Soybean Grade Requirements and Discount Schedules

All grain elevators that receive and purchase soybeans from producers have a discount schedule that they apply to each individual load that is delivered to them. These discount schedules vary somewhat from elevator to elevator, and are used to determine the shrinkage of the delivered product that will be applied based on its grade in designated categories. The below narrative lists and explains the various shrink and discount factors that are applied to soybeans at the elevator.

The USDA Federal Grain Inspection Service has established requirements for US soybean grades. They appear in the below table.  Click here for pictures of the various categories of damaged seed.
 

Definitions of the terms or shrinkage elements in the above table and the range of discounts that will be applied for each shrinkage element that exceeds the maximums in the above table follow.

Test weight is a measure of density of the seed. The standard test weight for soybeans is 60 lb/bu which is always used to convert the weight of the soybean load to the number of bushels contained in the load. Discounts for test weights below 54 lb/bu vary, but generally range from $0.005 to $0.02 per bushel for each 1 lb below 54 lb/bu to 50 lb/bu. Some elevators may reject loads with a test weight below 49 lb/bu.

Damaged kernels are soybeans and pieces of soybeans that are materially damaged by heat, weather, disease, insects, etc. Damage discounts range from $0.02 to $0.05 per bushel for each 1% damage between  2% and 8%. A load with more than 8% damage may be rejected.

Heat damaged soybeans are those that are materially damaged and discolored (black or dark brown) by heat. This damage can occur when soybeans are stored at moisture levels that are too high (majority of damage) or are dried at too high a drying temperature. Heat damage is considered a separate damage category and is penalized more. Most elevators start assessing discounts for heat damage at 0.20%, and the discounts can be based on percent of commodity price (e.g. 0.25% for each 0.5% damage increase) or on bushels of product (e.g. $0.03 to $0.05 per bushel for each 0.5% increase). A load with more than 2-3% heat damage may be rejected.

Foreign material (FM) is all matter that passes through a 0.125 in. (8/64) round-hole sieve and all matter other than soybeans that remain in the sieved sample. Most elevators deduct foreign matter in excess of 1% from the gross weight of the load. Some elevators will reject loads with more than 5% FM.

Splits are undamaged soybeans with more than 1/4 of the bean removed. Discounts generally start at 20% to 25% splits depending on the elevator, and range from $0.01 to $0.05 per bushel for each 5% increase in split beans, or 0.10% or more of price depending on percentage of splits.

Soybeans of other colors are those that have green, black, brown, or bicolored seed coats. Discounts of 0.5% of price or $0.005 to $0.01 per bushel are generally applied for each 1% other colors in excess of 1%.

Seed moisture content (not in table). Producers are paid based on the gross weight of a load minus the shrink discount when seed moisture exceeds 13%. Common discounts for moisture content to convert gross weight to net weight are 1% to 1.50% for each ½% moisture content above 13%. Some elevators will subtract $0.09 to $0.10 per bushel for each 0.5% moisture content over 13%. Some elevators will also assess a drying charge on loads with a moisture content above 13%. Also, some elevators reject loads that are above 15% moisture content, while others set the rejection point up to 20%.

Click here for links to example discount schedules and for an example calculation of how shrinkage and discount factors will affect net payment for a load of soybeans delivered to the elevator.  Note that individual elevators will have their own discount schedules that will vary slightly from each other.

Producers are encouraged to become familiar with the discounts for each shrinkage component that are applied at their delivery point. This can be critical for obtaining the highest possible price for soybeans that are delivered to the elevator. Also, becoming familiar with the various shrinkage elements and how discounts for them are applied will provide valuable guidance for ensuring that the highest quality product is delivered to the elevator.

Composed by Larry G. Heatherly, Sept. 2015, larryheatherly@bellsouth.net