Biobased USA, Brandon, FL Soysoap 2 product costs $6.00 an acre and has given the farmer and universities 8 to 20 more bushels on Soybeans and 15 more bushels on Corn Per Acre. Soysoap should make after your breakeven or even get you to breakeven a ROI of $80.00 to $200 an acre. A farmer must make says NCSU says 35 Bu/A beans to breakeven. If bad years like 2015 follow good years like 2010-14, our farmers can survive it. NC averages for 2010-14 are 33.9 Bu/A, $12.30 selling price, and $108.98/A profit. Univ of Illionis projections for 2016 is farmer will loose money on Beans read last article! But todays prices for Soybeans is only $8.77 and that makes being profitable farmer even harder!

Break-Even Soybean Prices: History and Projections

Why even grow Soybeans for .10 cents



For farmland that is cash rented near average rent levels, break-even soybean prices have increased from near $5.00 per bushel in 2004 to around $10.70 per bushel in 2013 and 2014. Break-even prices near $10.70 will cause losses when soybean prices are below $10.70. Prices being below break-even prices are possible over the next several years. 

Calculation of Break-Even Prices

Break-even prices for soybeans were calculated using methods similar to that for corn reported in a post last week (available here). Break-even prices were calculated using summary data from Illinois Farm Business Farm Management (FBFM) as reported in "Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans" (available here).  Break-even prices are reported for northern, central, and southern Illinois, with the central region divided into categories for high-productivity and low-productivity farmland.

Break-even prices were calculated by adding per acre non-land costs and cash rent together, and then subtracting government payments and crop insurance proceeds.  This per acre break-even value gives the amount of crop revenue necessary to break-even. For northern Illinois in 2014, non-land costs are projected at $326 per acre, average cash rent at $264 per acre, and there are no government payments or crop insurance proceeds projected for 2014.  This gives $590 of crop revenue ($326 non-land costs + $264 cash rent) that must be obtained to break-even in 2014.  Given a 56 bushel per acre expected yield, the break-even price is $10.54 per bushel ($590 crop revenue / 56 bushel yield).

Inclusion of government payments and crop insurance proceeds lowers break-even prices.  In recent years, government program payments only include direct payments, which average $21 per acre in northern Illinois.  A direct payment is not projected for 2014.  Similarly, break-even prices are lowered by crop insurance proceeds.  In particular, break-even prices in the drought year of 2012 would have been much higher had crop insurance proceeds not been included in break-even calculations.

Break-even prices were calculated given a cash rent situation with cash rent levels near averages.  Farms with above average cash rent levels will have higher break-even levels, and vice versa.  Break-even prices will differ for owned and share rent farmland. 

Break-Even Prices

 Over time, break-even prices in the northern, central-high (high productivity farmland), central-low (low productivity farmland) and southern regions have tracked each other closely (see Figure 1).  While yields vary across the regions, offsetting differences in cash rents tend to even out break-even prices across the regions.  Because regional break-even prices track each other closely in most years, the averages of break-even price across regions are reported in the remainder of this post.

fig1.jpg

 

In 2004, break-even prices averaged $4.97 per bushel.  Between 2004 and 2013, break-even prices increased in most years:  $5.34 in 2005, $5.78 in 2006, $6.78 in 2007, $7.59 in 2008, $8.75 in 2009, $7.77 in 2010, $8.84 in 2012, $10.81 in 2012, and $10.82 in 2013.  Increases in both non-land costs and cash rents led to the increase in break-even prices. The projected 2014 break-even of $10.70 per bushel is projected slightly below 2013 levels.

Summary and Commentary

Currently, cash grain bids for 2014 fall delivery are near $11.30 per bushel, $.48 above the break-even level of $10.82 per bushel.  It is conceivable that fall prices next year could be below break-even levels near $10.70 per bushel. USDA benchmark prices place soybean prices a $10.60 over the next several years, slightly below the $10.70 break even for 2014.

 There are possibilities that break-even prices may decline over time.  Non-land costs could decrease; however, this process will be slow and there are limits to likely non-land cost decreases.  Further decreases in break-even prices are possible with cash rent decreases.  However, cash rents tend to be "sticky".  This suggests a protracted period of losses would have to occur before cash rents decline.

Break-even prices will vary across farms, depending on costs, yield levels, and land control situations.  Farms with lower break-even prices will be able to handle low commodity prices better than farms with higher break-even prices.

Issued by Gary Schnitkey
Department of Agricultural and Consumer Economics
University of Illinois


Soysoap

Break-Even Corn Prices: History and Projections



For farmland that is cash rented near average rent levels, break-even corn prices have increased from $1.67 per bushel in 2004 to the mid-$4.00 range in 2013 and 2014. Mid-$4.00 break-even prices will cause losses when corn prices are in the in the low-$4 range or below. There are good possibilities of prices being below break-even prices over the next several years.

Calculation of Break-Even Prices

Break-even prices were calculated using summary data from Illinois Farm Business Farm Management (FBFM) as reported in "Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans" (available here). Break-even prices are reported for northern, central, and southern Illinois, with the central region divided into categories for high-productivity and low-productivity farmland.

Break-even prices were calculated by adding per acre non-land costs and cash rent together, and then subtracting government payments and crop insurance proceeds. This per acre break-even value gives the amount of crop revenue necessary to break-even. For northern Illinois in 2014, non-land costs are projected at $565 per acre, average cash rent at $264 per acre, and there are no government payments or crop insurance proceeds projected for 2014. This gives $829 of crop revenue ($565 non-land costs + $264 cash rent) that must be obtained to break-even in 2014. Given a 187 bushel per acre expected yield, the break-even price is $4.43 per bushel ($829 crop revenue / 187 bushel yield).

Inclusion of government payments and crop insurance proceeds lowers break-even prices. In recent years, government program payments only include direct payments, which average $21 per acre in northern Illinois. A direct payment is not projected for 2014. Similarly, break-even prices are lowered by crop insurance proceeds. In particular, break-even prices in the drought year of 2012 would have been much higher had crop insurance proceeds not been included in break-even calculations.

