So, what is the outlook for this year’s crops? Until recently, corn prices were at or below $3.00 and soybean prices were at or below $8.00. But with recent good exports, purchases from China and a shrinking crop from earlier USDA predictions, corn and soybeans prices have rallied to above $3.15 and soybeans above $9.30. With projected average production costs in 2020 of $743 per for corn and $483 per acre for soybeans, how does this compare to projected income?
Using high yields of 250 bushels per acre on corn and 60 bushels for soybeans at current prices, gross income would be $787.50 for corn and $558, which would both cover the production costs listed above. Using lower yields of 225 bushels for corn and 55 bushels for soybeans, gross income would be $708.75 for corn and $511.50 for soybeans. Now only soybeans cover the costs. Using historical average yields of 190 bushels for corn and 50 bushels for soybeans, both crops would be below the above-listed production costs.
Using the total production costs divided by price yields necessary to cover average production costs, a farmer would need yields of 236 bushels per acre for corn and 52 bushels per acre for soybeans. Overall yields for Minnesota will vary widely and so will gross income. This year, 46 counties are estimated to receive a soybean farm bill ARC County payment averaging $26 per acre with a high of $51 and a low of $1. For corn, only 12 counties are estimated to receive an ARC County corn payment averaging $52 with a high of $70 and a low of $8 per acre. Most of these counties are in southern and southwestern Minnesota. These numbers are from a spreadsheet available at the University of Illinois Extension website. So only these counties would receive any of these payments. For wheat, near-maximum ARC-CO payments are likely for many areas.
Any farmer in Minnesota could have chosen to take PLC coverage instead of ARC County. This program pays if the marketing year average prices are below the reference price of $3.70 for corn, and with projecting MYA price of $3.60 so PLC would pay 10 cents per bushel. For soybeans, no PLC payments are likely at a MYA price of $8.55/Bu. when the reference price is $8.40/Bu. For wheat, a PLC payment of $.92 per bushel is likely with a $5.50 reference price and a $4.58 per bushel MYA price. The exact number of farmers choosing PLC is not available.
Farmers have been able to access other government programs this year to increase incomes as well. The outlook for 2020 is good, with improving prices and projected higher yields.
For more information, contact:
Dave Bau, Extension Educator, Ag Business Management, U of M Extension Regional Office, Worthington, 507-372-3900 ext 3906, bauxx003@umn.edu
