December 7, 2005
Corn-after-corn production may be
less profitable than soybean production in 2006, meaning the
recent trend of increasing corn production may end, according to
a University of Illinois
"Between 2000 and 2004, corn returns exceeded soybean returns in
many areas of Illinois," said Gary Schnitkey, U of I Extension
farm management specialist who co-authored the study with fellow
Extension specialist Dale Lattz.
"Budgets suggest that recent cost increases have narrowed the
gap between corn and soybean returns. Higher corn yields will be
required in 2006 as compared to recent years for projected corn
returns to exceed soybean returns. From a returns perspective,
farmers may wish to plant soybeans on farmland that could be
corn-after-corn in 2006."
However, Schnitkey added, planting more soybeans may increase
risks as soybean rust is a possibility.
The study, "Projected Returns for Corn and Soybeans in 2006," is
available on farmdoc at:
Between 1997 and 2005, total corn and soybean acres in Illinois
were relatively stable, with a low of 21 million acres in 1997
and a high of 21.6 million acres in 2005. Total acres devoted to
corn and soybeans represent over 90 percent of the planted acres
in the state.
"As a result, corn acre increases generally cause soybean acres
decreases and vice versa," said Schnitkey.
Since 1998, corn acres have increased in Illinois. That year,
the ratio of corn-to-soybean acres was 1.00, meaning that there
was one acre of corn for every acre of soybeans. That ratio was
1.03 in 2002, 1.07 in 2003, 1.17 in 2004, and 1.27 in 2005.
"Given constant total corn and soybean acres in Illinois, a 1.27
ratio means that for every corn acre that followed soybeans,
there was 0.27 acres of corn-after-corn," he said.
He noted that two factors can explain the shift to more corn
acres from 1998 to 2005. First, corn has been more profitable
"The second factor likely causing a shift to more corn is an
increase in the perceived risk of soybean production," he said.
"Up to 2003, soybeans were often viewed as the 'safe' crop as
yields did not exhibit as much variability as corn yields. In
2003, that perception began to change as soybean yields were
considerably below trend-line yields on many farms.
"Low 2003 soybean yields were followed in the next year by the
discovery of soybean rust in the southern United States,
increasing the probability that rust could occur in Illinois."
Now, new factors have been added to the equation--recent cost
increases have reduced corn returns more than soybean returns.
"On Illinois grain farms, variable costs for corn are projected
to be $55 per acre higher in 2006 than in 2002," said Schnitkey.
"Variable costs for soybeans are projected to be $20 per acre
higher in 2006 than in 2002.
"On the other end, corn-after-soybeans has a $116 projected
operator and land return per acre, soybean production has a
projected $99 return, and corn-after-corn has a $75 projected
Schnitkey said that agronomic research has also indicated that
corn-after-corn yields average about 10 percent lower than
"Many farmers, however, doubt that a yield drag exits," he
He encouraged farmers to project 2006 costs and returns for
"Given that the cost increases for corn have been higher for
corn, corn yields are going to have to be higher in 2006 for
corn returns to exceed soybean returns," he said.
But soybean production also carries risk. Even though an
outbreak did not occur in 2005, there is a potential for soybean
rust in 2006.
"Many models of rust incidence suggest that outbreaks will not
occur every year in Illinois," said Schnitkey. "The fact that an
outbreak did not occur in 2005 does not provide a great deal of
evidence concerning the
probability of an outbreak."