U of Illinois Economist Updates Break-Even Levels for Corn, Soybeans09/12/2016
A comparison of break-even prices to delivery bid prices for the fall of 2017 suggest that soybeans will be more profitable than corn. Relative to soybean costs, corn costs must be reduced by $60 to $80 per acre before corn and soybeans are projected to have the same profitability in 2017.
Soybeans More Profitable Than Corn
As discussed in a July 7th farmdoc daily article, soybeans have been more profitable than corn in Illinois from 2013 through 2015. Current projections suggest that soybeans will be more profitable than corn in 2016, resulting in four years of soybeans being more profitable than corn.
Differences in corn and soybean costs explain why soybeans are more profitable than corn in recent years. In recent years, corn costs have increased more than soybean costs. Figure 1 shows corn costs minus soybean costs, hereafter referred to as the corn-soybean cost difference. The corn-soybean cost difference equaled $63 per acre in 2000. The difference increased and reached a high of $247 per acre in 2013. The difference decreased from the 2013 high and is projected to be $200 per acre in 2016.
Break-Even Corn Prices
Break-even corn prices are calculated for different soybean prices. If the actual corn price is higher than the break-even price, corn and soybeans will have the same profitability. A break-even corn price will be impacted by:
- Soybean price. A higher soybean price will increase the break-even corn price.
- Corn-soybean cost difference. A higher cost difference will increase the break-even corn price.
- Expected corn yield. A higher corn yield will decrease the break-even corn price.
- Expected soybean yield. A higher soybean yield will increase the break-even corn price.
To read more of this article and view the data, please visit farmdoc daily.