Break-even prices are calculated given a cash rent situation with cash rent levels near averages. Farms with above average cash rent levels will have higher break-even levels, and vice versa. Break-even prices will differ for owned and share rent farmland.

Break-Even Prices

Over time, break-even prices in the northern, central-high (high productivity farmland), central-low (low productivity farmland) and southern regions have tracked each other closely (see Figure 1). While yields vary across the regions, offsetting differences in cash rents tend to even out break-even prices across the regions. One notable exception in similar break-even prices occurred in 2012, when southern Illinois had a much lower break-even price than the other regions. Southern Illinois' 2012 break-even price was lower because of higher crop insurance payments than other regions. Because regional break-even prices track each other closely in most years, the averages of break-even price across regions are reported in the remainder of this post.


FEFO_13_21_fig1.jpg


In 2004, break-even prices averaged $1.67 per bushel. Between 2004 and 2013, break-even prices increased each year: $1.98 in 2005, $2.40 in 2006, $2.54 in 2007, $2.88 in 2008, $3.59 in 2009, 3.69 in 2010, $4.18 in 2012, $4.19 in 2012, and $4.65 in 2013. Increases in both non-land costs and cash rents led to the increases in break-even prices.

The projected 2014 break-even of $4.31 per bushel is projected below 2013 levels. Two items lead to lower 2014 break-even levels. The first is lower fertilizer prices. In northern Illinois, fertilize costs per acre are projected at $140 per acre, down from 2013 projected levels of $170 per acre. Second, 2014 yields are projected higher than 2013 levels.

Summary and Commentary

Currently, cash grain bids for 2013 fall delivery are $4.40 per bushel, below the projected 2013 break-even level of $4.65 per bushel. Cash bids for 2014 fall delivery are near $4.35 per bushel, near the $4.31 per bushel break-even level. Corn prices in the low $4.00 and high $3.00 per bushel range are possible over the next several years, leading to the possibility of losses. 

There are some possibilities that break-even prices may decline over time. Non-land cost could decrease; however, this process will be slow and there are limits to likely non-land cost decreases. Further decreases in break-even prices are possible with cash rent decreases. However, cash rents tend to be "sticky". This suggests a protracted period of losses would have to occur before cash rents decline.

Issued by  Gary Schnitkey 
Department of Agricultural and Consumer Economics
University of Illinois


Soysoap

Revised 2015 Corn and Soybean Return Estimates



Gary Schnitkey 

Department of Agricultural and Consumer Economics
University of Illinois 

Recommended citation format: Schnitkey, G. "Revised 2015 Corn and Soybean Return Estimates." farmdoc daily (5):169, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 15, 2015.

Permalink: http://farmdocdaily.illinois.edu/2015/09/revised-2015-corn-and-soybean-return-estimates.html


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As harvest is beginning, more information is available to project 2015 revenues and returns. Revised returns are presented in this article for high-productivity farmland in central Illinois. Similar estimates for northern, southern, and low-productivity central Illinois farmland are available in the 2015 Crop Budgets. Overall, returns for 2015 continue to be projected at low levels, with returns being below average cash rent levels.

Revised gross revenue

Table 1 shows revised budgets for high-productivity farmland in central Illinois. Much of the emphasis during this revision related to updating gross revenue estimates included yields, prices, Agricultural Risk Coverage (ARC) payments, and crop insurance payments.

Yields: When originally released, 2015 Crop Budgets contained yield estimates based on trend yields. At this point, the information available to update these yields estimates comes from the National Agricultural Statistical Service (NASS). NASS revised state yield estimates on September 11th. Obviously, yields will vary from expectations across Illinois. At this point, yield estimates for smaller areas are not available. As a result, estimated state yields are used to adjust 2015 budgeted yields.

The NASS state yield estimates for corn in Illinois is 173 bushels per acre. The 173 bushel yield estimate is one bushel higher than the 2015 trend estimate of 172 bushels per acre. As a result, corn yields in Table 1 are adjusted up by one bushel per acre from initial estimates.

NASS estimated the 2015 soybean yield at 54 bushels per acre. The 54 bushel yield is four bushels higher than the trend estimate of 50 bushels. As a result, soybean yields are adjusted up by four bushels per acre from their original estimates.

Commodity prices: Revised World Agricultural Supply and Demand Estimates (WASDE) were released on Friday (for a commentary see farmdoc dailySeptember 14, 2015). WASDE's range on corn price for the 2015-16 marketing year is from $3.45 per bushel to $4.05 per bushel, with a midpoint of $3.75. Current forward cash bids in central Illinois range from $3.85 per bushel for harvest-time delivery to $3.95 for spring delivery. A price of $3.90 per bushel is used in Table 1, reflecting an expectation in the higher end of the WASDE range.

WASDE's range on soybean price is from $8.40 per bushel to $9.90 per bushel, with an average of $9.15 per bushel. Current central Illinois forward bids range from $9.00 for harvest-time delivery to $8.75 for spring delivery. A price of $8.90 per bushel is used in Table1, slightly below the mid-point of the WASDE range, reflecting the lower forward bids.

ARC payments: Revenue includes $35 per acre for ARC payments. This $35 value is an average over corn and soybean base acres, with procedures used to estimate ARC payments provided in a previous article (farmdoc dailyAugust 18, 2015). Items to note about these ARC payments are:

Crop Insurance: Projected prices for 2015 are $4.15 per bushel for corn and $9.74 per bushel for soybeans. The December 2015 corn contract currently is trading near $3.95 per bushel. If $3.95 is the harvest price, the harvest price would be 95% of the projected price, indicating that yields would need to be below guarantee yields before crop insurance payments would occur. The November soybean contract currently is trading near $8.90, with $8.90 being 91% of the projected price. Similar to corn, yields must be below guarantee yields before crop insurance payments occur.

There will be some areas where crop insurance payments occur, particularly in areas where large amounts of rain occurred this spring. To recognize these payments, budgets in Table 1 include $20 per acre in crop insurance payments.

