In the first release of the 2023 Illinois Crop Budgets on farmdocdaily, costs were projected to increase next year.
At projected costs, per bushel prices of $5.30 for corn and $12.75 for soybeans result in only marginal profitability, similar to levels experienced from 2014 to 2019, said University of Illinois Agricultural Economists Gary Schnitkey, Krista Swanson and Jim Baltz, and Carl Zulauf of the Agricultural, Environmental and Development Economics at Ohio State University, in a white paper.
RISKS REMAIN
While 2023 was projected to be profitable, risks exist, the economists said. A decline in commodity price likely would not be associated with similar decreases in costs, reducing already narrow margins.
Profitability risks will be mitigated over time as input prices are locked in and as projected prices for crop insurance are set in February, they said.
Projected corn and soybean budgets were presented for Northern, Central-High, Central-Low and Southern Illinois. They showed a projected farmer return for corn next year of -$11 an acre in the Northern region, $8 in the Central-High region, $11 in the Central-Low region and -$63 in the Southern region.
Projected 2023 Illinois farmer soybean returns were $11 an acre for the Northern region, $43 for the Central-High region, $25 for the Central-Low region and –$61 in the Southern region.
COST INCREASES
Non-land costs were projected to be higher in 2023 than in 2022, the economists said. Non-land costs were projected to be $860 an acre in 2023, up from $758 in 2022.
Overall, costs have increased dramatically since 2020, from $577 to $860 an acre, an increase of $283 per acre, or a 49% increase.
In northern Illinois, cash rents were projected to increase from $296 up to $301 per acre, they said. While projected returns may not justify an increase in cash rent, relatively high profitability in recent years and continuing high commodity prices likely will lead to cash rent increases. Like non-land costs, land rents have increased since 2020, increasing from $256 per acre up to $301 per acre, an increase of $45 per acre, or 18%.
Total costs equal non-land and land costs, the paper said. In 2023, total costs were projected at $1,161 per acre, up from 2022’s $1,054. Since 2020, total costs have increased from $833 per acre to $1,161, an increase of $328 per acre, or 39%.
The economists projected higher fertilizer costs in 2023. While fertilizer prices have declined recently prices still are much higher than last year.
Many farmers purchased fertilizer for 2022 before much of the price increase in fall and early winter of 2021. Opportunities to price at those levels do not exist currently.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $135.00 to $142.13 per cwt, compared with last week’s range of $136.00 to $150.00. FOB dressed steers, and heifers went for $212.71 to $217.25 per cwt, versus $213.91 to $219.67.
The USDA choice cutout Thursday was down $1.66 per cwt at $266.28, while select was down $0.95 at $240.35. The choice/select spread narrowed to $25.93 from $26.64 with 86 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady at $2.60 to $2.70 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.10 over Sep, which settled at $6.02 1/4, up $0.10 3/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $173.75 per cwt down $0.29. This compares with Thursday’s Aug contract settlement of $179.07, down $0.27.