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PLANT CORN OR BEANS? Soybeans have been more profitable than corn for farmers in corn-soybean rotations over the past three years.

Relative profitability of corn vs. soybeans in Indiana

Farm Business: Which crop is most profitable can shift over time.

From 2007 to 2013, corn production was relatively more profitable than soybean production on average-productivity land in Indiana. Specifically, the budgeted contribution margin for rotation corn on average land was, on average, $38 per acre higher than the contribution margin for rotation soybeans on average land.   

The difference in contribution margin between corn and soybeans from 2007 to 2013 ranged from negative $21 per acre in 2008 to $87 per acre in 2007.

Shift in profitability
Since 2014, soybeans on average-productivity land have been relatively more profitable than rotation corn.  The average difference in the budgeted contribution margin for corn and soybeans from 2014 to 2017 is $85 per acre. 

The difference in contribution margin during this period has ranged from $51 per acre in 2015 to $115 in 2016. As of mid-February of this year, the budgeted 2017 contribution margin for soybeans was $74 per acre higher than the contribution for rotation corn.

Using cost and yield differences, breakeven corn price levels for corn and soybeans to have the same profitability can be computed. 

Let's start by examining breakeven levels for ground that was planted to corn in 2016. With a soybean price of $10 per bushel, corn prices in the fall of 2017 would need to be above $4.63 per bushel on low-productivity land, above $4.53 per bushel on average-productivity land, and above $4.36 per bushel on high-productivity land for continuous corn to compare favorably to rotation soybeans. Assuming a fall soybean price of $9.50, the breakeven levels would be $4.47, $4.37 and $4.20, respectively, on low-, average- and high-productivity land.

Rotation comparison
Now let’s examine breakeven levels for ground that was planted to soybeans in 2016. With a soybean price of $10 per bushel, the breakeven levels for corn are $4.24 per bushel on low-productivity land, $4.16 per bushel on average-productivity land and $4.01 per bushel on high-productivity land. Corn prices would need to be above these levels to favor corn. 

If soybean price is $9.50 this fall, corn prices would need to be above $4.08 on low-productivity land, $4.01 on average-productivity land and $3.86 on high-productivity land for corn to compare favorably to soybeans.  

The first point here is to recognize that the difference in budgeted contribution margin between corn and soybeans since 2007 has shifted over time. Second, understand that you can determine the level of corn prices needed to compare favorably with soybeans on land that was in corn or soybeans in 2016. More information pertaining to cost items for corn, soybeans and wheat can be found on the website for the Center for Commercial Agriculture.

Langemeier is with Purdue University’s Center for Commercial Agriculture. He writes from West Lafayette.

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