By TIM ALEXANDER
Illinois Correspondent

BLOOMINGTON, Ill. — Approximately 175 farmers and others attended last week’s 2011 University of Illinois Corn & Soybean Classic in Bloomington, where Gary Schnitkey, a UoI agricultural economist, illustrated why corn should outpace soybeans in terms of profitability this year.

Using the “corn-minus-soybean returns” formula Schnitkey has employed successfully since 2006 (with the exception of an inaccurate prediction in 2009), he predicts corn will fetch upwards of $90 per acre more than soybeans in 2011, based on recent input and non-land cost averages.

“In my opinion ... with the prices that seem likely to be prevalent, with yields being reasonable and costs that seem reasonable, it’s going to be hard to (recommend planting soybeans) wherever you are sitting in Illinois,” said Schnitkey.

“Unless we see some structural change, it is highly likely that before harvest we’re going to see a $90 spread between corn and soybeans.”
Corn-minus-soybean returns are calculated by subtracting projected soybean returns from that of corn.

A positive value indicates that corn is more profitable, while a negative value indicates the opposite. Since 2006, corn-minus-soybean returns have increased significantly as corn has become used more for ethanol while retaining high export demand.

“2006 was the transition year, the year when (corn profitability) took off. Since then we have always projected corn to be more profitable,” Schnitkey explained. “There will be years that doesn’t happen, such as 2009. We had higher costs, and there unfortunately wasn’t much we could do to predict that. We also couldn’t predict we’d have a (record) wet year.”

In central Illinois, for high-productivity cropland, the corn-minus-soybean ratio shot from 50 in 2006 to 98 in 2007.

“Our projections right now would say that 2011 looks a lot like 2007,” he told the gallery. “Obviously, a lot of things could change.”

The year 2009’s final ratio of minus 95 reflected the first time soybeans had proven more profitable in central Illinois since 2002, when the final ratio was minus 6. Accelerated nitrogen fertilizer costs were to blame for the shift, along with high drying costs and soybean prices increasing relative to corn prices, Schnitkey explained.

A high-water mark for corn profitability was achieved in 2008, when the corn-minus-soybean ratio reached 118.

The trend of greater profitability for corn versus soybeans should continue, Schnitkey predicted. “It is highly unlikely that from now to three or four years in the future that you will find corn to be less profitable than soybeans,” he said.

After his presentation the economist was asked whether the returns formula for 2011 had been calculated prior to the recent spike in fertilizer and other input prices. Schnitkey replied that fertilizer had risen “about $10” since the chart was produced and that a further spike in input prices could affect the predicted ratio.

The 14th annual Classic’s stop in Bloomington was the fourth of seven day-long conferences featuring eight expert speakers emphasizing crop production, pest management and economics.

The series concluded Jan. 13 in Quincy.

“The Corn and Soybean Classics provide a wonderful opportunity for producers and agribusiness alike to share in discussions with University of Illinois extension specialists pertaining to multiple aspects of crop production, protection and marketing,” said Aaron Hager, associate professor of weed science for the UoI and organizer of the Corn & Soy Classics. “We’ve found that our clientele really value the opportunity to interact with so many different specialists at a single meeting.”