HIGH OIL CORN - UPDATED FOR 2003

Description: High Oil corn has an oil content of 7.25 to 7.5 percent compared to about 4 percent for normal corn. The added oil makes this a high-energy feed that can be used to increase growth performance in livestock or poultry, or to replace more expensive energy sources in feed rations. Data from the last seven years has also shown that protein levels are also higher than conventional yellow corn. Most of the high oil corn acres were grown with DuPont’s TOPCROSS® technology, which involves planting seed of a high oil pollinator mixed with seed of a male-sterile hybrid. High oil corn blends grown with the TOPCROSS® system often produce yields comparable to the grain parent, depending upon the growing conditions. Due to higher grain energy content, though, yields of HOTC have sometimes been lower than those of normal corn, especially when yields are limited by the total amount of energy available from photosynthesis. Some work is also being done to improve oil content using traditional breeding. A survey of high-oil corn growers in 2001 reported that high-oil corn yields were 97% of conventional corn, while seed companies report yields of 95-105% of conventional corn.
Trends in Demand: The interest in producing high-oil acres continues a downward trend due to uncertainty with yields and premiums offered. However, there continues to be a strong export demand for high-oil corn. In 2002 nearly 500,000 acres of high oil corn were grown in the U.S., down from 900,000 acres in 1998. About 65% of these acres were grown under contract for the export market for feed use, while the remaining 35% was grown for domestic livestock feed. Contracted acres of high-oil corn are grown in southern Minnesota, northern and eastern Iowa, and central and northern Illinois. In 2003 projections are for 450, 000 acres of high-oil corn to be grown. Low prices of feed fat, a byproduct of the meat processing industry, and cooking oil from the fast food industry has decreased the demand for high-oil corn domestically, even though high-oil corn offers a more consistent source of energy in feed rations. Export contracts for 2003 are at a maximum of 25 cents for 7.5-8% oil, plus there may be an additional premium paid for early sign up as well as delivery incentives. Premiums decrease one cent for every tenth of a drop in oil percentage. Continued growth in demand for high-oil corn can be expected in the Middle East, Mexico, Latin America and Japan. Most of the high-oil corn hybrids are non-GMO which is a benefit for the export market.

RECOMMENDED PRODUCTION MANAGEMENT PRACTICES

• Seed Selection. Important considerations for successful high-oil corn production are oil content, yield potential, maturity, standability, disease resistance, drought tolerance, dry-down and adaptability. To ensure top yields and maximum profit, ask your seed dealer about elite hybrids adapted to your area.
• Field Selection. To maximize returns, select better-yielding, top-quality soils.
• Crop Rotation. A good soybean-corn rotation plan is recommended to increase yield and decrease insect and disease pressures.
• Isolation. For best results, plant TOPCROSS? high-oil corn varieties in large blocks to reduce oil content loss due to pollen drift from normal hybrids into high-oil fields.
• Seedbed Preparation. Prepare a seedbed that will promote uniform seed emergence and crop development. Avoid cloddy soils with heavy residue and poor furrow closure conditions. Conventional and minimum till methods may provide for more even plant emergence.
• Plant Population. Increase plant density as much as 10%, or by 2,000 to 3,000 plants per acre when planting at populations less than 30,000 seeds/acre to make up for less-productive pollinator plants. Around 30,000 to 32,000 is ideal for highly productive soils, with a yield response up to 34,000 under good conditions. Ask your dealer about specific rate recommendations as per field and hybrid selected.
• Planting Date. Plant early, as you would other hybrids. The second half of April is normally the best time to plant.
• Fertility. A good balanced fertility program is a must. Starter fertilizer can promote uniform plant emergence for good pollination. Nitrogen should be used at a rate of 1.2 pounds per bushel of expected yield, minus 40 pounds nitrogen if following soybeans, and minus other nitrogen applications such as manure and DAP.
• Insect Management. In the TOPCROSS? high-oil hybrids, the pollinator may be more susceptible to insects, therefore, it is important to have an effective pest control program. If planting corn on corn, below-ground pests should be controlled with a soil insecticide. Rootworm insecticide should also be used in areas where western corn rootworm damage has been observed in first-year corn or where wireworms and true white grubs have a history. During the growing season, monitor fields for aboveground pests such as corn leaf aphid, corn rootworm beetles, and Japanese beetles that can clip silks and reduce the number of kernels pollinated.

RECOMMENDED HARVEST AND POST-HARVEST MANAGEMENT PRACTICES

• Harvesting High-Oil Corn. To avoid excessive mechanical damage to kernels, make sure the combine is properly adjusted according to the operator’s manual. Set the clearance and speed of the cylinder and make slight adjustments as grain moisture and field conditions change. Grind off all sharp edges in the feeder housing, rotary and handling systems. Replace excessively worn augers. Rotary combines are generally recommended.
• Drying Strategies. Some field drying is good, in that it lowers drying costs. High-oil corn may be artificially dried at low temperatures. Temperature must be kept below 110?F during the drying process to minimize undesirable quality losses. Many producers prefer to transfer corn to separate storage facilities after drying.
• Corn Handling and Cleaning. Keep high-oil corn separated at harvest and in storage. Make sure that augers to and from the dryer are not causing damage: keep augers full when running and consider replacing pulleys to reduce auger speed to help maintain grain quality. Clean dry corn before placing it into a storage bin to improve airflow and reduce the potential for spoilage problems. Storage bins should be swept clean prior to placing grain in them to reduce insect problems. Run a cooling cycle through grain once a month during the fall and throughout the winter to lower grain temperature by 10 to 15?F at a time. Cover fan to minimize moisture accumulation in stored grain during premature warming in the spring.

