"Some farms may wish to consider switching acreages away from
soybeans and more into corn," said Gary Schnitkey, U of I
Extension farm financial management specialist who prepared the
study with Extension colleague Dale Lattz.
study, "2007 Crop Budgets Indicate Higher Returns for Corn
and Wheat," is available on U of I Extension's Farmdoc website.
Corn, soybeans, wheat and double-crop soybean budgets for the
2007 cropping year are estimated in the study for northern,
central and southern Illinois.
"Prices used in the budget are $2.75 for corn, $6.25 for
soybeans and $3.75 for wheat," said Schnitkey. "All prices are
significantly above historical averages. The projected corn
price is 28 percent above the six-year average; the soybean
price is 10 percent above the average; and the wheat price is 31
percent above the average."
Corn returns are projected higher than soybean returns,
something that Schnitkey pointed out was not unusual, especially
in northern and central Illinois.
"Summaries from Illinois Farm Business Farm Management
indicate that per-acre corn returns exceeded per-acre soybean
returns an average of $23 per year between 2005 and 2005 in
northern Illinois and $16 an acre in central Illinois on
high-productivity farmland," he said. "In southern Illinois, on
the other hand, soybean returns averaged $10 per acre higher
than corn returns.
"Unlike most years, corn-after-corn returns in 2007 are
projected higher than soybean returns in northern and central
Illinois, while in southern Illinois, soybean returns are
projected higher than corn-after-corn."
Because corn-after-corn returns exceed soybean returns,
Schnitkey said, some farmers may switch acres from soybeans to
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"A key factor in determining whether corn-after-corn returns
exceed soybean returns are relative yields, which can vary from farm
to farm," he noted.
Tables in the full report give examples of this.
"While switching to more corn may increase returns in 2007,
returns in 2008 could suffer from the switch," he said.
"Corn-after-soybean production generally is more profitable than
corn-after-corn because corn-after-corn has higher production costs
and lower yields than corn-after-soybeans.
"Hence, 2007 acreage decisions could impact 2008 returns."
Schnitkey also noted that the study's budgets have a 10-bushel
yield reduction for corn-after-corn compared with
"Yield drags are controversial," he said. "Some farmers do not
believe yield drags exist, while agronomic research consistently
shows that corn-after-corn has a 10 percent lower yield than
corn-after-soybeans. Beliefs about yield drag impact return
"In the current price environment, similar yields for
corn-after-corn and corn-after-soybeans almost always result in corn
being more profitable than soybeans. Moreover, having no yield drag
eliminates the concern that 2007 acreage decisions will reduce 2008
The corn price used in the study's budgets is, he noted again,
"Projected prices can change between now and harvest,
particularly if large acres shift to more corn," he said. "Hence,
there are risks in making large acreage shifts."
of Illinois Extension news release]