Break-Even Corn-After-Corn Yields and Yield Drags

Many Illinois farmers have been disappointed with 2011 corn-after-corn yields, reporting significantly lower corn-after-corn yields compared to corn-after-soybean yields. So as to provide guidance for 2012 planting decisions, break-even corn-after-corn yields are calculated for farms in northern, central Illinois with high-productivity farmland (central-high), central Illinois with low-productivity farmland (central-low) and southern Illinois regions. Break-even corn-after-corn yields are between 24 and 35 bushels lower than corn-after-soybean yields.

Break-Even Corn-After-Corn Yields

Break-even corn-after-corn yields are calculated in Table 1 and require soybean returns, corn-after-corn non-land costs, and corn price information. Calculations are shown for northern Illinois. In northern Illinois, soybean returns are projected at $342 per acre (54 bushel soybean yield x $12.00 soybean price – $306 non-land costs). This soybean return, along with corn-after-corn non-land costs and corn price, are used to find the break-even corn-after-corn yield. For $542 per acre of non-land costs for corn and a $5.50 corn price, the break-even corn-after-corn yield is 161 bushels per acre (161 bushels = ($342 soybean return + $542 corn non-land costs) / $5.50 corn price). This means that corn-after-corn with 168 bushel yield will give the same return as soybeans with 54 bushel yield.

The 168 bushel break-even corn-after-corn yields for northern Illinois is 29 bushels below the 190 bushel projected yield for corn-after-soybeans. This suggests that the break-even yield drag between corn-after-soybeans and corn-after-corn is 29 bushels in northern Illinois. Calculations in other regions indicate:

1. The break-even corn-after-corn yield in central-Illinois with high productivity farmland is 163 bushels per acre, 35 bushels below the 198 projected corn-after-soybean yield.
2. The break-even corn-after-corn yield in central Illinois for farms with low-productivity farmland is 160 bushels, 24 bushels below the 184 bushel projected corn-after-soybean yield.
3. The break-even corn-after-corn yield in southern Illinois is 1437bushels per acre, 24 bushels below the 161 bushel projected yield for corn-after-soybeans.

Obviously these break-evens vary with differing prices, yields, and costs. Farms will have different yields and costs; hence, break-evens vary across farms.

Break-Even Corn-After-Corn Yields for Differing Prices

Projected corn and soybean prices impact break-even corn-after-corn yields. Table 2 shows break-even corn-after-corn yields for differing corn and soybean prices, given costs and yields typical of northern Illinois. Break-even yields decrease as corn price increase. Break-even yields decrease as soybean price decreases.

Historical Break-Even Corn-After-Corn Yields Relative to Soybean Yields

For northern Illinois, the 161 bushel break-even corn-after-corn yield is 3.0 times the 54 bushel per acre projected soybean yields. The 3.0 ratio is low compared to historical ratios. From 2000 to 2010, the corn-to-soybean break-even ratio has averaged 3.3 (see Figure 1), meaning the corn yields had to be 3.3 times higher than soybean yields to break even. This current relatively low ratio suggests that market signals are favoring corn production over soybean production.

Summary

Break-even corn-after-corn yields for 2012 are presented in this paper. These break-evens corn-after-corn yields are between 24 and 35 bushels lower than corn-after-soybean yields. The 2012 break-even corn yields relative to soybean yields are low from a historical perspective. While farmers are questioning whether to continue with as much corn-after-corn, market prices and costs suggest corn is relatively more profitable than soybeans from an historical perspective.