The Real Role of the Grain Elevator in Your Farm Business

Posted on May 2, 2022


Many producers turn to the grain elevator to get prices and sales recommendations, but is that really what the elevator is for? While you may have a strong relationship with your rep at the elevator, it has to be said: they don’t always have your best interest in mind.

Here’s what the grain elevator is actually for and how its role affects your bottom line.

What do grain elevators do?

At their core, grain elevators are meant to store crops that have been acquired or are available for resale, as well as to aid with the problem of grain storage. They protect grain from the weather while also helping to maintain quality through temperature monitoring and inspections. The grain can be easily transported thanks to the vertical storage with bins on the inside of the structure.

Some of the other responsibilities of a grain elevator include quality control, promoting the sale of grain, managing pricing, and shipping grain. Though reps at the elevator maintain communication with producers regarding the sale of grain, it is not the elevator’s responsibility to advise you on when to sell or how much.

Selling and Reselling

Grain elevators buy grain for cash on the spot or based on many types of contracts. The elevator benefits from the narrower grain basis (the gap between the local cash price and the futures price), which happens at specific periods throughout the year.

Quality Control

To collect a grain sample, the truck or train delivering grain is probed and the crop is analyzed before being unloaded. The findings of the tests are used to determine which bin the grain will be stored in. Testing may include moisture, protein, test weight, classification, and dockage. Other more intricate testing or physical inspections may be carried out as well.

Storage

Grain storage at the elevator provides more options for selling and may allow you to hold out for price increases during the season. Because storing grains has a cost, storage capacity often plays a factor in deciding when and to whom the grain is sold. If it is more profitable to sell the harvest later for a higher price than it is now, it may be best to keep the grain.

Take advice at the elevator with a grain of salt

While you may sell or hold based solely on the advice you receive from the elevator, it’s important to understand that this advice will always carry a bias. Since grain elevators are owned and operated by buyers, they generally only have the best interests of their business in mind.

Think about it: When was the last time your rep at the elevator told you not to sell?

This isn’t to say that you shouldn’t take any advice from the elevator, but it should only make up part of your sales decision process. The rest should include clear, unbiased data and analysis, like what you’ll find on GrainFox.

The GrainFox difference

As your farm wealth toolkit, GrainFox’s main goal is to help you maximize profits through intuitive tools, comprehensive price finding capabilities, and unbiased market analysis and sales recommendations.

Our advisors and analysts don’t have a stake in the sale of your grain, which means we only offer impartial advice and recommendations, backed by over 20 years of historical and statistical data. Essentially, we’re doing our job as long as you’re getting what you deserve for doing yours.

The bottom line

While the elevator plays an important role in the storage and sale of your crops, it’s important to understand that it only makes up part of the profit equation.

The sales recommendations and market analysis you receive should be completely unbiased, with only your best interests at heart. Combine these with powerful tools that you can use anywhere at any time, and you’re setting yourself up for long-term success right from the get-go.

To get started, sign up for GrainFox today.

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