More corn in 2013?
In calculating rotation returns, I assume that a constant rotation has been obtained. This means that all continuous corn acres are in continuous corn and continuous corn returns will be used in calculating continuous corn rotation return. It is possible to have higher returns for all corn if a switch is being made away from soybeans in the previous year (moving from a corn-soybeans rotation to continuous corn).
Rotations returns are:
- $545 per acre for corn-soybeans rotation (average of $643 return for corn-after-soybeans and $446 return for soybeans-after-corn).
- $562 per acre for corn-corn-soybeans (average of $643 return for corn, $571 for corn-after-corn, and $471 for corn-after-two-years-corn).
- $525 per acre for continuous corn.
These rotation returns suggest that the corn-corn-soybeans rotation is the most profitable rotation.
For the corn-corn-soybeans rotation to be more profitable than corn-soybeans rotation, corn-after-corn yields cannot be too far below corn-after-soybeans yields. The above budgets assume that the188 bushel corn-after-corn yield is 10 bushels less than the 198 bushel corn-after-soybeans yield. The corn-soybeans rotation has higher returns than the corn-corn-soybeans rotation if the corn-after-corn yield is below180 bushels per acre. This implies that the corn-soybeans rotation is more profitable if there is an 18 bushel yield drag for corn-after-corn (198 bushel corn-after-soybean yield minus 180 break-even corn-after-corn yield). In this case, this works out to be a 10 percent yield drag.
Continuous corn is not as profitable as corn-corn-soybeans. For continuous corn to have the same profitability as the corn-corn-soybeans rotation, the continuous corn yield has to be 186.5 bushels. This 186.5 bushel yield compares to the budgeted yield of 188 bushels for corn-after-soybeans. Essentially, continuous corn cannot have a yield drag compared to corn-after-corn given the prices, yields, and costs shown in Table 1.
The Choice in 2013
Planting corn in 2013 is projected to be more profitable than soybeans. For example, the corn-after-corn return of $571 per acre is $125 per acre higher than soybeans-after-corn. This $125 difference is large compared to historical differences in returns. Between 2006 through 2011, corn has average $58 per acre more profitable than soybeans on central Illinois high-productivity farmland.
While planting my corn in 2013 may be more profitable, it may require giving up returns in future years, as fewer acres of corn-after-soybeans can be planted in 2014. Which way farmers will go is an open question. In recent years, many farmers have had much worse yield drags for corn-after-corn than those implied by budgets in Table 1. Reports of corn-after-corn having more than 40 bushels lower than corn-after-soybeans are not uncommon. These poorer corn-after-corn yields may cause some farmer to planting more soybeans.
Corn is projected more profitable than soybeans in 2013. Planting more corn in 2013 can result in lower returns in 2014 because fewer acres of corn-after-soybeans can be planted.
Rotation projections in this article are based on budgets in Table 1. Results are sensitive to yield drags for corn-after-corn and continuous corn. Also, farmland of lower productivity generally has less of an advantage in planting more corn. Historically, corn yields rare higher relative to soybean yields on higher productivity farmland. Hence, planting more soybeans on lower productivity farmland than suggested herein may be warranted.