Budgets project corn gains at $244 more than soybeans
Projections for 2013 call for another profitable year but a wide spread between corn and soybean
profits, according to University of Illinois budgets for the upcoming year. The 2013 operator and farmland return for corn is forecast at $654 per acre, which is higher than the 2011 return of $573
per acre, but below the projected 2012 return of $699 per acre.
Soybean returns for the upcoming year are projected to be $405 per acre, below returns forecast
for 2012 at $484 and slightly below 2011 returns of $419. These corn and soybean projections are
for highly productive farmland in central Illinois. Trend-line yields are projected at 195 bu. per acre for corn and 57 bu. for soybeans in 2013.
The budgets use $6 per bushel corn and $12.50 soybean prices, based on present futures. "A major difficulty in projecting 2013 returns is determining prices to use in the budgets," notes University of Illinois ag economist Gary Schnitkey, who developed the budgets. "These prices could change a great deal between now and harvesttime 2013, resulting in large changes in profitability."
The budgets project non-land corn costs of $516 per acre, $4 less than 2012 costs. Fertilizer costs are projected to be $155 per acre, down $10 from 2012. Offsetting the fertilizer decline is a $2 increase in pesticide costs to $52 in 2013, as well as $2 per acre higher seed costs at $100 and
$2 per acre higher machinery depreciation at $43.
Non-land costs for soybeans for 2013 are projected to be $308, $2 higher than 2012. Fertilizer
costs are expected to be $53 per acre, down $5, and pesticide costs $33, up $2. Seed costs also are projected to be $2 per acre higher, at $65 for 2013, and machinery depreciation is forecast to be $42 per acre, up $3.
Corn returns for 2013 are $244 higher than soybean returns. "This difference is large compared
with historical averages," Schnitkey says. Between 2005 and 2011, corn minus soybean returns averaged $75 per acre. He says the reason for the wider spread for 2013 returns is that a wide spread exists between corn and soybean prices at present.
From 2006 through 2012, the soybean to corn price spread averaged 2.38, but it was 2.08 in 2012. "Whether these relative prices persist into 2013 is an open question," Schnitkey says. Some analysts say that either corn prices must come down or soybean prices must go higher.
- October 2012