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Savvy marketing moves can help farmers temper revenue fluctuations in grain. In this blog post, we’ll discuss the return on investment of grain bins (with examples), several ways on-farm grain bins can protect profits, how to leverage grain marketing services, and how to finance building and repairing grain bins.
To determine the return on investment (ROI) of grain bins — which most often provide on-farm storage for corn, soybean, wheat, oats, and barley — it’s important to begin by considering the costs involved in building a grain bin and maintaining it. This includes preparing the site, pouring a cement pad, anchoring the bin, erecting the roof, and sealing the bin, among other tasks.
There are no standardized costs for grain bins and repair, as costs vary according to factors such as size and region.
For many farmers, the advantages that on-farm grain storage offers, though not guaranteed, can supersede the investment of building and maintaining a grain bin.
“If a mid-sized farmer (150k bu/year) implemented a storage hedge program over 20 years I’m confident that it would add over $1 million to their net worth,” says Nick Horob, the founder of Harvest Profit.
ROI considerations of on-farm storage include, but are not limited to:
Crop type
Number of harvestable acres
Number of bushels per acre
Here are two examples:
Crop: Corn
Number of harvestable acres: 600
Number of bushels per acre: 300
Price/bushel at harvest time: $3.38
Future sell price/bushel: $3.83
Will you sell your grain at harvest? Yes
Harvest revenue potential: $608,400
On-farm storage revenue potential: $689,400
On-farm price advantage: +$81,000
Crop: Soybeans
Number of harvestable acres: 700
Number of bushels per acre: 55
Price/bushel at harvest time: $9.78
Future sell price/bushel: $9.90
Will you sell your grain at harvest? No
Storage costs/bushel/month: $0.05
Months of storage: 4
Wait time costs: $500
Elevator storage revenue potential: $372,950
On-farm storage revenue potential: $381,150
On-farm price advantage: +$8,200
These calculations are based on the GSI ROI Calculator. There are many factors that can determine ROI, and these results are not guaranteed.
At the core of the grain bin system's value is control — over when you sell your grain, how you manage its quality, and how you mitigate market risks.
Here are the primary marketing benefits of having a grain bin system on your farm:
One of the most compelling reasons to store your grain is to avoid selling it during harvest, when market prices are typically at their lowest due to the seasonal supply glut. Grain bins allow you to store your crop and sell when prices improve, often later in the marketing year. They also give you the ability to capitalize on short term grain buyer needs in your area and potentially capture premiums for quick shipped grain.
Harvest can be a time-sensitive period where you need to move grain quickly. Keeping your combines and grain carts moving allows you to make the most of good weather conditions. Having your own grain storage enables faster harvesting, as you’re not dependent on the schedules, dump lines, or capacities of grain elevators.
Properly managed grain bins allow for better control over the quality of stored grain. By monitoring moisture levels and using aeration and drying equipment, you can maintain or even improve the condition of stored grain, potentially fetching a premium on the market. A modern bin system may also give you the flexibility to blend and mix grain to avoid discounts when delivering grain.
Storing grain at commercial elevators can be costly. By investing in your own system, you avoid ongoing storage fees, handling charges, and transportation costs. It also maintains your optionality to sell to other grain-buying locations if basis opportunities present themselves throughout the marketing year. This optionality is generally not present when storing grain at a commercial elevator which often leaves you captive to the posted basis at that location.
Storage gives you a larger window to market your grain which has significant advantages. However, it is important to manage your futures and basis price risk according to your own risk profile and goals. The most conservative strategies will often include futures hedges that lock in the futures carry between harvest deferred option months. This will limit exposure to futures price risk and leave the basis open to benefit from typical seasonal appreciation. By hedging off price volatility this provides hedges for unpredictable futures price fluctuations and keeps you exposed to more predictable basis risk.
FBN® Finance supports farmers with a variety of grain marketing services, including:
Use the crop marketing features on the FBN app to help make informed decisions for your ag operation. From the Markets section, you can:
Monitor your favorite cash markets
Chart basis history and seasonal trends
Calculate optimal selling locations based on your trucking and storage costs
Keep up to date on grain market news
Get access to grain market insights, alerts, and recommendations to execute your crop marketing plan with confidence by signing up for Market Advisory Essentials from FBN Finance.
If you’re looking for more customized risk management support, Market Advisory Pro will match you with a personal risk management advisor. They will meet with you to learn about your operations risk profile and goals, then build out strategies customized to your operation and supported by industry leading farm risk software. As part of this offering you receive a weekly visualized risk report, market newsletter & recommendations, a customized basis tearsheet, and daily text market updates.
Sign Up for FBN Crop Marketing
Unlock rewards for using regenerative farming. Through FBN Finance, you can earn premiums for the sustainable practices you already implement on your farm.
Join an FBN Sustainability Program
We understand the significant impact grain bins can make on your profitability, so FBN Finance offers two financing opportunities:
Land loans: Expand your property or make improvements to your existing acres with a land loan. Land loans begin at $125,000, and, subject to terms and conditions, there are instant approvals on loans up to $2.5 million.
Equipment loans: Obtain grain bin financing for a new build or an upgrade to your grain storage. Equipment loans range from $10,000 to $1,000,000.
No matter which option you choose, you can rest assured that you’re getting a great rate. With our low overhead and nationwide network, we’re often able to save customers thousands of dollars.
Apply for a Land Loan | Apply for an Equipment Loan
A Percent Hedged State of Mind — How to Manage Risk in Grain Marketing
How to Prevent Low Falling Numbers in Grain (And Why It Happens)
Track and Manage Crop Marketing Activities with FBN® Profit Center
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