(KMAland) -- The ag economists at Illinois have run some pricing scenarios to stress test farm economics for the coming year. Things look pretty good but there are some caveats.
Starting with this crop year, University of Illinois Agricultural Economist Gary Schnitkey says on a highly productive central Illinois farms it should be a good one.
“Incomes for 2021 look like they are going to be above average. Significantly so because right now we are projecting, rather USDA is projecting good yields and prices are pretty good.”
Next year, 2022, things change. Even if you use trend yields for highly productive central Illinois farmland at 220 bushels to the acre for corn, at $4.50 a bushel, and 69 bushels for soybeans at $12, the income drops. It's not bad says Schnitkey but still it drops.
“So, those are reasonable returns. They are actually a bit below the average from 2020 but above what we saw from 2014 to 2019. So, that would be a good income. Then we looked at prices that would cause zero net returns and then went back and looked at 2014 to 2019 prices and looked at what those returns would be.”
The breakeven prices, by the way, are calculated at $4.41 for corn and $10.23 for soybeans at trend yield. Those breakeven cash prices are higher than in the past says Schnitkey because non-land costs have gone up by about $100 per acre since 2014 for corn and 50 bucks for soybeans. Should the corn and soybean market move back to 2014 to 2019 price levels, $3.64 for corn on average and $9.91 for soybeans, then things turn really ugly says Schnitkey. For comparison, the average net income on the farm during that period was $25 per acre.
“If we use those prices for a 50/50 corn-soybean rotation we come with a minus $86 return.”
You may read more about these projections in the Stress Test article on the farmdocdaily website. In it Gary Schnitkey does note that a return to price levels like those in the last two years of the Obama Administration, 2014 and 2015, and throughout the Trump years, 2016 to 19, seems unlikely.