Despite Positive Price Momentum, Returns Will Fall Below 2018

12:40PM Jul 18, 2019
Harvest 2017
Harvest 2017
( Sonja Begemann )

Farmers should expect the trend of lower to negative farm returns to continue in 2019, despite recent positive market momentum.

“Overall, low returns are projected in 2019 and 2020, particularly for soybeans. Current projections indicate corn returns will be higher than soybean returns,” the report indicates.

Researchers made several key changes to the budget to reflect real-world conditions, including:

  1. The 2019 yields have been lowered.
  2. Crop prices for 2019 have been raised to $4.50 per bushel for corn and $9.00 for soybeans.
  3. Market Facilitation Program (MFP) payments of $50 per acre have been added to 2019 budgets. Per-acre payment rates have not been released, the $50 per-acre payment in the 2019 budgets is an estimate. Actual payment rates may be higher or lower.
  4. Crop insurance proceeds have been increased to reflect lower yields and higher prices
  5. Drying costs for corn have been increased from the usual $15 per acre up to $50 per acre

“At this point, overall returns on Illinois grain farms are projected to be much lower in in 2019 than in 2018. Soybean returns are projected to fall by over $100 in northern and central Illinois,” according to the report by Gary Schnitkey and Krista Swanson. “Better than expected yields, higher prices, or some combination could result in higher 2019 projected returns.”

The experts warn there could be considerable price volatility and, therefore, overall returns. Weather during critical growth stages can still greatly impact the crop, which could result in positive price momentum.

See the tables below for Illinois’ estimates on high- and typical-productivity farmland.

Table 1

Table 2