Wittal: Let’s look at the value of straw

Aug. 18 — Financial markets did a bit of a turnaround today and showed positive gains at day’s end.

Grains struggled for the most part but beans and corn were able to end with small gains while wheat ended up down slightly. 

The U.S. dollar is down a quarter of a cent today. The Canadian dollar is up 0.3 cents to close at US90.77 cents.

The Dow Jones September quote closed up 90 points at 9,210.

Crude oil is up $2.44 per barrel today to close at US$69.19.

Corn finished even to up two cents per bushel today, while beans ended up four to 11 cents per bushel.

Wheat was even to down two cents per bushel on the various U.S. exchanges. Minneapolis September wheat futures closed down 20 cents per bushel today.

Canola finished down 50 cents to $1 per tonne today. Barley closed down $2.30 today at $132.70 per tonne.

As a bonus feature today, we’re going to discuss the costs and benefits of baling and selling the straw off your land this fall. To do so, we have a guest article written by Steve Larocque, an agronomist and Nuffield scholar who runs Beyond Agronomy at Three Hills, Alta.

Does baling and selling straw make sense in 2009?

By Steve Larocque, Beyond Agronomy. Reprinted with permission.

With many producers looking at average crops, some are looking to boost revenue potential by baling and selling the straw. Now, I’m not a fan of removing straw from the field but I am a fan of profit and sometimes it does make sense to bale and sell the straw when the market is riding high.

Many grain farmers don’t have baling equipment so it must be hired out and trucked away, which is how I set up the example for crunching the numbers below. I will include the value of nutrients removed and include custom rates of baling and hauling to see what makes sense.

Steve’s quick math: On average, a tonne of wheat (36 bushels per acre) will yield a tonne of straw (2,200 lbs.). The present value of fertilizer today is roughly 36 cents a pound for urea, 32 cents for phosphate, 48 cents for potash and 35 cents for sulphur.

Nutrient content in 2,200 lbs. of barley straw: 14.5 lbs. N, 4.5 lbs. P, 37 lbs. K, 1.1 lbs. S 

Cost of nutrients per tonne: $24.55.

Nutrient content in 2,200 lbs. of wheat straw: 19 lbs. N, 4.5 lbs. P, 40 lbs. K, 3.3 lbs. S.

Cost of nutrients per tonne: $28.35.

Baling rates: Custom baling — $15 per bale, net wrapped or twine. Loading bales — $2.35 per bale, for self-loading truck.

The value of wheat or barley straw in today’s market is around 2.7 cents a pound ($60 per tonne). If we begin by looking at the exportable nutrient content in wheat and barley straw, it would be cheaper to sell barley straw versus wheat as fewer nutrients are exported in barley. For example, a 1,000-lb. bale of wheat straw would export $12.85 in nutrients versus a 1,000-lb. bale of barley straw at $11.13.

Next, the cost of producing a round bale at today’s price is roughly $15 a bale to have someone custom-bale it and $2.35 a bale to have it hauled off the field. In total, it would cost you approximately $17.35 per bale to have it done. At a price of 2.7 cents a pound or $60 a tonne, that’s a handy profit of $9.54 per 1,000-lb. bale or $21.20 per tonne. However, that doesn’t include the cost of nutrients removed in the straw.

If you include the value of nutrients removed from the field, you’re looking at a loss of $3.20 per 1,000-lb. bale for wheat straw and $1.48 per bale for barley straw.

In the end, if you ignore the cost of exporting nutrients, most average wheat and barley crops could add another $21.20 net per acre from straw sales. If you see value in that, I’ll leave the rest up to you.

About the author

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Columnist

Brian Wittal

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.

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