Illinois Economist: Rented Land Likely Won’t Generate Profit In 2019

September 21, 2018 06:00 AM
 
University of Illinois (U of I) recently released crop budgets for three regions in Illinois based on historical returns and costs to discover dismal profit forecasts for the 2019 season.

With dismal profit margins, farmers need to plan on cutting costs and negotiating lower land rental rates. University of Illinois (U of I) recently released crop budgets for three regions in Illinois based on historical returns and costs to discover dismal profit forecasts for the 2019 season.

“[Projected] return level is similar to return levels in 2005, more than 10 years ago,” said Gary Schnitkey and Krista Swanson from U of I in a recent news release. “In 2005, average cash rent in norther Illinois was $137 per acre, [which is] $101 per acre lower than current cash rents.”

Even stellar yields won’t necessarily improve profit possibilities. U of I research indicates even a 221 bu. per acre corn-after-soybean yield would result in returns of $218 per acre without land cost. This is still below the $238 per acre average cash rent for the area.

For the first time since 2013, corn is projected to be more profitable than soybeans. U of I research says this could lead to more corn acres in 2019.

See their projections in the charts below:

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Comments

 
Spell Check

Rick Herzberg
Cerro Gordo, IL
9/28/2018 09:41 AM
 

  Perhaps more consideration should be given to the crop planted in these areas. Many farmers here in central Illinois and across the Midwest are enjoying better returns from non-mainstream crops such as non-GMO corn and soybeans and from alternative cropping practices such as organic farming. While these crops and practices require focused and diligent farm management, the resulting revenue can be significantly higher than with mainstream (GMO) crops. - Rick Herzberg, Clarkson Grain Co.

 
 
Chuck
Jordan, MN
9/21/2018 09:31 AM
 

  In Minnesota, the basis is fairly wide, so realistic corn prices would be $3.00/bu and $7.50/bu for beans. If one uses Table 3 as a baseline for southern MN, farmers are looking at $200/ac loss for corn and $100/ac loss on beans. Sadly, many farmers expanded by in the late 1990's and early 2000's by renting land and buying more/new equipment, that strategy may prove to be fatal if the downturn continues.

 
 
Dave
Auburn, IN
9/21/2018 10:01 AM
 

  If you start lowering yields, it gets very ugly for everyone, inputs better come down

 
 

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