WEST LAFAYETTE, Ind. — Eeny, meeny, miney, mo. Corn or soybeans — which way to go?
Purdue University agricultural experts recommend farmers look at differences in relative price, input costs and yield experience before they plant crops this spring.
First, farmers need to consider the relative price difference in market prices between corn and soybeans, and what those might be in the fall, said Bruce Erickson, director of Purdue’s Cropping Systems Management.
Second is the difference in input costs between the two crops and third is the farmer’s individual yield experience with corn and soybeans.
“Some farmers have better luck with one crop than another,” Erickson said. “It just depends on the farm, tillage practices and crop management practices as to how they get along.”
Returns can vary
In Indiana, for example, expected returns on average quality land are not much different between corn and soybeans with new crop corn in the high $3 per bushel range and new crop soybeans about $8.50 per bushel, according to Purdue Extension agricultural economist Chris Hurt.
The return for corn and soybeans is very close right now, but those returns favored soybeans by $20 to $50 per acre for much of the winter, he said.
Still deciding
Midwest farmers have been slow to make their final planting decisions this winter, Hurt said.
Not only have crop prices been changing rapidly, but so have some of the input costs such as fuel and fertilizer, he explained. While fuel prices moved downward rapidly, fertilizer price adjustments have not been consistent in all areas, so what a farmer is paying for fertilizer could influence their incentives to plant corn or soybeans.
“If farmers have been able to line up reasonably priced nitrogen supplies this year, that may cause them to favor planting more corn,” Erickson explained. “If their fertilizer costs are high they are likely to plant more soybeans.”
Crunching numbers
Erickson and a Purdue ag econ team compared various scenarios figuring the expected returns based on the purchase price of fertilizer, other input costs and the market price for corn and beans.
“There was a $40 per acre difference in how corn returns compared to soybeans just based on the range of fertilizer prices we were hearing about,” Erickson said. “For example, anhydrous ammonia ranging anywhere from $500 a ton to $900 a ton.”
On your farm. After taking into account crop price differences and the price differences between input costs, a farmer also should look at their personal yield experience, Erickson said.
The national yield average for corn in 2008 was about 154 bushels per acre and close to 40 bushels per acre for soybeans, according to the USDA’s National Ag Statistics Service. “
This means the typical soybean field was yielding 25 percent of the typical corn field,” Erickson said. “This number is a little bit lower than in recent years — it typically hovers around 30 percent.”
A farmer who can raise 50-bushel soybeans but 150-bushel corn is having relatively better luck with soybeans compared to corn when looking at the national yield averages, Erickson explained.
Higher bean yields relative to corn would tend to provide greater incentives to plant soybeans.
* * *
Read more about the implications of crop selection (.pdf document) and management given the changing input costs and grain prices.
Also, more information about planting intentions will be released March 31 in USDA’s Prospective Plantings Report. Hurt and Corinne Alexander, a fellow Purdue ag economist, will report on and offer marketing strategies that evening from 7-9 p.m. via Web conferencing. Information about the event is available at http://www.agriculture.purdue.edu/aganswers/story.asp?storyID=5263.