SAMPLE PARTIAL BUDGET ANALYSIS¹

• Seed Costs:
  • High-Oil Corn: 31,000 kernels per acre (increased 6.5% to make up for pollinator) = 2.6 acres per 80,000 kernel unit; $111.25 per unit ÷ 2.6 acres = $42.75 per acre.
  • Regular Hybrid Corn: 29,100 kernels per acre = 2.75 acres per 80,000 kernel unit; $96.25 per unit ÷ 2.75 acres = $35.00 per acre

• Per Acre Variable Cost Comparisons:

Regular Hybrid Corn		HOTC Corn with 3% Lower Yield		HOTC Corn With Equal Yield
Fertilizer & lime	$50	Fertilizer & lime	$ 50	Fertilizer & lime	$ 50
Seed	35	Seed	43	Seed	43
Pesticide	35	Pesticide	35	Pesticide	35
Drying	16	Drying	15	Drying	16
Mchy. rep., fuel & hire	28	Mchy. rep., fuel & hire	28	Mchy. rep., fuel & hire	28
Storage	29	Storage	28	Storage	29
Operating Interest	6	Operating Interest	6	Operating Interest	6
Total	$199	Total	$205	Total	$207

• Premium: Premiums will vary by contractor for base % oil, 7.5-8%.
  

  Harvest Delivery Contract		Buyer’s Call Contract
  8.0% oil	$.25	8.0% oil	$.30
  7.9% oil	$.24*	7.9% oil	$.29*
  6.0% oil	$.05	6.0% oil	$.10
  Below 6%	regular #2 corn	Below 6%	regular #2 corn

  *Average premium = $.24; Premium decreases one cent per tenth of a percent of oil content.

• Increased profit potential per acre:
  Regular Hybrid Corn: 155 Bu/acre x $2.35 per Bu = $364.25
  $364.25 per acre - $199.00 cost per acre = $165.25 Regular Hybrid Corn
  High-Oil Corn with 3% lower yield: 150 bu/acre2 x ($2.35 + $.24) = $388.50
  $388.50 per acre - $205.00 cost per acre = $183.50 High-Oil Corn
  Added Value = $ 18.25 per acre
  High-Oil Corn with equal yield: 155 Bu/acre x ($2.35 + $.24) = $401.45
  $401.45 per acre - $207.00 cost per acre = $194.45 High-Oil Corn
  Added Value = $ 29.20 per acre
  
• Trucking Costs:
  Semi - $2.00 per loaded mile. Trucking costs may be higher if high-oil corn must be transported further.

ADDED VALUE CALCULATOR

ADDITIONAL WEBSITES

Sources:

• Experienced Grower Interviews, 1998-1999.
• Keeneth, Terry L. Harvesting, Drying and Handling Food Corn in Southwest Indiana.
• Keeneth, Terry L. Southwest Indiana Food Corn Production and Resource Guide.
• Optimum Quality Grains, L.L.C. www.optimumqualitygrains.com.
• Pfister Hybrid Corn Company. 1998-99 Superkernoil Product Guide.
• U.S. Feed Grains Council, 1998-1999 Value-Enhanced Corn Quality Report.
• University of Illinois. Farm Income and Production Cost Summary from Illinois Farm Business Records 1997.
• Wyffels Hybrids. Wyffles 1999 Product Guide.

______________________________________________________

Rita Frerichs compiled the information contained in this fact sheet through interviews with experienced producers and from private sector company representatives. This information has not been validated through research carried out by University of Illinois scientists, but this fact sheet has been prepared under the technical supervision of Emerson D. Nafziger, Steven Eckhoff, and Dale Lattz, College of Agricultural, Consumer and Environmental Sciences, University of Illinois at Urbana-Champaign. This work has been carried out as part of a project to Improve Farm Incomes and Rural Communities through Specialty Farm Products funded by the Illinois Council on Food and Agricultural Research (C-FAR) under the Special Research Initiative (SRI) on Rural Community Development.

For more information on other project activities and outputs, contact Burton E. Swanson, Department of Agricultural and Consumer Economics, 332 Mumford Hall, 1301 West Gregory Drive, Urbana, IL. Tel: (217) 244-6978; Fax: (217) 333-5835 or by e-mail: swansonb@uiuc.edu.

______________________________________________

¹ This analysis provides an example, based on statewide production costs, how farmers can evaluate the economics of high-oil corn. Producers should use their own cost and yield data in comparing the potential profitability of HOC under local conditions.

²Based on experienced farmer interviews, first time producers should anticipate an average yield reduction of 5% less than their normal yields. A 3% yield reduction has been assumed in this example to compute the additional value/acre of HOC.

³Some experienced producers report that HOTC hybrids yield as well as their normal hybrids. In these cases, HOC can produce extra profits, as shown in this example.

⁴This is the average premium for 7 firms responding to Illinois Specialty Handler Survey, ranging from 15 to 27 ¢/Bu.