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| I’ll second this. I built first bin in 2018. 48X10. Couldn’t come close to filling it. Built a 60X19 this year. Cussing myself for not building first bin bigger. Yields are generally going up. In 10 years our aph’s went from the 120’s to the 160’s. Plus you might pickup a quarter of land here or there. Mine turn key minus dirtwork and electrical was 1.95$/bu. Bought a used commercial leg and spouting 135’, in it 100,000 erected.
Economics.
Improved harvest hours. That windstorm that turns corn flat has gotten guys in the past. Myself included. Say 1 in 10 years and it knocks over 50bu. 500 acresX50buX4.5$ corn 11,250 per year considering it happens one in 10 years. Normal year that 500 acres raised 75,000 bu. That’s 15c/year/bu. There’s an argument to be made that improved APH from avoiding that event has value. I don’t care to make the argument right now. There is another argument you can harvest slightly wetter run fans not pay elevator dock and shrink. Don’t care to argue that either at the moment.
Typical harvest basis here is -30. Carry a couple months gets you to -5. Carry to June-july gets you to +3-10.
Carry in the market. If you sell bu ahead of harvest as a hedge against Dec, typically I can make 12-15 rolling to March, 10-13 rolling to May, 10-13 rolling to July. Broker says I should be able to average 45-50c but I haven’t seen it yet.
So, average worst case, you make 15C harvest efficiency gain, 25C basis improvement, and sell in Dec. no carry. That’s a 40C gain. Best case average, 15C harvest gain, 40C basis gain, 39C carry. 94C gain. Carrying to July 5.5% interest on MAL loan from FSA on 4.5 corn is 16.5C interest. 77.5C net.
25k bu bin at 125,000 at 5.5% bin loan rate $6,875 in interest first year. 25k bu at conservatively say 60C is $15,000. Net $8,125.
Guys will come at me saying it costs way more than 15-17C for taxes, insurance, electricity, and to load and unload bin. In our county, new bins aren’t taxed for first 7 years. On 10k bu bins I pay $112/yr. Say $280. Electricity doesn’t cost a couple hundred a month for 2 months. Assume you have service already. So $500. I’m making a leap you have an old tractor, buy a 10” used auger say 72’ for 4k just looked on marketplace. Call the tractor with diesel 50$/hr and 10” auger will do 3500bu/hr. Call it 10hr to fill. That’s $500. $500 for power. $280 for insurance. That’s $1280. That leaves $2700 for auger or to kick towards tractor purchase if necessary.
My stupid math. Just gotta make the payment principal match your net, or subsidize it for the duration of the note.
I still say buy bigger. It pays in the long run. 10+ years. | |
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Help me with the economics of a bin.
