Over the past few years grain storage systems have been popping up throughout farm country. According to Bob Utterback, of Utterback Marketing there are just a few main reasons to use a bin to store grain.
Utterback’s primary reasons for storage:
1. To keep the combines rolling in the fall when the local elevator gets behind schedule.
2. To avoid having to dump inventory at harvest on wide cash basis levels and wait for a more reasonable level in the future.
2. To take advantage of the carry that develops in the market. In order to take advantage of carry is the price must be fixed, he says.
When prices are low, it can be tempting to store grain in hopes of capturing higher prices later. Utterback warns that a bin is not a speculative long-investment tool.
“If that is the objective, you would be money ahead to dump the inventory as soon as possible and hold that inventory on paper where you are only required to invest a fraction of the value of the crop as compared to holding a cash position,” he says.