Commodity prices resulting in $50,000 net farm income are $3.70/bu. for corn and $8.51 for soybeans. Crop insurance is needed to have these breakeven commodity prices. If crop insurance is not purchased, commodity prices resulting in $50,000 net farm income are $4.03 corn and $9.27 soybeans. Significantly lower projected prices of $5.50 for corn and $13 for soybeans used in determining crop insurance guarantees will increase necessary commodity prices to obtain $50,000 of income.

Chicago Mercantile Exchange futures prices for harvesttime contracts are near $6 for corn and $12.30 for soybeans, suggesting cash prices substantially above levels that would generate $50,000 of incomes. At this point, futures prices point to strong 2012 income, given that costs and yields are near expectations.

While 2012 farm incomes are projected to be positive, commodity prices resulting in $50,000 are within the realm of possibility. Several years of above-average yielding years in the U.S. or around the world could result in near $4 corn and $9 soybean prices. Destruction in demand could also yield prices in this range.

Also note that the $3.70 corn and $8.51 soybean prices are well above prices that occurred prior to 2006. Between 1975 through 2005, corn prices averaged $2.40/bu. for corn and $6.10/bu. for soybeans. Commodity prices near these levels would cause financial stress today.