The corn profit picture for 2012 isn’t quite as rosy as 2011, but the marketplace could still offer very lucrative returns for growing corn this season, says Chad Hart, Iowa State University agricultural economist.

“In Iowa, we’re projecting season-average prices to range between $5.30 and $5.40/bu., and we’re projecting inputs costs to be about $4.40/bu.,” says Hart. “So, if that holds true, the market in Iowa will be offering 90¢-$1/bu. in profits to grow corn for 2012. Returns from growing corn in Iowa last year have averaged about $1.60/bu., but that corn is still being sold.”

Historically, anything over zero is a good return for corn, because government subsidies have typically provided adequate profit incentive, even when the market has not, adds Hart. He notes that from 1972 to 2008, the return on a bushel of corn averaged -7¢/bu.

In comparison, soybean profit margins look “a lot tighter than corn this year, probably in the range from zero to a 25¢/bu. return,” says Hart. “However, soybeans are a much lower-input-cost crop, and there’s less risk to grow them in a hot, dry year.”

Farmers considering planting more corn after corn, rather than corn in rotation with soybeans,  should weigh the benefits the rotation provides versus the revenue each crop might deliver separately, he adds. “In Iowa, we generally see about a 15-bu./acre yield reduction by moving from a corn-soybean rotation to a corn-following-corn rotation,” says Hart. “However, some soils are better at producing continuous corn than others. If it’s worked for you in the past, it might work for you again. If you’ve had problems with it in the past, you might see problems this year, especially if weather conditions are dry, and soil conditions in the western part of Iowa are currently pretty dry.”

Nearby corn prices in the U.S. are presently being shaped by dry Argentina weather that is reducing South America’s crop production potential, says Hart. Yet, in a few months, corn prices will likely be shaped largely by how many acres analysts think U.S. farmers will put into corn.

“The big potential market mover will be the USDA’s perspective planting report that is scheduled to be released at the end of March,” he says. “So far, I haven’t heard an analyst project anything less than 94 million acres will be planted to corn in 2012. Last year, farmers planted 92 million acres of corn, and most analysts are saying there will probably be 2-3 million more corn acres being planted.”