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MISSISSIPPI SOYBEAN PROMOTION BOARD
PROJECT NO. 11-2014 (YEAR 1)
2014 Annual Report
Title: Soybean Storage Profitability and Marketing Strategies for Mississippi Soybean
Growers
PI: Brian R. Williams, [email protected]
Bryon Parman, [email protected]
BACKGROUND AND OBJECTIVES
Soybean markets tend to vary cyclically, as market prices with fall contract expiration months
typically are lower than contract months expiring in spring or summer. Mississippi’s cash basis
is also typically higher in spring and summer than around harvest time, increasing the premium
from marketing beans in spring or summer.
The ability to take advantage of higher soybean prices forward contracted for the spring or
summer months requires the ability to store beans for intended delivery during said months.
One available option for producers is a storage agreement with a local soybean elevator requiring
the payment of a monthly storage fee. However, producers opting to use elevators and market
their beans far enough in the future may see storage fees erode any potential profits from forward
contracting, and the distance from field to elevator along with unloading waiting times can be
logistically challenging
Another available option for soybean producers to take advantage of market cycles is selfstorage in an on-farm facility. In this case, storage costs are internalized to the operation and
producers have the opportunity to build asset equity rather than renting space from elevators.
The primary objectives of this project are:
1. Examine the marketing advantages associated with on-farm soybean storage.
2. Estimate the costs associated with storing and drying soybeans in on-farm facilities.
3. Distribute results in the form of peer-reviewed journal articles, extension publications,
and extension presentations.
REPORT OF PROGRESS
Objective 1. Examine the marketing advantages associated with on-farm soybean storage.
Local cash price data have been collected for Greeneville and Belzoni. Futures contract price
data have also been collected. An analysis of seasonal trends have been completed and several
marketing scenarios have been examined. Among the marketing scenarios examined are:

Selling directly out of the field at harvest time using cash prices only.
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
Selling at harvest using hedging during the growing season to set the price.

Storing grain through January, February, April, May, June, or July and selling on the cash
market.

Storing grain until December, March, or July and marketing by hedging during the
growing season.
Objective 2. Estimate the costs associated with storing and drying soybeans in on-farm
facilities.

Data have been collected on the impact of storage facilities on land values. Dr. Parman
has met with grain bin manufacturers (Hutchinson Myrath & MFS) and has facilitated
their cooperation in estimating construction costs for various grain bin configurations.
They have completed storage configuration scenarios including loop, conveyer, and
moveable auger systems; storage volume options and scale savings; and multiple drying
options including rapid drying systems, dryer bins, and stirring systems. Alternative
drying power options, including natural gas vs. electrical powered dryers, are also being
evaluated.

Expectations are that four volume scenarios will be included, starting at 100,000 bu of
storage potential up to 500,000 bu storage potential. Each volume scenario will include a
low end configuration (moveable augers), intermediate cost configuration (Loop System),
and a high end option (conveyer system). This will essentially create 12 distinct options
for size and configuration.
Associated with each configuration will be separate drying options such as dryer bins,
stirrers, and rapid drying systems, which will be add-on options for any configuration and
volume potential. Storage volumes have been selected based upon recommendation from
Global Industries sales reps based upon their observations for farmers in Mississippi.

Major grain elevators located in the Mississippi Delta have been contacted to gather the
costs of storing grain at their facility as well as the dock-in price associated with
marketing grain that is not fully dry.

Miscellaneous costs not directly associated with storing and drying, including hauling,
equipment wear and tear, and time commitment for each storage option, have been
collected and analyzed.
Objective 3. Distribute results in the form of peer-reviewed journal articles, extension
publications.

An extension report that looks at the cost of construction and operation of storage
facilities is currently being written.

A marketing report that looks at profitability from a marketing perspective outlining each
of the scenarios described in Objective 1 is also being written.
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
Finally, a comprehensive report that includes construction and operating costs, marketing
benefits, and other less obvious logistical benefits such as harvest efficiency will be
generated.
IMPACTS AND BENEFITS TO MISSISSIPPI SOYBEAN PRODUCERS
This research can have a significant positive impact on Mississippi’s soybean producers.
Constructing an on-farm grain storage system can be an expensive endeavor, with construction
costs ranging from $41,118 for a smaller entry-level single tank system to $703,536 for a larger,
more advanced storage system with many options and features.
Many producers may be hesitant to make such a large investment without understanding the
costs and benefits associated with such an expenditure. The results from this projects will explain
the costs associated with on-farm grain storage systems as well as the additional marketing
opportunities and potential cost savings that can be realized from utilizing such a facility.
END PRODUCTS
Three extension bulletins are planned as an output of this project. One will outline the
construction and operating costs of an on-farm grain storage system. The second will look at the
marketing options that accompany an on-farm grain storage system, and the third will be a
comprehensive report.
Results are expected to be presented at the Southern Agricultural Economics Association annual
meeting held in February 2016.
Results from this study are also expected to be integrated into an extension program where they
will be presented to producers in a face-to-face setting.
Results from this study will also be sent directly to the Mississippi Soybean Promotion Board to
be featured on their website and disbursed as they see fit.
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