September 23, 2002
CROP ROTATIONS IN 2003: MORE WHEAT AND CORN?
During 2002, market prices for corn, soybeans, and wheat have increased
dramatically potentially changing relative profits of crops. This
paper examines profits for corn, soybeans and wheat using estimated
prices for 2003 crops. Calculations show that wheat and corn is
more profitable than soybeans. The remainder of this paper details
these changes in profitability. Farmers should revisit crop rotation
decisions. Planting more corn and more wheat while planting fewer
soybeans may be economically advisable. Farmers, however, should
not totally rely on averages shown in this paper. Farmers should
use their own yields and costs in making crop rotation choices.
Costs and Yields for Corn, Soybeans, and Wheat
Table 1 shows yields and direct costs for corn, soybeans and wheat
grown in Illinois taken for 2002
Illinois Crop Budgets. Panel A shows yields and costs for
high productivity farmland typical of northern and central Illinois
while Panel B shows yields and costs for low productivity farmland
more typical of southern Illinois. To grow more corn, many Illinois
farmers would have to grow corn on land that grew corn in the previous
year. Hence, returns are estimated for "corn following soybeans"
and "corn following corn." Panel B also includes yields
and direct costs for double crop soybeans.
Prices and Revenue less Direct Costs
These yields and costs are used to calculate revenue less direct
costs under two price scenarios:
- The 2001 loan rate scenario has prices of $1.95 for corn, $5.45
for soybeans, and $2.60 for wheat. These prices reflect average,
Illinois loan rates under the 1996 Farm Bill that were good planning
prices from years between 1999 through 2002.
- The 2003 contract price scenario represents estimated harvest-time
prices for 2003 crops. A crop's price equals the respective harvest
time futures contract price (December for corn, November for soybeans,
and July for wheat) minus the usual basis. Estimates are made
using future prices as of September 2002. This scenario use prices
of $2.30 for corn, $5.15 for soybeans, and $3.30 for wheat.
Revenue less direct costs, hereafter referred to as return, for
these price scenarios are shown in Table 2. For high productivity
farmland, soybeans have the highest return under 2001 loan rate
prices. Soybeans have a $159 per acre return compared to a $129
return for corn following soybean and a $108 return for wheat. Relative
returns under 2003 prices change dramatically. Corn following soybeans
has the highest per acre return ($185) followed by wheat ($161).
The $144 return for soybeans is the lowest. The soybean return is
below the corn following corn return of $157. This suggests that
planting more corn and more wheat and less soybeans may be an economical
For low productivity farmland, the $137 return for wheat with double
crop soybeans is the highest under 2001 loan rate prices. Soybean
return of $109 follows wheat and double crop soybeans. Under 2003
contract prices, wheat and double crop soybeans again has the highest
return. Wheat and double crop soybeans has a $173 per acre return,
followed by corn following soybeans ($151), corn following corn
($123), wheat ($121), and soybean ($97). Under 2003 contract prices,
soybeans are the least profitable alternative.
In this paper we use yields and costs contained in the 2002 Illinois
Crop Budgets to examine the profits of corn, soybeans and wheat.
Given current anticipated price for 2003 crops, returns for soybeans
are below those for corn and wheat. The above comparisons use average
yields. Farmers should use their own yields in making these comparisons.
Issued by: Gary Schnitkey
Lattz, Department of Agricultural and Consumer Economics