Many Midwest farmers have been disappointed with 2011 corn-on-corn yields, reporting significantly lower yields compared with corn after soybeans. If you are questioning whether to continue with as much corn on corn, prices still suggest corn is more profitable than soybeans from an historical perspective, says Gary Schnitkey, an ag economist at the University of Illinois.
On high-productivity land in central Illinois, soybean returns are projected at $374 per acre (56 bu. yield times a $12 per bushel price and $298 in non-land costs). Corn after corn has to yield 163 bu. per acre (considering $520 non-land costs and a $5.50 price) to break even with soybean returns. The 163 bu. break-even corn-after-corn yield for central Illinois is 35 bu. below the 198 bu. projected yield for corn after soybeans.
The break-even corn-after-corn yield in central Illinois for low-productivity farmland is 160 bu. per acre, 24 bu. below the 184 bu. projected corn-after-soybean yield. The break-even corn-after-corn yield in northern Illinois, meanwhile, is 161 bu., 29 bu. below the 190 bu. projected corn-after-soybean yield. In southern Illinois, the break-even corn-after-corn yield is 137 bu. per acre, 24 bu. below the 161 bu. projected yield for corn after soybeans. Obviously, the break-evens vary with differing prices, yields and costs, and thus vary across farms, Schnitkey notes.
The northern Illinois 161 bu. break-even corn-after-corn yield is three times the 54 bu. yield projected for soybeans. This ratio is low compared to historical ratios. From 2000 to 2010, the corn-to-soybean break-even ratio averaged 3.3, meaning that corn yields had to be 3.3 times higher than soybean prices to break even. The current ratio suggests market signals are favoring corn over soybeans, Schnitkey says.