What is in this article?:
- Will Higher Corn Profitability Increase Corn Acres in Corn Belt?
- Calculation of Breakeven Soybean-to-Corn Ratios
The current supply and demand situation suggests a need for more corn acres in the upcoming 2011 production year. If corn acres are to increase, a sizable amount of the growth likely will come from the Corn Belt. In the Corn Belt, increases in corn acres cause reductions in soybean acres, as these two crops compete for acres. As farmers decide the proportion of corn and soybeans to plant, relative profitability of corn and soybeans likely enter into the decision-making process.
Currently, corn is projected to be more profitable than soybeans for the 2011 year. Corn and soybean returns were projected for high-productivity farmland in central Illinois. Commodity prices used in projections were $5.85/bu. for corn and $13.25/bu. for soybeans, near prices offered for fall delivery of grain in central Illinois. Yields used in projection were at trend line for high-productivity farmland in central Illinois: 195 bu. for corn and 56 bu. for soybeans. Non-land costs were taken from revised central Illinois budgets on farmdoc: $510/acre for corn and $300/acre for soybeans. The difference in non-land costs between corn and soybeans is $210/acre. Corn returns were subtracted from soybean returns to arrive at corn-minus-soybean returns.
Projected 2011 corn-minus-soybean return on high-productivity farmland in central Illinois is projected at $189/acre. This $189 value indicates that corn is projected to be $189/acre more profitable than soybeans. The $189 value is high by historical standards. From 2004 through 2010, corn-minus-soybean returns averaged $48/acre. The highest corn-minus-soybean return of $118/acre occurred in 2008, a year in which corn acres increased in Illinois.