Most land rental rates in southern and western Minnesota increased 40-50% or more from 2010 to 2013, according to average farm business management land rental data compiled by the University of Minnesota. Average rental rates for 2014 were as high as, or even higher than, 2013 land rental rates in most situations across the region. Farm operators and landlords are now beginning the process of negotiating land rental contracts for the 2015 crop year, and are trying to arrive at equitable rental rates.
The commodity prices for corn and soybeans have been dropping rapidly in recent months, due to the expected record U.S. corn and soybean production in 2014, and the associated large increases in the U.S. grain supplies. USDA recently released the final national market year average (MYA) crop prices for the 2013-2014 year, which were $4.45 per bushel for corn and $13.00 per bushel for soybeans. The MYA average prices are calculated from Sept. 1 in the year of harvest, until August 31 the following year. The MYA prices in recent years for corn were $6.89/bu. in 2012-13, $6.22/bu. in 2011-12, and $5.18/bu. in 2010-11. The MYA soybean prices were $14.40/bu. in 2012-13, $12.50/bu. in 2011-12, and $11.30/bu. in 2010-11. USDA is currently estimating the 2014-15 MYA average prices near $3.50/bu. for corn and $10.00/bu. for soybeans.
Current cash corn prices are below $3.00 per bushel at most locations in the Upper Midwest, while cash soybean prices are below $9.00 per bushel. Forward pricing opportunities for fall 2015 for next year’s corn and soybean crop are only slightly higher than the current cash grain prices. Many farm operators could face a substantial loss per acre at the current projected commodity prices for corn and soybeans in 2015, if the 2015 land rental rates are not adjusted to lower levels. Crop input costs for seed, fertilizer, chemicals, fuel and crop drying are not likely to decline significantly for the 2015 crop year, according to most farm management experts.
Based on southern Minnesota farm business management (FBM) records, the average total direct costs in 2013 for seed, fertilizer, chemicals, fuel, etc., excluding land rents, on cash rental corn acres amounted to approximately $517 per acre. Fertilizer costs, and some other expenses, declined slightly for 2014; however average direct expenses for corn are probably still in a range of $475-$500 per acre for many farm operators. The average direct expenses in 2013 for soybeans in Southern Minnesota, excluding land rent, were approximately $222 per acre. Average soybean direct expenses for 2014 are likely to be similar to 2013 expense levels. In addition, the 2013 FBM records showed an average of $116 per acre on cash rented corn acres, and $77 per acre for soybeans, for costs of farm machinery, hired labor, property insurance and other overhead expenses.