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Dec. 8, 2022
by Gary Schnitkey, Nick Paulson, and Jim Baltz, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics, Ohio State University Illinois crop budgets for 2023 have been revised from their initial release in August (farmdoc daily, August 2, 2022). Corn prices have been increased from $5.30 per bushel in August to $5.60. Soybean prices increase from $12.70 to $13.40. We also adjusted some costs. Overall, increases in projected prices raised estimates of 2023 profitability. However, costs are at all-time highs. As is always the case, incomes can vary from projections made at this time of the year. Updated Budgets Updated 2023 projections are contained in two publications in the Management section of farmdoc. First, the 2023 Crop Budgets give corn-after-corn, corn-after-soybeans, soybeans-after-corn, soybeans-after-soybeans, and wheat budgets for four regions: northern Illinois, central Illinois with high-productivity farmland, central Illinois with low-productivity farmland, and southern Illinois. A double-crop soybeans budget also is given for all regions except northern Illinois. The second publication - Revenue and Costs for Illinois Grain Crops - shows yearly returns and costs of producing corn, soybeans, wheat, and double-crop soybeans by region of Illinois. These budgets represent average returns regardless of the preceding crop and are summarized from farms enrolled in Illinois Farm Business Farm Management (FBFM). Projections are based on the following assumptions: *Projected prices are $5.60 per bushel for corn and $13.40 for soybeans, near current 2023 fall bids. From the August release, we have increased the corn price by $.30 per bushel from $5.30 to $5.60 per bushel. Projected soybean price is increased by $.70 per bushel for soybeans from $12.70 per bushel to $13.40 per bushel. *Yields are set at trend levels for 2023, with trends established through historical yields. Over time, corn yields have increased an average of 2.0 bushels per acre each year, while soybean yields have increased by .5 bushels per acre. *Non-land costs are based on historical expenses on Illinois farms, updated based on current and expected input price levels. *Land costs are based on projected cash rents and are set at average levels *Return projections favor soybeans, but not by very large margins. In northern Illinois, projected farmer returns for corn are $47 per acre, $5 lower than the projected $51 per acre return for soybeans (see Table 1). Farmer Returns Farmer returns represent the amount remaining for the farmer after paying all financial costs, with a land charge at the average projected cash rent. In central Illinois, for high-productivity farmland, the 2023 farmer return is $72 per acre for corn and $92 per acre for soybeans. Figure 1 shows a history of farmer returns for central Illinois. From 2004 to 2022, farmer returns averaged $140 per acre for corn and $119 per acre for soybeans. The 2023 projected returns are below those 2004-2022 averages and considerably below returns from 2021 and 2022. Still, projected 2023 returns are above the low-income years from 2014 to 2019, when farmer returns averaged -$3 for corn and $77 for soybeans. Note that the average returns for soybeans during this period is highly influenced by the large Market Facilitation Program payments received for the 2018 soybean crop. To view the entire report click here. Tweet |
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