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| Illinois report: Corn will yield more profits in ’08 |
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By TIM ALEXANDER
Illinois Correspondent
URBANA, Ill. — According to a pair of University of Illinois extension financial experts, planting corn may be more profitable than soybeans this year, based on data available in late March.
“Given the current cash bids for fall delivery, our analysis suggests that corn will be more profitable than soybeans in 2008 on many farms in Illinois,” said Gary Schnitkey, UoI farm financial management specialist.
Schnitkey, along with extension colleague Darrel Good, prepared a study, Corn Versus Soybean Returns in 2008, which is posted on the extension’s main website.
“Our analysis was conducted by calculating expected corn and soybean revenues for each Crop Reporting District in our state. Differences in corn and soybean revenue are compared to differences in non-land production costs,” he explained in an extension news release.
“Across all districts, corn is projected to be more profitable than soybeans, based on harvest bids as of March 20.”
The study was published before the release of the USDA’s annual Prospective Plantings report, issued March 28, though the UoI study reflected the industry projection of fewer corn acres and more soybean acres this year.
“While Illinois farmers may – as projected – shift acres from corn to soybeans in 2008, the relative profitability of the crops does not appear to be a reason for this acreage shift,” Schnitkey noted.
USDA’s Prospective Plantings report showed U.S. corn producers reported intentions to plant 86 million acres of corn in 2008, with only Texas producers intending to increase corn acreage. In Illinois, prospective corn acreage is down 600,000 acres, or five percent.
A number of factors could affect the final total corn acreage planted in Illinois, according to Schnitkey.
“A relative corn and soybean price change could cause profitability to switch,” he said. “Relative yields could vary. In particular, any yield drag for corn-after-corn could narrow profits.”
Insect, disease or fungus problems could require pesticide treatments which could raise crop costs, he added.
Art Bunting, president of the Illinois Corn Growers Assoc., pointed out the key word on USDA’s report is “intentions” and that many factors could come into play affecting final acreage decisions – including the positive reaction the USDA report sparked at the Chicago Board of Trade.
“Many factors affect planting decisions today that didn’t even exist a few years ago,” stated Bunting in a March 31 news release addressing the Prospective Plantings report. “Supply and demand, weather, access to seed, input costs all play a role. Strong export demand for corn, growing demand for meat in the world and a burgeoning biofuels industry all make corn look like a solid option.”
All of that, he concluded, makes corn appear to be a strong contender for any uncommitted or undecided acreage.
“Growers are having good successes growing corn-after-corn too.
So hopefully, this will be enough to override the conventional corn-soybean mentality, especially in central and northern Illinois,” said Bunting.
The full UoI extension report can be viewed through www.farmdoc.uiuc.edu
This farm news was published in the April 9, 2008 issue of the Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
| 4/9/2008 |
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