TW and FM CHALLENGES ABOUND in THE 2019 CORN HARVEST
Nov 25, 2019
As harvest has progressed, the quality of the South Dakota and North Dakota corn crops have deteriorated rapidly. Agtegra corn receipts have declined from an average 55.0lb test weight in early harvest to 52.5lb test weight the last two weeks. On November 21, 2019, Agtegra’s inbound quality was such that 7 grain locations had average Test Weight that was 51 lb or below.
Corn sales for the majority of markets require a minimum of 54.0 test weight and a maximum of 3.0 Broken Corn Foreign Matter (BCFM.) The current quality of inbound corn at Agtegra locations will make it difficult to achieve those specifications. To help manage the risk associated with this poor crop, Agtegra has had to make the difficult decision to increase cash discounts on low test weight corn and high BCFM corn.
The new discounts will take effect for deliveries starting on November 26, 2019. The large portion of lightweight corn has overwhelmed the market and the current quality of the corn cannot make #2 yellow corn specifications. The market is struggling to find a suitable home for this corn, either export or domestic. Selling the corn as #3 yellow or #4 yellow results in a discount of 25 to 40 cents to Agtegra.
Grades of Designation of the U.S. Department of Agriculture Federal Grain Inspection Service:
#2 yellow corn specification is corn that has a minimum test weight of 54 pounds per bushel at 15.5% moisture. It has a maximum limit of 3% broken kernels and foreign material and cannot exceed 5% total damaged kernels.
#3 yellow corn specification is corn that has a minimum test weight of 52 pounds per bushel and maximum foreign material of 4%
#4 yellow corn specification is corn that has a minimum test weight of 49 pounds per bushel and maximum foreign material of 5%
How much are discounts increasing?
Currently, Agtegra will not accept corn below 50.0 lb test weight since there is no market available. For example, one truckload of 49 lb corn takes two truckloads of 52 lb corn to be able to average 51 lb shipments which is the lowest the market is allowing currently. There is not enough heavier test weight corn in the marketplace to absorb the lighter test weight corn for sales applications. Currently, there is not a monetary discount appropriate to reflect the risk in handling a sub 50 lb crop.
Thank you for your understanding as we all work together through this challenging year.
Corn sales for the majority of markets require a minimum of 54.0 test weight and a maximum of 3.0 Broken Corn Foreign Matter (BCFM.) The current quality of inbound corn at Agtegra locations will make it difficult to achieve those specifications. To help manage the risk associated with this poor crop, Agtegra has had to make the difficult decision to increase cash discounts on low test weight corn and high BCFM corn.
The new discounts will take effect for deliveries starting on November 26, 2019. The large portion of lightweight corn has overwhelmed the market and the current quality of the corn cannot make #2 yellow corn specifications. The market is struggling to find a suitable home for this corn, either export or domestic. Selling the corn as #3 yellow or #4 yellow results in a discount of 25 to 40 cents to Agtegra.
Grades of Designation of the U.S. Department of Agriculture Federal Grain Inspection Service:
#2 yellow corn specification is corn that has a minimum test weight of 54 pounds per bushel at 15.5% moisture. It has a maximum limit of 3% broken kernels and foreign material and cannot exceed 5% total damaged kernels.
#3 yellow corn specification is corn that has a minimum test weight of 52 pounds per bushel and maximum foreign material of 4%
#4 yellow corn specification is corn that has a minimum test weight of 49 pounds per bushel and maximum foreign material of 5%
How much are discounts increasing?
- -Test weight discounts will go from $.02 to $.03 for each 1/2lb below 54.0 to 52.0 lbs.
- -Test weight discounts will go from $.03 to $.05 for each 1/2 lb from 51.9 to 50.0 lbs.
- -BCFM discounts will go from $.04 to $.05 each 1% from 3.1% to 4.0%.
- -BCFM discounts will go from $.05 to $.06 each 1% from 4.1% to 10%.
Currently, Agtegra will not accept corn below 50.0 lb test weight since there is no market available. For example, one truckload of 49 lb corn takes two truckloads of 52 lb corn to be able to average 51 lb shipments which is the lowest the market is allowing currently. There is not enough heavier test weight corn in the marketplace to absorb the lighter test weight corn for sales applications. Currently, there is not a monetary discount appropriate to reflect the risk in handling a sub 50 lb crop.
Thank you for your understanding as we all work together through this challenging year.