On-Farm Grain Storage: Is the Carrying Cost Worth It?
Storing to wait for better prices is an attractive strategy, but the carrying cost quietly eats into your margin. Here is how to work out whether waiting really pays.
7 April 2026·3 min read
A grower stores 500 tonnes of wheat hoping for a better price in March. He gets +€12/t. A good trade? Not necessarily. Six months of carrying cost can absorb most of the gain. Before deciding to store, you need to work out what waiting really costs.
Breaking down the carrying cost
| Cost item | Typical estimate | Over 6 months (500 t) |
|---|---|---|
| Finance costs (cost of tied-up capital) | 3.5–4.5% / yr × grain price | ≈ €2,000–3,500 |
| Silo cost (depreciation + maintenance) | €1.5–2.5/t/month | €3,750–6,250 |
| Electricity (aeration, monitoring) | €0.2–0.5/t/month | €500–1,250 |
| Weight loss (drying down) | 0.1–0.3% of volume | €500–1,500 |
| Quality risk (mycotoxins, insects) | Variable → discount €2–10/t | €0–5,000 |
| Estimated total | €6,750–17,500 |
Expressed in €/t over 500 t and 6 months, the real carrying cost sits between €13/t and €35/t. A price gain of €12/t is therefore often a net loss once costs are included.
The break-even chart
When storage really pays
- When the market is in carry (contango): the price gap between harvest (July) and a deferred month (March) has to cover the carrying cost. If the gap is below your real cost, the market is telling you to sell now.
- When fundamentals are structurally bullish: a tight stocks-to-use ratio, a run of downward USDA revisions — storage can then capture a significant premium.
- When cash flow needs are covered elsewhere: storing on a short-term loan at 5% in the hope of €8/t is rarely sensible.
Simple rule: work out your monthly carrying cost (silo + capital + risks). If the market carry for the period you are targeting does not cover that cost plus a minimum margin, sell now and reposition on the next season if the trend invites you to.