All Corn in 2007?

URBANA - Why not plant all corn in 2007, asks a University of Illinois Extension farm financial management specialist.

"Planting all corn in 2007 likely will be more profitable than planting soybeans on farms with high-productivity farmland," said Gary Schnitkey. "Revenue insurance at high coverage levels can be used to lock-in profits, thereby reducing risks from planting all corn."

Schnitkey based the conclusion on his study, "Why Not All Corn?" (http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_03/fefo07_03.html) available on Extension's farmdoc website.

"Differences in corn and soybean yields across farms will impact the advisability of planting all corn."

Schnitkey's study used Chicago Board of Trade (CBOT) futures contracts, adjusted by basis. These indicate that reasonable 2007 projected prices are $3.80 per bushel for corn and $8 per bushel for soybeans. These prices were used to project corn-after-corn and soybeans returns. Costs and yields were taken from U of I budgets for central Illinois, high-productivity farmland.

"These budgets have a corn-after-corn yield of 170 bushels per acre, a soybean yield of 55 bushels per acre, and $25 per acre of direct payments," he noted. "Total non-land costs are $338 per acre for corn and $249 per acre for soybeans. Costs include crop insurance premiums of $32 for corn and $18 for soybeans, representing the costs of a Crop Revenue Coverage (CRC) policy at an 85 percent coverage level."

Using these budgets, operator and farmland return is $338 per acre for corn and $249 per acre for soybeans.

"These returns are above average," Schnitkey said. "From 1995 through 2005, operator and farmland return averaged $182 per acre across all crops. Hence, the corn-after-corn return is $156 above average and the soybean return is $67 above average.

"The difference between the corn and soybean returns also is very large. Corn return minus soybean return is $89 per acre. Between 2001 and 2005, the difference in profitability between corn and soybeans averaged $20 per acre. Hence, the $89 per acre estimate is $66 above average."

Schnitkey noted that this $89 difference in profitability can have large impacts on profitability across farms planting various mixtures of corn and soybeans.

There are risks involved in opting for the all-corn strategy.

"Planting all corn may result in lower returns than planting soybeans under certain price and yield scenarios," he said. "Scenarios that resulted in higher soybean prices were examined and can be reviewed in the report online.

"Holding all other factors constant, situations where soybean returns exceeded corn returns include: soybean prices exceed $9.61 per bushel; soybean yields are above 66 bushels per acre; corn yields are below 146 bushes per acre; and corn prices are below $3.27 per bushel."

Planting all corn also raises some operational concerns.

"Planting will have to occur in a shorter time window and yield losses may occur if planting does not occur in this window," Schnitkey said. "Harvest may be more complicated. On many farms, harvesting corn is slower than harvesting soybeans. There is a possibility that planting more corn will complicate and lengthen the harvest season. In years with adverse weather, lengthening the harvest could result in yield losses.

"Production risks are increased. Since only one crop is planted, any production problems related to diseases or pests have a larger chance of impacting all acres."

Schnitkey added that there also may be concerns with the all-corn strategy in future years. Planting all corn in 2007 means that there will be no possibility of rotating corn onto land that was previously planted to soybeans in 2008.

"Generally, corn-after-soybeans is more profitable than corn-after-corn," he said. "The decision to plant all corn in 2007 could lower profits in 2008."

A Microsoft Excel spreadsheet entitled "Corn-Soybean Rotation Tool" is available in the FAST section (http://www.farmdoc.uiuc.edu/pubs/FASTtool.asp?category=farm) of farmdoc, he noted.

"An individual can use this spreadsheet to evaluate the profitability of specific situations," he said.

Soybean Rust Management 2007

Soybean rust made it to Illinois in October of 2006, but fortunately, its arrival was too late to cause damage to the state's soybean crop. Will soybean rust appear in Illinois again in 2007, and if it does appear, what are major concerns for soybean producers and agri-business professionals?

To help prepare soybean producers, crop advisors and other agri-business professionals for scouting, sampling, detection and management of soybean rust for the 2007 growing season, University of Illinois Extension has planned a distance education program on March 14, 2007 hosted by many Extension offices across the state. The program will be held from 8:30 am to noon at the Logan County Extension Office. Registration for the program begins at 8:30 a.m.

"Soybean producers, crop advisors and other agri-business professionals will hear the most current information on the biology and monitoring for soybean rust, scouting and detection of soybean rust and management strategies in the 2007 soybean crop" says David Feltes, University of Illinois Extension Educator, IPM.

Spore trapping, prediction modeling, fungicide efficacy, in-field scouting and fungicide application are just some of the many topics that will be discussed by Extension, USDA, and University personnel from Illinois and other states.

For more information and to register for the program, contact the Logan County Extension office, 217-732-8289, or email fultonj@uiuc.edu . The registration deadline is the day prior to the session, and the cost to attend the program is $5 per person and is payable at the door. Continuing education units for certified crop advisors have been applied for.