University of Illinois agricultural economist Gary Schnitkey indicated this week at the farmdoc daily blog (“2017 Crop Budgets, 2016 Crop Returns, and 2016 Incomes“) that, “Revised projections of 2016 crop returns and 2017 crop budgets have been released. For 2016, soybeans are projected to have record-setting yields, leading to higher soybean returns than in 2015. Given that non-land costs and cash rent cuts have occurred, higher soybean returns should cause 2016 net incomes to be higher than 2015 incomes. However, crop budgets suggest very low returns and net incomes in 2017.”
Dr. Schnitkey explained that, “Table 1 shows corn and soybean returns for central Illinois farms with high-productivity farmland. The first three columns show revenues, costs, and returns for corn while the second set of three columns show results for soybeans. The 2015 column represents actual results based on data from Illinois Farm Business Farm Management (FBFM). Values for 2016 and 2017 are projections. Similar data are shown for northern, central (low-productivity), and southern Illinois farms in a publication available here. Budgets for 2017 are available here.”
Table 1
The farmdoc update added that, “2016 Crop Revenue for Corn: Corn crop revenue for 2016 is projected at $762 per acre based on a 231 bushels per acre yield and a $3.30 per bushel price (see Table 1). Currently, USDA is projecting Illinois’ state yield at 200 bushels an acre, tying the highest yield for Illinois set in 2014. The 231 bushels per acre used for central Illinois projections is the same as occurred in 2014. A $3.30 per bushel corn price is based on current cash bids and levels of Chicago Mercantile Exchange (CME) futures contracts going into spring. The $3.30 price is $.10 above the midpoint range contained in the September WASDE report. Overall, high yields lead to the $762 corn revenue projection which is $8 per acre higher than 2015 corn revenue.
“2016 Crop Revenue for Soybeans: Soybean crop revenue is projected at $653 per acre based on a 71 bushels per acre yield and a $9.20 price. Currently, USDA is projecting a 61 bushels per acre yield for Illinois, the highest yield ever for the state of Illinois. The 71 bushels per acre yield used for central Illinois would be its highest yield, and is 5 bushels above the next highest yield of 66 bushels per acre that occurred last year. The $9.20 per bushel price is near current cash bids. The $9.20 price is $.15 above the $9.05 midpoint of the WASDE range contained in the September report.”
Dr. Schnitkey also pointed out that, “Land Costs: Land costs shown in Table 1 represent average cash rents. Cash rent in 2016 is projected at $268 per acre, down $10 from the $278 level in 2015.
“Farmer Return is projected at -$28 per acre for corn, $10 per acre higher than the -$38 farmer return in 2015. Soybean return is projected at $63 per acre, up by $53 per acre from the $10 level in 2015.”