Gross revenue: Given these estimates, gross revenues are estimated at $840 per acre for corn-after-soybeans, $801 for corn-after-corn, $603 for soybeans-after-corn and $656 for soybeans-after-two-years-corn (see Table 1).

Operator and land return

Cost remain unchanged from pervious budgets. Given the above gross revenues and previously estimated costs, operator and land return estimates are $255 per acre for corn-after-soybeans, $217 for corn-after-corn, $233 for soybeans-after-corn, and $286 for soybeans-after-two-years-corn. These are the returns shared between farmers and land owners.

The projected 2015 operator and land returns are below those of recent years (see Figure 1). The last time corn had a lower operator and land return than projected for 2015 was in 2008. Soybean returns in 2006 were lower than the 2015 projected soybean return.

Figure 1 also includes average cash rents for this quality of farmland. Both the 2015 corn and soybean operator and land return are projected to be below the 2015 average cash rent.

09152015_fig1.jpg

Summary

Revised estimates of gross revenue for 2015 are presented in this article. Revised gross revenues point to low returns and low net incomes for 2015. Revisions to these estimates will be made as more accurate yield, price, and cost information is obtained.

References

Good, D. "Weekly Outlook: Smaller Corn Supplies Provide Opportunity for Price Rallies." farmdoc daily (5):168, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 14, 2015.

Schnitkey, G. "2016 ARC-CO Payment Estimates for 2016 Cash Rent Bids." farmdoc daily (5):150, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 18, 2015.



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Tuesday, July 21, 2015

2015 and 2016 potential Corn Soybean crop budgets - from Gary Schnitkey

The first version of the 2016 Illinois Crop Budgets is available for download from the management section of farmdoc (click here for budgets). As is detailed in the "Commentary" section of this paper, three implications are drawn from 2016 projections. First, cash flows will need to be reduced even if corn prices are above $4.00 per bushel. Two, cash rent reductions of about 30% from average 2014 levels are needed to generate farmer returns roughly the same as from 2000 to 2005. Third, keys to watch will be announcements of 2016 input prices by seed, fertilizer, and chemical input manufacturers. If these prices are at 2015 levels, adjustments to lower commodity prices must predominately come by lowering returns to farmers and landowners.

Comparison of 2016 Budgets to 2014 and 2015 Values

Budgets are given for corn, soybeans, wheat, and double-crop soybeans grown in northern, central, and southern Illinois. Central Illinois is further divided into categories for high and low productivity farmland. Table 1 shows 2016 budgets for corn and soybeans grown in central Illinois on high-productivity farmland (history back to 2009 is provide here). The 2015 Crop Budgets break out corn production into corn-after-soybeans and corn-after-corn production. In Table 1, only corn production is shown, which is a weighted average of corn-after-soybeans and corn-after-corn production. Similarly, the 2015 Crop Budgets break out soybean production into soybeans-after-corn and soybeans-after-two-years-corn while Table 1 reports a weighted average of those soybean budgets.

fdd07072015_tab1.jpg

Several notes about the construction of 2016 budget:

Given the above, non-land costs for 2016 are projected at $572 per acre for corn and $367 per acre for soybeans, down from 2015 levels. If these projections hold, 2016 will be the third straight year of non-land cost reductions. Non-land costs reached a high in 2013 of $615 per acre for corn and $372 per acre for soybeans. Projected 2016 non-land costs are 7% lower than 2013 levels for corn and a 1% lower for soybeans.

Operator and Land Returns

Operator and land returns in 2016 are projected at $280 per acre for corn and $223 per acre for soybeans. For a 50% corn and 50% soybean split, the operator and land return is $251 per acre. If farmland is cash rented, the operator and land return is the amount to split between then landowner and farmer. If cash rents are above $251 per acre, the farmer will face loses. If the farmer owns the farmland, the $251 operator and land return is available for paying property taxes, servicing farmland debt, and providing return to farmers.

If 2016 returns hold as projected in Table 1, farmers will have a third-straight year of losses on farmland that is cash rented at average levels (see Figure 1). In 2014, operator and land returns were below average cash rents by small amounts. In 2015, operator and land returns are projected below cash rents, indicating that farmers will have losses on cash rent farmland when rent levels are near average. Cash rent negotiations for 2016 rents will play a large part in determining farmer returns for 2016.

fdd07072015_fig1.jpg

Commentary on Operator and Land Returns

Summary

Projected 2016 budgets suggest the need to reduce cash flow, leading to a difficult planning period for 2016 crop production. Input price releases will determine the need to reduce cash rents for 2016.

The 2016 Illinois Crop Budgets will be updated as more information on commodity and input prices become available.




Hard Times are Coming!
Soysoap

Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans, Actual for 2009 through 2014, Projected 2015 and 2016


Department of Agricultural and Consumer Economics

University of Illinois

July 2015

Introduction


Gary Schnitkey


July 2015


This publication presents revenues and costs for producing corn, soybeans, wheat, and double-crop soybeans in three regions of Illinois: northern, central, and southern Illinois. Central Illinois is further divided into categories for high-productivity farmland and low- productivity farmland. Divisions between high and low farmland productivity are made based on soil productivity ratings. Generally, farms with higher soil productivity ratings have higher yields. Between 2009 and 2014, corn yields on high productivity farmland averaged 181 bushels per acre while corn yields on low productivity farmland averaged

169 bushels.


This publication includes ten tables:


1. Corn Revenue and Costs, Northern Illinois

2. Soybean Revenue and Costs, Northern Illinois

3. Corn Revenue and Costs, Central Illinois with High Productivity Farmland

4. Soybean Revenue and Costs, Central Illinois with High Productivity Farmland

5. Corn Revenue and Costs, Central Illinois with Low Productivity Farmland

6. Soybean Revenue and Costs, Central Illinois with Low Productivity Farmland

7. Corn Revenue and Costs, Southern Illinois

8. Soybean Revenue and Costs, Southern Illinois

9. Wheat Revenue and Costs, Southern Illinois

10. Double-Crop Soybean Revenue and Costs, Southern Illinois


Each table shows revenues and costs for 2009 through 2014. These financial results are summarized from grain farms enrolled in Illinois Farm Business Farm Management. Results for 2015 and 2016 are projections made based on expected yields, prices on futures exchanges, and input prices.


