When Purdue University Extension ag economists updated crop budgets in early March, they included projections through 2016. While gazing into the crystal ball can be dangerous, if they're right, a more stable period of costs and prices could be ahead for crop farmers. At the same time, feed prices would moderate for livestock producers so that they might show profits again.
"We included all the costs in these budgets, including cash rent, return to labor, depreciation and family living expenses," Extension Economist Chris Hurt says. "Many people don't do that but sooner or later you have to pay for the machinery. Our projections indicate that through 2016, you should be able to return a small profit above each year for corn. The soybean budget might be negative with all costs included by 2014, but only by a small amount.
The projected costs of production per bushel of corn for 2013-2016, respectively, are $5.08, $5.13, $5.07 and $5.02. Average price of corn during the period is estimated at $5.47, $5.38, $5.36 and $5.18, respectively. Hypothetical net return per acre is $88, $42, $48 and $28, respectively.
For soybeans, projected cost of production per bushel for 2013-2016 are $12.44, $12.58, $12.48 and $12.36. Prices expected per bushel are $12.60, $12.25, $11.85 and $11.60. Net return is $21 per acre in 2013, then negative returns, $17, $32 and $39, in 2014-2016.
The cash rent figures used in these calculations were based off of state averages determined in Purdue surveys. For 2013, the cash rent was $28 per acre, up from $208 in 2012. For 2014, 15 and 16 cash rents were held steady at $222 per acre.
The budget also assumed trend yields for both corn and soybeans. This was assumed to be average land. The average yields for corn for 2013-1016 per acre, respectively, were 165, 167, 169 and 171 bushels per acre. The yields for soybeans were 49.5, 50, 50.5 and 51 bushels per acre.