Store or sell grain: the price storage has to beat

Put in today's price and what storing costs you. This works out the price you would need later just to break even, month by month. It does not predict prices.

Prices in

Price if you sell now, $ per tonne

Months you would store it

Storage cost, $ per tonne per month

Commercial storage, or your own bin's running costs. 0 if you ignore it.

Interest, % a year

What the money would cost or earn if you had it now, for example your operating loan rate.

Shrink and handling loss, %

Grain lost or downgraded while stored.

Other one-off costs, $ per tonne

Aeration, extra handling or trucking later.

Price needed later to break even–

Above today's price by–

That is a rise of–

Storage–

Interest–

Shrink and other costs–

Break-even price, month by month

Stored for	Break-even price	Above today

This does not predict prices or tell you whether to store. It only works out how much higher the price has to be later for storing to come out even with selling today. Whether prices get there is your call. Nothing you type is sent anywhere.

How the break-even price is worked out

Storing grain costs money in three ways: the storage itself, the interest on money you would otherwise have now, and grain lost or downgraded along the way. The break-even price is the price that covers all three:

(price now × (1 + interest × months ÷ 12) + storage × months + other costs) ÷ (1 − loss)

With canola at $650 a tonne, stored six months at $1.50 a tonne a month, 7% interest and a 0.5% loss, that is (650 × 1.035 + 9) ÷ 0.995 = $685.18. The price has to rise by about $35 a tonne, or 5.4%, before storing beats selling today.

Questions

How do I know if storing grain is worth it?

Work out the break-even price: today's price plus storage, interest and expected shrink over the months you would store. Storing only pays if you expect to sell above that price. This calculator works out the break-even; it does not predict whether prices will get there.

What does storing grain actually cost?

Three things: the storage itself, the interest on money you would otherwise have now, and grain lost or downgraded while stored. On $650 canola, six months at $1.50 a tonne a month, 7% interest and 0.5% loss adds up to about $35 a tonne.

Should I count interest if I have no loan?

Yes. Money tied up in grain could be paying down debt or earning interest elsewhere, so it has a cost either way. Use your operating loan rate, or what the money would earn.

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