All revenues associated with crop production are included in the tables. Revenues

include crop revenue, Agricultural Risk Coverage (ARC) payments, Price Loss Coverage (PLC) payments, Average Crop Revenue Election (ACRE) payments, other government payments, and crop insurance payments. Crop revenue represents returns from marketed grain and equals yield times price per bushel. Price per bushel represents a market year average price that farmers received for grain. Crop insurance represents average indemnity payments from crop insurance.


Non-land costs are divided into 1) direct costs – costs that can be directly attributable to the production of the crop, 2) power costs – costs generally related to machinery operations, and 3) overhead costs – costs associated with general operation of the farm.

These costs are accrued so that they are associated with the year of production. For example, fertilizer costs for 2010 may have been incurred in 2009. Any fertilizer expense associated with 2010 production paid in 2009 is associated with 2010 production.


Subtracting non-land costs from revenue yields “operator and land return”. This is the return remaining to pay for farmland and provide a return to the operator. In a cash rent situation, the payment for farmland is cash rent. If the operator and land return is $170 per acre and cash rent is $150 then the farmer return is $20 per acre.


An average land costs is included in this publication. Land costs represent a charge for use of the land. In this publication, land costs equal the average cash rent paid by farmers to land owners. This data is obtained from the Nationally Agricultural Statistical Service. Other means of controlling farmland, such as owning farmland or share-renting farmland, could have different costs.


Farmer return is then reported. Farmer return equals operator and land return minus land costs. This is the amount that farmers have to provide a return for unpaid labor, equity capital invested in the farm, and management. Farmer return is equivalent to net farm income per acre.




Acknowledgments: Much of the data used in these budgets comes from the local Farm Business Farm Management (FBFM) Associations across the State of Illinois. Without their cooperation, information as comprehensive and accurate as this would not be available for educational purposes. FBFM, which consists of 5,500 plus farmers and 60 professional field staff, is a not-for-profit organization available to all farm operators in Illinois. FBFM field staff provides on-farm counsel with computerized recordkeeping, farm financial management, business entity planning and income tax management. For more information, please contact the State FBFM Office located at the University of Illinois Department of Agricultural and Consumer Economics at 217-333-5511 or visit the FBFM website at www.fbfm.org.

Table 1. Corn Revenues and Costs, Northern Illinois

Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


178


174


177


143


204


208


192


194

Price per bu

$3.63

$5.03

$6.10

$6.75

$4.61

$3.80

$4.20

$4.20

Crop revenue

$646

$875

$1,080

$965

$940

$790

$806

$815

ARC/PLC or ACRE

8

0

0

0

0

50

25

20

Other gov't payments

23

23

23

23

21

0

0

0

Crop insurance proceeds 9 19 7 173 48 46 0 0

Gross revenue $686

$917

$1,110

$1,161

$1,009

$886

$831

$835

Fertilizers

154

118

158

200

199

169

154

144

Pesticides

47

44

47

57

60

60

60

60

Seed

84

95

97

110

118

123

125

124

Drying

48

19

21

18

29

28

28

28

Storage

9

6

5

4

5

5

5

5

Crop insurance 26 19 34 28 28 28 28 28

Total direct costs

$368

$301

$362

$417

$439

$413

$400

$389

Machine hire/lease

17

17

18

16

19

19

19

19

Utilities

5

6

5

5

5

5

5

5

Machine repair

24

25

21

25

28

30

31

31

Fuel and oil

18

17

23

24

27

27

20

20

Light vehicle

2

2

2

2

2

2

2

2

Mach. depreciation 38 41 44 57 69 72 75 75

Total power costs $104

$108

$113

$129

$150

$155

$152

$152

Hired labor

12

12

18

17

18

19

20

21

Building repair and rent

8

7

11

11

9

10

11

11

Building depreciation

7

10

13

15

16

17

18

18

Insurance

8

9

7

9

13

13

13

13

Misc

7

11

9

9

8

8

8

8

Interest (non-land) 16 18 16 14 17 17 17 18

Total overhead costs $58 $67 $74 $75 $81 $84 $87 $89


Total non-land costs

Table 2. Soybean Revenues and Costs, Northern Illinois

Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


49


56


60


51


59


61


59


60

Price per bu

$9.78

$11.31

$12.71

$14.51

$13.21

$10.20

$10.00

$10.00

Crop revenue

$479

$633

$763

$740

$779

$622

$590

$600

ARC/PLC or ACRE

0

0

0

0

0

0

10

10

Other gov't payments

23

23

23

23

20

0

0

0

Crop insurance proceeds 5 5 4 25 5 4 0 0

Gross revenue $507

$661

$790

$788

$804

$626

$600

$610

Fertilizers

60

28

38

49

49

43

37

33

Pesticides

28

26

28

34

35

35

35

35

Seed

53

52

53

62

68

71

78

77

Drying

4

1

1

1

1

1

1

1

Storage

5

3

2

2

2

2

2

2

Crop insurance 16 13 23 19 19 19 19 19

Total direct costs

$166

$123

$145

$167

$174

$171

$172

$167

Machine hire/lease

14

16

16

15

16

16

16

16

Utilities

4

5

4

4

5

5

5

5

Machine repair

20

23

18

24

24

25

26

26

Fuel and oil

15

16

21

23

23

23

23

23

Light vehicle

2

2

2

2

2

2

2

2

Mach. depreciation 33 26 26 49 60 65 70 70

Total power costs $88 $88 $87 $117 $130 $136 $142 $142

Hired labor

10

11

17

16

16

16

16

17

Building repair and rent

4

4

6

5

5

5

5

5

Building depreciation

4

5

7

8

8

9

10

10

Insurance

8

8

7

9

12

12

12

12

Misc

7

11

9

9

8

8

8

8

Interest (non-land) 14 15 13 13 14 14 14 15

Total overhead costs $47 $54 $59 $60 $63 $64 $65 $67

Total non-land costs

$301

$265

$291

$344

$367

$371

$379

$376

Operator and land return

$206

$396

$499

$444

$437

$255

$221

$234

Land costs

177

188

222

247

262

265

268

258

Farmer return

$29

$208

$277

$197

$175

-$10

-$47

-$24

Net farmer profit

-$40

$136

$189

$112

$83

-$102

-$139

-$116

1Results for 2009 through 2014 are summarized from grain farms enrolled in Illinois Farm Business

Farm Management. Projections are made for 2015 and 2016.


