EAST LANSING — Every elevator that receives soybeans has a discount schedule. The discount schedules are important because they communicate how and when various shrink factors and discounts are applied at delivery. Discount schedules vary from elevator to elevator and can be somewhat confusing. This article lists and explains the major shrink and discount factors pertaining to soybeans and provides examples of shrink and discount calculations.
Test weight measures the density (mass/volume) of the crop and is measured in pounds per bushel. Test weight is also a measurement of quality and affects the allowable storage time for soybeans. The standard test weight of 60 pounds per bushel is always used to convert the scale weight of soybean loads to the number of bushels contained in the load. This is true even if the actual test weight of the load is lower than 60 pounds per bushel. Therefore, test weight does not impact the number of saleable bushels harvested from a defined area (acre or field).
However, most grain buyers will begin discounting soybean loads when the test weight falls below 54 pounds per bushel. Discounts are often applied to the gross weight of the load before shrink factors are applied. The only advantage of having test weights higher than 54 pounds per bushel is that the beans will take up less volume in storage and during transportation.
Grain moisture is an important factor when selling soybeans. Soybean producers are paid based on the gross weight of the load they deliver minus the moisture shrink when grain moisture levels exceed 13%. Most grain buyers use a moisture shrink factor of 0.7 or 0.8% for each half percent of moisture above 13 percent to convert gross weight to dry weight. They will also assess a drying charge on loads having grain moisture levels above 13%. A common drying charge is $0.025 per bushel for each half point of moisture above 13%.
The weight of soybean loads is also reduced to account for foreign material in the soybeans. Just as with moisture shrink, grain buyers shrink or reduce the gross weight of the load based on the actual foreign material found in the sample. Although U.S. number 1 yellow soybeans allow for 1% foreign material and U.S. number 2 yellow soybeans allow for 2% foreign material, there are many companies that will allow only a half percent and some will shrink for any foreign material above 0% . Some elevators also assess an foreign material discount in addition to the foreign material weight deduction or shrink. The foreign material discounts range from $0.01 to $0.05 for each 1 % of foreign material found in the sample above 1% . The discount rate typically increases as the amount of foreign material in the sample increases.
Damaged seed includes heat damage, frost damage, immature seed, mold damage, insect damage and sprout damage. Producers may be allowed up to 2% damaged beans before damage discounts apply. Damage discounts range from $0.02 to $0.05 for each 1% above 2%. The discount typically increases as the amount of damage in the sample increases.
Heat damage (black or dark brown soybeans) occurs when wet soybeans are dried at too high of a drying temperature (greater than 130 degrees Fahrenheit). However, most heat damage occurs when soybeans are placed into storage at moisture levels that are too high for safe storage and hot pockets develop in the grain mass. Heat damage is included in the damage (total) category and producers are not charged twice for this type of damage.
Beans are counted as splits whenever a quarter of the seed is missing. Producers are generally allowed up to 20% splits at delivery without being discounted. However, some grain buyers begin discounting when split beans exceed 10% . The discount for splits ranges from $0.01 to $0.05 for each 5 % increase in split beans and increases as the percentage of splits in the sample increases.
This example demonstrates how the shrink, discounts and net payment or settlement are calculated for a load of soybeans weighing 55,000 pounds having the following grain quality factors and a market price of $8.50 per bushel:
- 14.5% moisture
- 4% foreign material
- 55% per bushel test weight
- 3% damaged beans
- 10% splits
|Example soybean discount schedule|
|Grain quality factor||Shrink and discounts|
|Moisture||0.7% shrink for each 0.5% plus $0.025 drying charge for each 0.5% moisture above 13% per wet bushel|
|Foreign material||Foreign material greater than 1% deducted from gross weight|
|Test weight||No discount for soybeans above 54 pounds per bushel|
|Damage||$0.03 per bushel for each 1% above 2% damage|
|Splits||$0.01 per bushel for each 5% splits above 20%|
- 14.5% – 13% = 1.5% moisture above 13%
- 1.5% ÷ 0.5% = 3
- 3 x 0.7% = 2.1%
- 55,000 x 0.021 = 1,155 pounds of moisture shrink
Foreign material shrink
- 4% foreign material in the load – 1% allowed = 3% foreign material shrink on the load
- 55,000 x 0.03 = 1,650 pounds of foreign material shrink on the load
Saleable or marketable bushels
- [gross weight – (moisture + foreign material shrink)] ÷ 60
- 55,000 pounds – (1,155 pounds + 1,650 pounds) = 52,195 pounds
- 52,195 ÷ 60 = 870 dry marketable bushels
Gross payment without applicable discounts and drying charges
870 bushels x $8.50 per bushel = $7,395
- 14.5% – 13% = 1.5% moisture above 13%
- 1.5% ÷ 0.5% = 3
- 3 x $0.025 per each 0.5% per bushel = $0.075 per gross or wet bushel
- 55,000 ÷ 60 = 917 gross or wet bushels
- 917 gross bushels x $0.075 per bushel drying charge = $69.00
Test weight discount
No test weight discount applied to the load
- 3% damage in the load – 2% allowed damage = 1% of the gross
- 1% damage over allowed x $0.03 per bushel for each 1% damage = $0.03 per bushel
- 917 gross bushels x $0.03 per bushel = $27.51
Discount for splits
No discount for split beans applied to the load
Net payment/settlement on the load
- Gross payment – (drying charges + discounts)
- $7,395 – ($69.00 + $27.51) = $7,299 net payment before checkoff deduction
Taking the time to understand and compare soybean discount schedules can help producers maximize net payments from every load sold.
— Michael Staton, Michigan State University Extension
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