price that still covers your costs. File the net you choose as the price the sale paid, one line in a price record with a source.
As each truck leaves, write the moisture and foreign material readings with the date and the name of whoever read them. Keep a sealed sample of the load. If your reading and the buyer’s differ, ask for a second reading of the sample. A log of every docked load, with its lot, also tells you where to start when you trace a lot back to the field.
The same step, a written figure beside the real one, works for any other part of farm management.