Prepared by: Gary Schnitkey, University of Illinois, schnitke@illinois.edu, 217 244-9595, July 2015. Available in the management section of farmdoc (www.farmdoc.illinois.edu).


Table 3. Corn Revenues and Costs, Central Illinois -- High Productivity Farmland, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


192


168


174


126


197


231


196


198

Price per bu

$3.62

$5.07

$6.24

$6.93

$4.52

$3.75

$4.20

$4.20

Crop revenue

$695

$852

$1,086

$873

$890

$866

$823

$832

ARC/PLC or ACRE

8

0

0

0

0

2

25

20

Other gov't payments

24

24

24

24

22

0

0

0

Crop insurance proceeds 5 32 23 295 61 10 0 0

Gross revenue $732

$908

$1,133

$1,192

$973

$878

$848

$852

Fertilizers

185

122

159

200

193

163

148

138

Pesticides

52

44

50

49

66

60

60

60

Seed

90

95

96

108

114

119

124

123

Drying

38

22

19

16

24

23

23

23

Storage

14

13

8

7

8

5

5

5

Crop insurance 25 18 30 25 27 27 27 27

Total direct costs

$404

$314

$362

$405

$432

$397

$387

$376

Machine hire/lease

9

8

8

10

11

11

11

11

Utilities

4

4

4

5

5

5

5

5

Machine repair

18

17

17

22

22

24

25

25

Fuel and oil

13

17

18

23

24

24

20

20

Light vehicle

1

2

1

2

2

2

2

2

Mach. depreciation 35 38 39 55 63 66 69 69

Total power costs $80

$86

$87

$117

$127

$132

$132

$132

Hired labor

12

13

14

14

16

17

18

19

Building repair and rent

5

4

5

8

6

7

8

8

Building depreciation

5

6

6

9

5

6

7

7

Insurance

7

8

8

9

10

10

10

10

Misc

7

8

8

8

8

8

8

8

Interest (non-land) 14 13 13 11 11 11 11 12

Total overhead costs $50 $52 $54 $59 $56 $59 $62 $64

Total non-land costs

$534

$452

$503

$581

$615

$588

$581

$572

Operator and land return

$198

$456

$630

$611

$358

$290

$267

$280

Land costs

209

215

248

270

290

293

296

286

Farmer return

-$11

$241

$382

$341

$68

-$3

-$29

-$6

Table 4. Soybean Revenues and Costs, Central Illinois -- High Productivity Farmland, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


55


60


56


50


58


64


57


58

Price per bu

$10.03

$11.47

$12.75

$14.66

$13.25

$10.25

$10.00

$10.00

Crop revenue

$552

$688

$714

$733

$769

$656

$570

$580

ARC/PLC or ACRE

0

0

0

0

0

0

10

10

Other gov't payments

24

24

24

24

22

0

0

0

Crop insurance proceeds 3 5 11 26 6 5 0 0

Gross revenue $579

$717

$749

$783

$797

$661

$580

$590

Fertilizers

62

42

55

68

65

59

49

45

Pesticides

31

27

31

39

40

40

40

40

Seed

58

61

62

69

73

76

78

77

Drying

1

1

1

1

1

1

1

1

Storage

7

6

4

4

4

4

4

4

Crop insurance 16 12 20 17 18 18 18 18

Total direct costs

$175

$149

$173

$198

$201

$198

$190

$185

Machine hire/lease

8

7

8

9

9

9

9

9

Utilities

4

4

3

4

4

4

4

4

Machine repair

16

15

16

19

20

21

22

23

Fuel and oil

12

15

17

20

21

21

21

21

Light vehicle

1

1

1

1

1

1

1

1

Mach. depreciation 31 34 35 48 55 60 63 63

Total power costs $72

$76

$80

$101

$110

$116

$120

$121

Hired labor

12

12

14

13

15

15

16

16

Building repair and rent

4

4

4

6

5

5

5

5

Building depreciation

3

4

5

8

9

10

11

11

Insurance

7

8

8

9

10

10

10

10

Misc

7

8

8

8

8

8

8

8

Interest (non-land) 10 12 11 10 10 10 10 11

Total overhead costs $43 $48 $50 $54 $57 $58 $60 $61

Total non-land costs

$290

$273

$303

$353

$368

$372

$370

$367

Operator and land return

$289

$444

$446

$430

$429

$289

$210

$223


Land costs


209


215


248


270


290


293


296


286


Farmer return


$80


$229


$198


$160


$139


-$4


-$86


-$63

1Results for 2009 through 2014 are summarized from grain farms enrolled in Illinois Farm Business Farm

Management. Projections are made for 2015 and 2016.


Prepared by: Gary Schnitkey, University of Illinois, schnitke@illinois.edu, 217 244-9595, July 2015.

