May 23, 2002
Economist: Numbers say it is time to switch from corn to soybeans
WEST LAFAYETTE, Ind. Since Midwest farmers have watched the optimum time come and go for planting corn, it may be time to trade in the corn seed for soybeans, said a Purdue University agricultural economist.
"By the time we get out to the end of May or the first of June, our estimates show that on average-quality soils here in Indiana, we could have $15 to $20 an acre better returns from planting beans than corn," said Chris Hurt, Purdue Extension agricultural economist. "The premium for planting soybeans over corn continues to grow, reaching near $35 per acre by June 10. However, producers have to look at their specific conditions to make those decisions."
Several factors play into a producer's situation, such as expected yields for planting date, expected fall prices and respective costs. Based on several of these factors, Hurt said the break-even date for planting corn was around May 17.
In the analysis, corn yields are about three times that of soybean yields; however, after May 10, corn yields are projected to decrease by 1 percent per day that planting is delayed. As for soybeans, yields are estimated to fall 0.5 percent per day from May 21 to June 10 and then 1 percent per day for each day after June 11, Hurt said.
The last wet spring in Indiana was 1996 when farmers shifted 300,000 acres from corn to soybeans, and it looks as though producers may shift 300,000 to 400,000 acres this year. Hurt said a major issue with so many acres of soybeans is the potential yield-reducing impacts of planting more beans on land that was planted to beans last year.
"For our analysis, we have assumed there would be a 10 percent yield reduction for acres that went beans on beans this year, and if you go heavy on beans in 2002, you also will have some beans-on-bean ground again in 2003," Hurt said. "Therefore, we have assumed a 10 percent yield reduction on those beans-on-beans acres in 2002, as well as 2003, and assigned that as a cost back to soybeans this year."
Hurt said in the analysis, he assumes prices are going to be near the loan this fall. New crop corn prices would be about $2.02, while soybeans are estimated to be around $5.12 on average across the state. One incentive for planting corn, despite lower yield potential, that producers could see in the next couple of weeks is a corn price rally, he said.
"There is still time to plant corn, but our evaluation for Indiana given that new crop corn prices are around $2 say there is not enough economic incentive at this point to continue planting corn," Hurt said. "If we are continuously delayed, the corn market needs to provide more incentive to encourage farmers to plant corn with stronger prices."
Hurt also said that Purdue Extension agronomists are particularly concerned about diseases, weed problems and insect infestation that can come from not having a crop rotation for several years.
"Disrupting normal rotations can have serious consequences for all farmers, and they want to carefully evaluate the economics of the shift to soybeans on their farms," Hurt said. "But economic returns may be even more critical, and the time has arrived to at least consider shifting to soybeans."
At the beginning of this week, close to 5.2 million acres of corn and 5.2 million acres of soybeans remained unplanted in Indiana. Before the planting season started, Indiana farmers were projected to plant 6 million acres to corn and 5.4 million acres to soybeans, Hurt said.
Writer: Jennifer Doup, (765) 494-6682, email@example.com
Sources: Chris Hurt, (765) 494-4273, firstname.lastname@example.org
Alan Miller, (765) 494-4203, email@example.com
Craig Dobbins, (765) 494-9041, firstname.lastname@example.org
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