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Ridgway, IL | It's the difference between a shrink + dry moisture discount schedule and a straight few discount schedule.
Lets just say shrink on corn is 1.25% per point. So to take 22% down to 15% you or the elevator is getting (7 x 1.25%) 8.75% less #2 corn than what your net weight is.... Because corn is traded vs 15% spec. This shrink will be approximately the same no matter if you let it dry in the field or dry at your farm dryer.
The elevator can either shrink your pay weight by that factor or shrink your payment by that factor and your check will be the same. Price x dry bushels less discounts is what you get paid for.
When an elevator uses a straight drying fee, example 8c/half.... They are doing the same math as the shrink and dry method but just showing the customer a straight number rather than the formula. The straight drying fee will change as corn price changes because the shrink becomes a different cost as the price of the corn changes.
It's becoming more common I think to use a shrink and dry discount schedule.... Example 1.25% shrink plus 3c/half | |
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Shrink