Table 5. Corn Revenues and Costs, Central Illinois -- Low Productivity Farmland, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


187


157


158


115


183


215


182


184

Price per bu

$3.63

$5.03

$6.21

$6.77

$4.51

$3.76

$4.20

$4.20

Crop revenue

$679

$790

$981

$779

$825

$808

$764

$773

ARC/PLC or ACRE

8

0

0

0

0

2

25

20

Other gov't payments

24

24

24

24

22

0

0

0

Crop insurance proceeds 5 32 23 295 61 10 0 0

Gross revenue $716

$846

$1,028

$1,098

$908

$820

$789

$793

Fertilizers

172

124

164

206

202

172

148

138

Pesticides

52

44

50

60

66

60

60

60

Seed

90

94

100

113

120

125

129

128

Drying

37

17

15

14

19

18

18

18

Storage

9

10

6

5

7

5

5

5

Crop insurance 23 21 28 26 26 26 26 26

Total direct costs

$383

$310

$363

$424

$440

$406

$386

$375

Machine hire/lease

11

11

11

12

13

13

13

13

Utilities

5

5

5

6

5

5

5

5

Machine repair

22

21

20

24

25

27

28

28

Fuel and oil

15

19

20

24

24

24

20

20

Light vehicle

2

2

2

2

2

2

2

2

Mach. depreciation 29 37 40 53 62 65 68 68

Total power costs $84

$95

$98

$121

$131

$136

$136

$136

Hired labor

12

13

13

15

15

16

17

18

Building repair and rent

6

6

7

8

9

10

11

11

Building depreciation

6

8

9

11

11

12

13

13

Insurance

8

9

8

9

10

10

10

10

Misc

7

7

7

8

8

8

8

8

Interest (non-land) 16 11 16 14 14 14 14 15

Total overhead costs $55 $54 $60 $65 $67 $70 $73 $75

Total non-land costs

$522

$459

$521

$610

$638

$612

$595

$586

Operator and land return

$194

$387

$507

$488

$270

$208

$194

$207

Land costs

177

188

208

233

240

243

246

236

Farmer return

$17

$199

$299

$255

$30

-$35

-$52

-$29

Table 6. Soybean Revenues and Costs, Central Illinois -- Low Productivity Farmland, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


52


54


52


47


53


61


52


53

Price per bu

$9.91

$11.43

$12.76

$14.46

$13.21

$10.25

$10.00

$10.00

Crop revenue

$515

$617

$664

$680

$700

$625

$520

$530

ARC/PLC or ACRE

0

0

0

0

0

0

10

10

Other gov't payments

24

24

24

24

22

0

0

0

Crop insurance proceeds 3 5 11 26 6 5 0 0

Gross revenue $542

$646

$699

$730

$728

$630

$530

$540

Fertilizers

48

35

46

59

55

51

43

39

Pesticides

33

28

32

38

38

40

40

40

Seed

47

49

52

60

55

76

79

78

Drying

1

1

1

1

1

1

1

1

Storage

4

4

2

2

2

4

4

4

Crop insurance 15 12 19 17 17 18 18 18

Total direct costs $148 $129 $152 $177 $168 $190 $185 $180


Machine hire/lease

10

10

9

11

11

9

9

9

Utilities

4

4

4

5

5

4

4

4

Machine repair

19

19

18

21

21

21

22

23

Fuel and oil

14

17

18

21

21

21

21

21

Light vehicle

2

2

1

2

2

1

1

1

Mach. depreciation 31 32 34 44 46 60 63 63

Total power costs $80 $84 $84 $104 $106 $116 $120 $121

Hired labor

12

13

13

14

14

15

16

16

Building repair and rent

5

4

5

6

6

5

5

5

Building depreciation

5

6

6

7

7

10

11

11

Insurance

8

9

8

9

9

10

10

10

Misc

7

7

7

8

8

8

8

8

Interest (non-land) 14 10 14 12 12 10 10 11

Total overhead costs $51 $49 $53 $56 $56 $58 $60 $61

Total non-land costs

$279

$262

$289

$337

$330

$364

$365

$362

Operator and land return

$263

$384

$410

$393

$398

$266

$165

$178

Land costs

177

188

208

233

240

243

246

236

Farmer return

$86

$196

$202

$160

$158

$23

-$81

-$58

Table 7. Corn Revenues and Costs, Southern Illinois, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


163


148


141


56


183


194


160


162

Price per bu

$3.80

$5.22

$6.39

$6.84

$4.69

$3.75

$4.20

$4.20

Crop revenue

$619

$773

$901

$383

$858

$728

$672

$680

ARC/PLC or ACRE

5

0

0

0

0

2

25

20

Other gov't payments

21

21

21

21

19

0

0

0

Crop insurance proceeds 34 13 41 532 41 7 0 0

Gross revenue $679

$807

$963

$936

$918

$737

$697

$700

Fertilizers

149

134

163

199

198

168

148

138

Pesticides

55

45

52

54

66

60

60

60

Seed

84

90

88

101

111

116

120

119

Drying

18

10

11

5

17

16

16

16

Storage

4

3

2

2

3

5

5

5

Crop insurance 16 15 20 22 24 24 24 24

Total direct costs

$326

$297

$336

$383

$419

$389

$373

$362

Machine hire/lease

9

8

8

11

10

10

10

10

Utilities

5

4

5

5

6

6

6

6

Machine repair

24

23

26

26

30

32

33

33

Fuel and oil

18

20

24

29

29

29

20

20

Light vehicle

1

2

2

2

2

2

2

2

Mach. depreciation 44 47 50 59 67 70 73 73

Total power costs $101 $104 $115 $132 $144 $149 $144 $144

Hired labor

19

20

13

20

26

27

28

29

Building repair and rent

8

8

7

10

8

9

10

10

Building depreciation

8

9

9

14

16

17

18

18

Insurance

9

9

9

11

12

12

12

12

Misc

8

7

7

8

9

9

9

9

Interest (non-land) 14 13 16 14 12 12 12 13

Total overhead costs $66 $66 $61 $77 $83 $86 $89 $91

Total non-land costs

$493

$467

$512

$592

$646

$624

$606

$597

Operator and land return

$186

$340

$451

$344

$272

$113

$91

$103

Land costs

120

125

137

144

160

163

166

158

Farmer return

$66

$215

$314

$200

$112

-$51

-$75

-$55

Table 8. Soybean Revenues and Costs, Southern Illinois, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


