April 5, 2001
A SWITCH TO SOYBEANS ACRES IN ILLINOIS?
In 2001, some analysts are suggesting that more soybeans and less corn will
be planted in Illinois. This shift is expected because production costs have increased
less for soybeans than for corn. In addition, the loan rate for soybeans compared
to the loan rate for corn is out of line compared to historical average prices
and favors soybean production. Budgets comparing the advisability of shifting
from corn to soybeans are presented in this paper.
The following four tables shows budgets listing revenue less variable costs
(RLVC) for corn and soybean production given different preceding crops. Budgets
for different regions are shown in different tables. The corn following soybeans
and soybeans following corn budgets are based on data from Illinois Farm Business
Farm Management records. The corn following corn and soybeans following soybeans
budgets reflect adjustments to yields and costs. The major change is a reduction
in yield when the preceding crop is the same as the planted crop. Agronomic research
suggests that a ten percent yield drop occurs when the preceding crop is the same
as the planted crop.
Revenue less variable costs (RLVC) in Northern Illinois for soybeans following
soybeans is projected to be $130 per acre in 2001 (Table 1). This is uneconomical
compared to planting corn. RLVC for corn following soybeans is $160 per acre (Table
1). In no region of the state is soybeans following soybean projected to be more
profitable than corn following soybeans.
In the budgets, a $2.20 corn price and a $5.45 soybean price are used in determining
revenue. The corn price is above the loan rate while the soybean price is at the
loan rate. Given current futures prices, these prices are reasonable forecasts.
However, lowering the corn price to the loan rate ($1.95) changes the comparisons.
In northern Illinois, RLVC for corn following soybeans is $121 per acre, below
the soybean following soybeans' RLVC of $130. For central Illinois high-quality
farmland, corn following soybeans' RLVC is $137 per acre, above soybean following
soybeans' RLVC of $129. For central Illinois low-quality farmland, corn following
soybean's RLVC is $111 per acre, below soybean following soybeans' RLVC of $121.
In southern Illinois, corn following soybeans' RLVC is $66 per acre, below soybean
following soybeans' RLVC of $81.
Budgets do not indicate a shift to soybean acres is warranted when prices suggested
by current future markets are used in the comparisons. Using loan rate prices
may suggest a shift, particularly in southern Illinois and on low productivity
farmland in central Illinois. Overall, budgeted amounts do not suggest a major
shift from corn to soybeans is warranted.
Issued by:Gary Schnitkey,
Department of Agricultural and Consumer Economics