USDA preview: More corn?
What do you expect out of Thursday's USDA Prospective Plantings report? More corn? More soybeans? More of both?
Looking ahead to the big annual estimate of what farmers plan to plant this spring, University of Illinois ag economist Gary Schnitkey ran some of the numbers for corn and soybean profitability. What's the verdict?
Right now, corn's ahead. "Over much of the corn-belt corn is projected more profitable than soybeans," Schnitkey says. "Moreover, differences in corn returns are projected to be more than historically observed. Whether farmers will react to profit incentives remains to be seen."
This is true despite the fact corn non-land per-acre costs are pegged at $510 versus $300/acre for soybeans, at least in central Illinois, Schnitkey says.
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"Projected 2011 corn-minus-soybean return on high-productivity farmland in central Illinois is projected at $189 per acre. This $189 value indicates that corn is projected to be $189 per acre more profitable than soybeans," he adds. "The $189 value is high by historical standards. From 2004 through 2010, corn-minus-soybean returns averaged $48 per acre. The highest corn-minus-soybean return of $118 per acre occurred in 2008, a year in which corn acres increased in Illinois."
While these numbers are true for his state, Schnitkey adds "Corn being projected more profitable than soybeans is widespread over much of the Corn Belt."
But, that doesn't mean the countryside will be completely blanketed by corn this year. Though the profitability numbers are in corn's corner on paper, do what works best agronomically on your acres, Schnitkey says.
"Overall there may be caution to switching to more corn because growing and harvest conditions in the past two years have been problematic in many areas of the Corn Belt," he says. "Individual farms can vary significantly from these averages. Hence, farm specific budgets should be consulted when evaluating acreage decisions."