44


49


44


41


49


55


47


48

Price per bu

$10.03

$11.70

$12.86

$14.54

$13.43

$10.20

$10.00

$10.00

Crop revenue

$441

$573

$566

$596

$658

$561

$470

$480

ARC/PLC or ACRE

0

0

0

0

0

0

10

10

Other gov't payments

21

21

21

21

19

0

0

0

Crop insurance proceeds 6 7 29 67 17 5 0 0

Gross revenue $468

$601

$616

$684

$694

$566

$480

$490

Fertilizers

46

41

50

61

63

59

49

45

Pesticides

40

33

38

39

46

40

40

40

Seed

49

53

52

54

64

76

78

77

Drying

1

1

1

1

1

1

1

1

Storage

1

1

1

1

2

4

4

4

Crop insurance 10 10 14 14 16 18 18 18

Total direct costs

$147

$139

$156

$170

$192

$198

$190

$185

Machine hire/lease

9

8

9

10

9

9

9

9

Utilities

5

5

4

5

6

4

4

4

Machine repair

24

22

20

24

28

21

22

23

Fuel and oil

18

19

19

22

27

21

21

21

Light vehicle

1

2

1

2

2

1

1

1

Mach. depreciation 42 45 48 56 64 60 63 63

Total power costs $99

$101

$101

$119

$136

$116

$120

$121

Hired labor

19

18

19

20

24

15

16

16

Building repair and rent

3

5

6

6

5

5

5

5

Building depreciation

3

5

5

8

9

10

11

11

Insurance

9

9

9

11

12

10

10

10

Misc

8

7

7

8

9

8

8

8

Interest (non-land) 14 13 13 14 13 10 10 11

Total overhead costs $56 $57 $59 $67 $72 $58 $60 $61

Total non-land costs

$302

$297

$316

$356

$400

$372

$370

$367

Operator and land return

$166

$304

$300

$328

$294

$194

$110

$123

Land costs

120

125

137

144

160

163

166

158

Farmer return

$46

$179

$163

$184

$134

$31

-$56

-$35

Table 9. Wheat Revenues and Costs, Southern Illinois, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


57


61


61


72


76


67


67


68

Price per bu

$4.04

$5.52

6.55

$7.13

$6.45

$5.50

$5.00

$5.00

Crop revenue

$230

$337

$400

$513

$513

$513

$513

$340

ARC/PLC or ACRE

10

0

0

0

0

20

0

0

Other gov't payments

21

21

21

21

0

0

0

0

Crop insurance proceeds 42 8 12 0 25 0 0 0

Gross revenue $303

$366

$433

$534

$538

$533

$513

$340

Fertilizers

86

92

109

103

105

85

70

66

Pesticides

18

12

19

22

27

27

27

27

Seed

33

40

41

44

47

49

51

50

Drying

1

1

1

0

1

1

1

1

Storage

1

1

1

1

1

1

1

1

Crop insurance 4 5 7 8 9 9 9 9

Total direct costs

$143

$151

$178

$178

$190

$172

$159

$154

Machine hire/lease

13

12

12

17

18

18

18

18

Utilities

5

5

6

6

7

7

7

7

Machine repair

22

20

23

23

28

30

32

33

Fuel and oil

15

16

19

23

26

26

26

26

Light vehicle

3

2

2

2

2

2

2

2

Mach. depreciation 30 32 34 40 45 48 51 51

Total power costs $88 $87 $96 $111 $126 $131 $136 $137

Hired labor

16

15

10

15

16

16

16

16

Building repair and rent

5

8

7

7

8

8

8

8

Building depreciation

3

5

5

6

7

7

7

11

Insurance

7

7

7

9

9

9

9

9

Misc

7

6

6

7

7

7

7

7

Interest (non-land) 16 15 18 16 16 16 16 17

Total overhead costs $54 $56 $53 $60 $63 $63 $63 $68

Total non-land costs

$285

$294

$327

$349

$379

$366

$358

$359

Operator and land return

$18

$72

$106

$185

$159

$167

$155

-$19

Land costs2


120


125


137


144


160


163


166


158

Farmer return

-$102

-$53

-$31

$41

-$1

$4

-$11

-$177

Table 10. Double-Crop Soybean Revenues and Costs, Southern Illinois, Actual for 2009 through 2014, Projected for 2015 and 2016.1


Year



2009

2010

2011

2012

2013

2014

2015P

2016P


Yield per acre


32


30


36


17


32


35


32


32

Price per bu

$10.03

$11.70

$12.76

$14.46

$13.21

$10.20

$10.00

10

Crop revenue

$321

$351

$459

$246

$423

$357

$320

$320

ARC/PLC or ACRE

0

0

0

0

0

0

0

0

Other gov't payments

0

0

0

0

0

0

0

0

Crop insurance proceeds 3 0 4 12 8 0 0 0

Gross revenue $324

$351

$463

$258

$431

$357

$320

$320

Fertilizers

22

21

32

38

38

32

29

27

Pesticides

19

22

29

30

37

37

37

37

Seed

40

39

42

43

47

49

51

50

Drying

0

0

0

0

0

0

0

0

Storage

1

1

1

1

1

1

1

1

Crop insurance 3 3 4 4 5 5 5 5

Total direct costs

$85

$86

$108

$116

$128

$124

$123

$120

Machine hire/lease

9

9

10

11

11

11

11

11

Utilities

4

5

4

5

5

5

5

5

Machine repair

23

24

22

26

26

27

27

27

Fuel and oil

16

16

16

19

21

21

21

21

Light vehicle

2

2

1

2

2

2

2

2

Mach. depreciation 21 22 23 27 28 30 30 30

Total power costs $75 $78 $76 $90 $93 $96 $96 $96

Hired labor

10

11

12

13

13

13

13

13

Building repair and rent

5

6

7

7

6

6

6

6

Building depreciation

3

3

3

5

5

5

5

5

Insurance

0

0

0

0

0

0

0

0

Misc

0

0

0

0

0

0

0

0

Interest (non-land) 7 7 7 8 7 7 7 7

Total overhead costs $25 $27 $29 $33 $31 $31 $31 $31

Total non-land costs

$185

$191

$213

$239

$252

$251

$250

$247

Operator and land return

$139

$160

$250

$19

$179

$106

$70

$73

Land costs2


0


0


0


0


0


0


0


0

Farmer return

$139

$160

$250

$19

$179

$106

$70

$73

1Results for 2009 through 2014 are summarized from grain farms enrolled in Illinois Farm Business Farm

Management. Projections are made for 2015 and 2016.

