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| I just went through this same exercise when the local poultry company needed corn badly and was offering 1% discount off the price per point of moisture above 15.5%. It took a lot of figuring to convince myself that they were paying more for the water I delivered than they were taking off of the price. Normally their discount is 2.5% off of the price per point above 15.5% which includes the shrinkage and drying charge. Apparently a lot of other farmers figured it out also as the lines were long but well worth it.
You sold them 2000 bu x 56#/bu = 112,000 # of corn.
At 25% moisture it contained .25 x 112,000# = 28,000# of water.
At 15.5% moisture that same weight would contain .155 x 112,000# = 17,360# of water.
So they paid you for and extra 28,000#-17,360# = 10,640# of water.
Divide 10,640# by 56 #/bu = 190 bu that they paid for which was actually water.
2000 bu total - 190 bu water = 1810 bu corn @ 15.5%
1810 bu x $3.74 / bu = $6769.40 worth of corn
$7480 - $6769.40 = $710.60 / 2000 bu = $.36 / bu shrinkage charge.
$6769.40 - $4100 = $2669.40 drying charge / 2000 bu = $1.33 / bu drying charge.
To check my math $2.05 / bu net + $1.33/ bu dry charge + $.36 / bu shrinkage = $3.74 / bu
You got hosed. That outfit would no longer be my main grain merchandiser. | |
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Wet corn shrinkage
