Pricing Corn Silage In 2011

"What is corn silage worth when corn prices are flirting with $7 per bushel or more?" Corn prices have gone up to unprecedented levels and will be the big factor in pricing this year's corn silage. The corn crop is also quite variable across the province with a combination of delayed planting dates, a very dry early summer and extremely variable thunderstorm activity and rainfall in late summer. The determination of the price of corn silage must be tailored to each individual situation.

Local supply and demand and negotiation between buyer and seller ultimately determines the price. With the today's high grain corn prices, the price of corn silage looks dramatically different than it was only a year or two ago. It is important that you make your own assumptions for your situation and calculate your own costs, in order to determine what you feel is an acceptable price. Then negotiate the best you can.

Example Calculations

One method to establish the price of corn silage is to compare it to the local value of grain corn to determine a minimum price. (Refer to Table 1.) As a seller, you would not want to sell it as corn silage for less than you could net selling it as grain. Buyers feeding corn silage to livestock might be prepared to pay more if they have to, depending on what alternate feedstuffs are available. From a livestock nutrient point of view, corn silage in the ration may be worth either more or less than is reflected in the market. These calculated corn silage values are not necessarily the cost of production, or the feed nutrient values, but reflect the market value of the alternate harvesting options (ie. harvesting as grain corn).

Tremendous variation in yield and quality can occur between fields. Many fields will have good yield and quality potential, while others do not. Higher yield reduces harvesting costs per tonne and increases the proportion of grain and therefore energy. Higher yielding corn fields contain a higher proportion of grain relative to stover, and are usually greater in digestible energy.

The expected grain value should be adjusted for custom combining, drying, and trucking charges to give a value of the crop in the field. The additional soil nutrient value (P and K) removed in the non-grain portion of the silage (stover) is significant, at about $3.50 per tonne of corn silage. Calculating the cost per lb or tonne of dry matter can help put corn silage in perspective relative to what the market was willing to pay for standing hay. If the seller is going to fill the silo for the buyer, custom silo filling charges should also be added. The Crop Budgeting Aids and the Custom Rate Survey are available from OMAFRA at www.gov.on.ca/OMAFRA/english/busdev/agbusdev.html. Storage costs, fermentation shrink and spoilage losses are not included.

Because of the increased grain corn prices, corn silage price calculations have almost doubled from last year and tripled from only a few years ago. Percent moisture will have a significant impact on price, so it is important to sample and get reliable moisture numbers. An error of only 5% moisture (ie. estimating 65% instead of 70%) is equivalent to almost $8 per tonne.

Salvaging A Poor Corn Crop

Farmers attempting to salvage poor corn fields damaged by lack of rain by harvesting them as silage should be aware of some of the harvesting and nutrition implications. Information on harvest and storage of corn silage, including "Harvesting Corn Silage At The Right Moisture", "Drought Damaged Corn Silage" and "Grazing Corn Stover" is available on the OMAFRA Crop Website at http://www.omafra.gov.on.ca/english/crops/field/forages.html.

Tremendous variation can occur in drought-stressed corn fields. Some fields will have short plant height with more normal ears, so the ratio of grain to stover may be reasonably normal. Yields will be reduced, but forage quality may be fairly normal. Other fields could be more normal in height but have very small ears. These fields will have a very low ratio of grain to stover, much lower than the "thumb rule" 7.7 bushels grain per tonne (7.0 bu/ton) of silage at 65% moisture for a good crop.

Other Considerations

The local supply and demand of corn silage and alternate forages will influence the price. The availability of silage storage and the economics of feeding are considerations. Sellers with Crop Insurance should contact Agricorp
(1-888-247-4999) before harvest to determine how selling corn as silage will impact a claim. Good yield and quality estimates are important and should take into consideration actual weights and percent moisture. The removal of the stover organic matter could be considered as well.

This example is meant to be a general guide for farmers and should be used as a starting point in negotiations between the buyer and seller. Make your own assumptions and do the calculations specific to your situation.

Table 1 - Pricing Corn Silage Example Calculations (Minimum Values)

	Example #1 "normal"	Example #2 "stressed"
grain yield bushels / ac	160	100
grain yield metric tonne (mt)/ac	4.1	2.5
bu grain (15.5%) / mt silage	7.7	6.5
corn silage yield - mt / ac (65% moisture)	20.8	15.4
grain price $ / mt (#2 grade, fall delivery, local)	$280	$280
gross grain value / ac (yield X price)	$1,148	$700
- drying (24% moisture @ $22 / mt)	-90.20	-55.00
- combining	-35.00	-35.00
- trucking (@ $8.00 / mt)	-32.80	-20.00
= gross value / ac less grain harvesting costs	$990	590
+ extra P & K removed in the stover (~$3.50/mt of silage)	+72.80	+53.90
per acre	1,062.80	643.90
standing corn per metric tonne (mt)	$51.10	$41.81
¢ / lb dry matter	6.6¢	5.4¢
$ / tonne dry matter	$146	$119
+ silo filling ($175/hour, 2.5 acres/hour)	+70.00	+70.00
per acre	1,132.88	713.90
harvested corn silage per metric tonne (mt) (before shrink, spoilage & storage cost)	54.47	46.36