As University of Illinois ag economist Gary Schnitkey points out, U.S. farmers planted 7% more corn acres in 2016. Comparatively, soybean acres only rose 1%. However, June projections of this year’s crop indicate soybeans will be the more profitable crop, he says.
Does that mean a major acre swap in 2017 is likely?
“Obviously, 2017 prices and cost projections will impact the advisability of this switch,” he notes in a recent edition of farmdoc daily. “As benchmarks, soybeans likely will have higher returns than corn in 2017 if 2017 corn prices are below $4.00 or non-land costs for corn do not decrease substantially.”
But there are some scenarios where corn would be more profitable than soybeans next year, Schnitkey adds. First, if commodity prices increase above $4.00 per bu. for corn, it will likely lead to higher returns for corn compared to soybeans. Secondly, corn costs could come down relative to soybean costs – but non-land costs for corn would have to go down $70 to $100 per acre in Illinois, Schnitkey offers.
“A combination of the above two items also could cause corn to be more profitable than soybean,” he says. “As always, relative yields will play a role in profitability differences between the crops.”
The large increase in corn acres for 2016 may be influencing input prices, Schnitkey says.
“Seed and fertilizer costs are considerably higher for corn than for soybeans,” he says. “Hence, the revenue to input manufacturers will be higher if acres switch to corn. Recent corn acreage increases reduce incentives to lower input prices as acreages are increasing without making substantial cuts in input prices.”
Whether a farmer plants more corn or more soybeans in 2017, he or she should continue to prioritize cutting costs where possible, Schnitkey concludes.
USDA predicts "moderately" rising soybean prices through 2025, citing "lower soybean plantings and strengthening demand for soybeans and soybean products" for this prediction.