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 May 25, 2023
by Gary Schnitkey and Nick Paulson, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf. Department of Agricultural, Environmental and Development Economics, Ohio State University We update the 2023 Crop Budgets to reflect declining corn and soybean bids for fall delivery. At currently projected price levels -- $5.00 per bushel for corn and $12.30 for soybeans -- farmer returns will be negative on cash-rented farmland. If prices stay at current levels, or continue to move lower, adjustments will be needed for 2024 production to achieve positive returns. Updated Budgets Initial 2023 Illinois Crop Budgets were released on August 2, 2022 (see farmdoc daily, August 2, 2022). As is our custom, those budgets are revised several times through the planning season. The most recent revision was posted on December 6, 2022. Compared to the previous version, today's revision contains several significant changes: Corn and soybean prices are revised downward. The budgeted corn price was $5.50 in the December 6 version and is now $5.00. The budgeted soybean price was set at $13.30 in the December 6 version and is now $12.30. Costs are also revised to reflect updated information. In general, our estimates of 2023 costs have increased since the earlier budget releases. Updated 2023 projections are contained in two publications in the Management section of farmdoc. First, the 2023 Illinois 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). Projected Corn and Soybean Prices Expectations of 2023 fall delivery prices have fallen in recent months. For example, settlement prices of the December 2023 Chicago Mercantile Exchange (CME) corn contract during the month of February resulted in a $5.91 per bushel projected price for corn. As of mid-May, it is trading at $5.10. Similarly, the November CME soybean contract declined from $13.76 per bushel in February down to $12 per bushel in mid-May. Several factors contributed to these price declines. Markets have seemingly adjusted to the ongoing Ukraine-Russia conflict. While Argentina has poor crop prospects due to severe drought conditions, Brazil is projected to have good production levels, with 2022/23 soybean production at record levels (farmdoc daily, March 31, 2023). In the U.S., spring planting has gotten off to a fast start, leading to expectations of trend yields. All of those factors contribute to supply increases while demand remains stable, leading to the recent price declines. On May 8, the Office of the Chief Economist of the U.S. Department of Agriculture released its monthly World Agricultural Supply and Demand Estimates (WASDE) report. In this report, the first WASDE estimates of the 2023/24 supply and use sheets were released, which include estimates of the 2023/24 market year average (MYA) prices. For corn, the 2023 MYA price is estimated at $4.80 per bushel, lower than the 2021 and 2022 MYA prices of $5.95 and $6.75, respectively (see Figure 1). For soybeans, the 2023 MYA price is projected at $12.10 per bushel, down from 2021 and 2022 levels of $13.60 and $14.35, respectively. To read the entire report click here.
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