The impact of corn in 2013

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Your planting decision may already have been made and the seed ordered.  Whether that is the case or not, will you be planting more corn? 

Corn is more profitable per acre than soybeans, and more profitable than most cropping rotations would average.  However, agronomic problems with continuous corn have pushed many farmers to consider some spice in their life with a periodic change of crop. 

While such considerations will have an impact on farm budgets, what happens with the value of crops nationally when more corn is planted or when alternative cropping patterns arise?  Your personal decision is part of a national trend whether you know it or not.

If you have been penciling out your crop budget for 2013 and deciding what to plant not only for the coming year, but in successive years, you have noticed that corn is the money crop and provides more profit than soybeans in all combination of rotations.  University of Illinois farm management specialist Gary Schnitkey says on high productivity farmland fall delivery prices will suggest the planting of corn when you compare returns to the operator and the farmland:

  • $643 per acre for corn-after-soybeans,
  • $571 for corn-after-corn,
  • $525 for continuous corn
  • $446 for soybeans-after-corn
  • $471 for soybeans after-two-years-corn
  • The lowest corn return – $525 for continuous corn – is $54 per acre higher than the highest soybean return – $471 for soybeans-after-two-years-corn.

Schnitkey says the problem facing farmers is starting the more profitable rotation. “If, for example, all farmland in 2013 is planted to corn, there will be no possibility of planting corn-after-soybeans in 2014 as there were no soybeans in 2013. Planting soybeans in 2013 allows for a 2014 planting of the most profitable corn crop, corn-following-soybeans.

Let's Look At Several Years

To adequately judge the financial value of a rotation, Schnitkey says a complete rotation has to occur with prices averaged over the course of the rotation.  When that is done, a producer will receive:

  •  $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.

Schnitkey says it is difficult to predict what farmers may do in 2013, “While planting 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.”

Corn Acreage Expansion Underway

If all farmers workout the same budget, they would obviously plant more corn in 2013 and that would not only expand corn acres, but may expand total acres.  Recently, Informa Economics forecast a 99 million acre corn crop in 2013, and even with fewer soybean acres, the overall corn and soybean crop footprint was going to increase by over three million acres.  That is apparently the response to commodity prices, but to what degree?

Economists at the University of Florida, lead by James Seale, Jr., studied crop prices and acreage response from 1960 to 1995 when the “Freedom to Farm” Farm Bill was passed, and then from 1996 to 2010.  They found that when total acreage expands, the acreage devoted to corn increases more than other commodities. 

They report “if land expands (contracts) by 1%, then the land quantity for corn, cotton, soybeans, and wheat goes up (down) respectively by 1.92%, 1.67%, 0.53%, and 1.54%.   As is seen, corn is the most responsive to the expansion of total land because its land elasticity is the highest.”  Consequently, regarding commodity prices, they report, “The results indicate that if the price of corn, cotton, soybeans, and wheat goes up (down) by 1%, the land quantity for the different crops goes up (down) by 0.18%, 0.47%, 0.32%, and 0.23%, respectively.”

Make Way for Corn

To apply this finding to 2013, the Florida State researchers report that if corn acreage increases by 1%, then acreages for other commodities will decline.  But by how much?  “The results mean that if the price of corn goes up by 1%, then land dedicated to cotton, soybeans, and wheat decrease respectively by 0.23%, 0.19%, and 0.11% while the land for hay increases by 0.06%. This indicates that when it comes to land allocation, corn and cotton are substitutes. In addition, pairs like corn and soybeans as well as corn and wheat are also substitutes while corn and hay are actually compliments. Furthermore, the corn and cotton combination has the highest cross price elasticity (0.23%), thus they compete between each other for acreage more so than other combinations.”

And they report that has caused corn to be grown in regions that were recently unfamiliar to it.  “Corn not only bids away acreage from wheat in the states where both wheat and corn are grown like in Illinois, Missouri, Nebraska, and Texas, but it also takes away the acreage in traditionally only wheat growing areas like a greater swath of the Midwest, Kansas, farther north and west into the Dakotas and central Minnesota. Over the past 50 years corn’s competition for land also extends to new territories like some areas in Arizona, California, Mississippi, and Texas, which are historically dedicated to cotton.”


To no surprise, corn will be the primary cash crop on high productivity Cornbelt farmland in 2013 based on its profitability over other commodities, but the greatest profitability comes from a rotation that has corn planted after soybeans.  Analogous to a chicken and egg question, how will that occur in future years if all land is planted to corn in 2013?  When land is planted to corn, that means that acreage is taken away from other commodities.  With the expansion of corn production in the US, it is being produced in many more areas than once considered for corn.

Source: FarmGate blog

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Inamullah Shah    
Lahore, Pakistan  |  January, 26, 2013 at 12:43 AM

It looks good return fron corn,In Pakistan we have two seasons Spring & Autumn. For planting spring farmers plant over .7 million acres & use 100% USA made seed ( 70% of Pioneer, 20% Monsanto, 7% Syengta & only 3% of others) , spring season planting is started & will continue till March end, this crop is after almost 100% after potato crop. So the yield are high 4 to Mt per acre (10 to 12 Mt per Hectare) In the autumn start from June to end August & again .7 million acres plant. If the corn returns are good in USA they also get good return. In the autumn farmers used Thai origen seeds & share is remain same Pioneer on the top with 62% market share but the yields are low 2.5 to 3 Mt per acre.

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