24/10/2025
Should you pay DP charges for stored corn, or explore a different strategy? 🌽 🤔
The answer is clear for most.
You're likely better off with selling corn and re-owning it will call options.
This approach can save you significant money while keeping your upisde potential.
Here is why 👇
Assume you are paying 5 cents per month in DP charges.
Plus 8% interest on a line of credit.
At $4.50 corn, interest costs run you 3 cents a month.
For a total of 8 cents every month when you combine the DP and interest.
(5 cents of DP + 3 cents of interest = 8 cents)
By February 20th, holding corn on DP would cost you 32 cents in total.
(4 months X 8 cents a month = 32 cents)
Here is an alternative 👇
March futures are trading at $4.37
The March $4.35 call options cost only 15 cents.
This presents a compelling opportunity.
You could sell your physical corn, buy one call option to protect your upside, and still come out ahead.
Even better.. you could buy two call options for 30 cents.
This 30 cents for the options would still be less than your total carrying costs of 32 cents.
While leaving you with exposure to the upside if we were to rally.
The DP strategy simply delivers the futures price minus 32 cents in total carrying costs.
The one call option strategy provides a floor of $4.22 while keeping your upside open.
($4.37 futures - 15 cents for call = $4.22)
The double call strategy provides a floor of $4.07 while keeping your upside open by twice as much.
($4.37 futures - 30 cents for both calls = $4.07)
For example, if corn were to rally to $5.05 like we did last year. You would receive $5.47
Which is a full 74 cents above the DP outcome of $4.73 ($5.05 - 32 cents storage = $4.73)
So should you pay DP charges?
Probably not in this current environment.
However, this analysis does NOT account for basis appreciation or extreme market moves in either direction.
Remember, you can always make marketing decisions and defer payment until January 1st. The right pricing decision and the right cash flow decision don’t have to align.
The bottom line:
If your elevator will improve basis even on DP corn, you might justify paying DP. But right now, options are simply too cheap and DP charges are too expensive to ignore this strategy.
If you need some help deciding when and what to do in your grain marketing.. try our updates & signals free
👉 www.dailymarketminute.com/freetrial
Disclaimer: futures and options are risky and not suitable for everyone. This is not investing advice.