2 Land costs and farmer return are only applied to the wheat budget.

2015 Net farm income more than cut in halved by prices!

Delta Farm Press Editoral Staff Forrest Laws

Corn is down $3 to $4 a bushel; soybeans, $5 to $6; cotton, 10 to 15 cents per pound; and rice, $1 to $2 per hundredweight. So just how bad is the fallout from the lower commodity prices farmers are having to adjust to in 2015?

It may be worse than many farmers and observers think, according to Pat Westhoff, director of the Food and Agricultural Policy Research Institute or FAPRI at the University of Missouri and a speaker for the University of Arkansas’ Food and Agribusiness Webinar in Mid-September.

In 2013, we have record levels of net farm income in this country,” he said. “USDA estimated a net farm income of $124 billion that year. Some new estimates that just came out a few weeks ago suggest that for 2015 we’re looking at a level that’s roughly half of the level for 2013; all the way down to $58 billion.”

Dr. Westhoff, an agricultural economist who is called on frequently to provide analysis of farm bill issues for members of Congress, was speaking on the topic “The Market Outlook: Any Relief in Sight?” He found it difficult to offer much encouragement.

Related

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USDA adjustments to corn, soybean numbers lift futures markets

Are we going to be emerging from this soon?” he asked. “One of the things I’m going to repeat several times during the course of my presentation today is that, unfortunately, unless there are some positive surprises on the horizon, there’s a very good chance we could have several years coming of depressed prices for major farm products.”

He displayed a chart of November soybean futures that showed how prices peaked above $14 a bushel in 2012-13 and then fell to $10 a bushel for the crop growers harvested last fall. Chicago Mercantile Exchange futures are now showing soybeans at $9 per bushel, not only for 2015, but for 2016, 2017 and 2018.

‘Always going to be surprises’

Economists and other “predictors” rarely ever get the future right, he concedes. “There are always going to be surprises, but we found that, at least since the recession, HIS Global Insights, a private forecasting group from Pennsylvania, has done a pretty good job of predicting what might be going on in the U.S. and global economy.”

IHS Global Insights forecast GDP growth of 2.4 and 2.2 percent in 2014 and 2015, which was about in line with an Economist poll’s suggestion of 2.4 percent in 2015.

For 2016 we have a little bit of a difference of opinion,” says Westhoff. “Global Insight sees a very significant uptick on the rate of growth to more than 3 percent, the first time that would have happened in some time. The Economist’s poll is not quite as optimistic (2.6 percent).”

Global Insight also sees the global economy growing at a stronger rate of 3.3 percent in 2016 (vs. 2.6 in 2015). It also is forecasting China’s GDP growth to remain fairly strong at 6.3 percent, which would be down from 2014’s 7.4 percent and 2015’s 6.5 percent, “but by no means in a recession,” said Westhoff.

Westhoff reviewed what’s happened in the corn market from the market peak of $7 per bushel in 2012-13 to less than $4 per bushel in 2014-15 and 2015-16. Acres and yields have declined slightly from the record levels of 90.6 million planted acres and 171 bushels per acre in 2014-15, but not enough to make much of a dent in the ending stocks figure for corn of 1.6 billion to 1.7 billion bushels.

As a result, FAPRI is predicting corn prices will remain below $4 per bushel through 2015-16, 2016-17, 2017-18 and 2018-19, and that market returns will remain below $300 an acre in 2015-16 – barring ther surprises.

Soybeans below $9

Soybeans have been following a similar track since prices peaked in 2014 and are projected to remain in the $9 to $10 per bushel range for the next four marketing years, according to Westhoff and FAPRI’s analysis.

It’s easy to forget this now, but as recently as the spring of 2014, it was possible for a few days to sell 2015 crop soybeans for $15 a bushel,” says Westhoff. “Now, of course, we’re well below $10, and, in fact, we’re below $9 on our average price in the market the last couple of days.” (Westhoff spoke on Sept. 16.)

FAPRI is expecting a slight decline in soybean acres in 2016 and the potential for a return of average yields (47 bushels so far in 2015) closer to trend-line numbers. The 3.9 billion bushels produced in 2014 and 2015 combined with larger beginning stocks means the markets will have a lot of soybeans in 2016.

USDA has underestimated both soybean exports and the crush the last two years,” says Westhoff. “So we anticipated a good chance the final story will be a little more optimistic than USDA is showing. But even with a slightly stronger export picture, we were still looking at roughly 400 million bushels of carryout, and that’s a high enough level to cause prices to be in the low we have observed recently of $9 per bushel or less.”

The FAPRI director said he had more positives to talk about for rice, at least from a producer stand point. “After bottoming out below $10 per hundredweight, we have seen a pretty remarkable recovery in rice prices the last few weeks to almost $13 per hundredweight as of yesterday afternoon. That’s an amazing development considering the oversupply we were facing.”

The turnabout appears to have come from over-optimistic USDA reports that indicated farmers had planted more rice and were headed toward higher yields than now appears to be the case.

Cotton producers also had some opportunities to price their crop at higher levels in 2014-15, but futures have since settled into a range of 60 to 65 cents per pound. “And, unfortunately, there’s good reasons to expect that may continue for some time to come until or unless there’s a major surprise in the market.”

To see Dr. Westhoff’s presentation and to learn more about the University of Arkansas’ Food and Agribusiness Webinar series, visit http://www.uaex.edu/farm-ranch/economics-marketing/food-agribusiness-webinars/posts/09-16-15-market-outlook-pat-westhoff.aspx.



More 2015 Income Projection Reports

2015 FAPRI Report



Pat Westhoff FAPRI Missouri Presentation Notes




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