Above Trend Yields or Higher Prices Needed to Break-Even in 2018
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Farmers figuring crop budgets for this year will face an uncomfortable reality. In order to break-even on cash rented land, generally speaking, it will require above trend yields, higher prices, or some combination of the two.
2018 is shaping up very much like the last two years says University of Illinois Agricultural Economist Gary Schnitkey. Each of them began with dire price and income outlooks. Higher than average trend yields financially salvaged what were expected to be very poor seasons on highly productive soils in central Illinois. FBFM (Farm Business Farm Management) records show farmers in this area of the state harvested 228-bushel corn and 69-bushel soybeans on average in 2016 and, while the numbers have not yet been fully summarized, project 2017 yields at 221 and 68.
Since 2012 corn and soybean yields in central Illinois have been at or above trend. The weather and management will need to produce another year of above-trend yields in order for cash grain farmers to break even again this year.
University of Illinois’ Gary Schnitkey calculates break even will require a $3.97 average cash corn price with a trend yield of 202 bushels to the acre. If the average yield is 229, then the average breakeven cash price would be $3.50. The figures for soybean are $9.85 at the 61-bushel trend and $8.84 with a 68-bushel yield.