Non-land costs for 2022 corn and soybean production were projected to be at record highs, said University of Illinois Economists Gary Schnitkey, Krista Swanson and Nick Paulson in a report for the Illinois farmdocdaily.
Such “reasonably optimistic projections” could be made for 2022 corn and soybean returns based on projected corn and soybean prices being above 2014-2020 average prices, the economists said.
Despite the high costs, corn and soybean production was projected to be profitable in 2022 because projected prices were considerably higher than average prices from 2014 to 2020, the economists said. A return to average 2014-2020 prices would result in negative 2022 returns if yields are at or below trend.
CORN, SOYBEAN RETURNS FOR CENTRAL ILLINOIS
Estimates of revenues and costs for corn and soybeans grown on highly productive farmland in central Illinois showed an estimated corn yield of 220 bushels per acre, down from this year’s estimated 222. This was balanced against an estimated price of $4.50 a bushel for a crop revenue of $990 an acre.
Less productive land could see a corn yield of 209 bushels an acre next year, the article said.
The authors made a point of saying they did not factor in government payments like the Market Facilitation Program or the Coronavirus Food Assistance Program in their estimates of returns next year.
IMPORTANCE OF HIGHER-THAN-AVERAGE PRICES
Even with rising costs, the economists’ projections were for positive 2022 returns to farmers of $24 per acre for corn and $150 per acre for soybeans on cash rented land. The $24 per acre corn projection compares with an average farmer return of $4 per acre from 2014 to 2020. The $150 soybean projection compares with an average of $88 per acre from 2014 to 2020.
The projected higher returns in 2022 would occur because of higher-than-average corn and soybean prices, they said. The 2022 corn price of $4.50 per bushel is $.77 per bushel higher than the 2014-2020 average of $3.73 per bushel.
The $12.35 price for soybeans is $2.44 higher than the 2014-2020 average of $9.91, they said. A return to 2014-2020 average prices would cause negative 2022 projected farmer returns if yields remain at or below trend yields.
At the 2014-2020 average price of $3.73 per bushel, farmer return would be a minus $145 per acre, well below any recent return, the article said. Since 2000, when comparable returns have been compiled, the lowest return was a minus $50 per acre in 2015.
For soybeans, a return to the 2014-2020 average would result in a minus $18-per-acre return, well below the $11 low set in 2000, they said.
CATTLE, BEEF RECAP
Fed cattle traded this week at $120 to $123 per cwt on a live basis, up $1 to $2 from last week. Dressed-basis trade was at $195, steady to down $2.
The USDA choice cutout Wednesday was up $3.43 per cwt at $273.16, while select was up $2.18 at $256.12. The choice/select spread widened to $17.04 from $15.79 with 106 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.86 to $1.91 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.49 1/4 a bushel, up $0.00 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $154.36 per cwt up $0.39. This compares with Wednesday’s Aug contract settlement of $160.17 per cwt, down $0.52.