Midwestern farmers are likely to see “very low returns” from corn and soybean crops this year, said economist Gary Schnitkey of the University of Illinois as spring planting gets under way. When overhead costs such as seed, fertilizer, equipment and insurance are counted, returns per acre could range from $106 to $176 an acre, says Schnitkey, compared to land rental costs that are projected at $220 to $260 per acre.
“In recent months, not much has changed in 2019 outlook and very low returns could occur. Maintaining liquidity in this time period is crucial,” wrote Schnitkey at the farmdoc daily blog. Thrifty use of fertilizer—staying close to the application rates recommended by university researchers—”seems prudent.” Fertilizer is the largest expense in corn production, running at $150-$160 an acre. Schnitkey said cash flow would improve if growers avoid large capital purchases.
The USDA’s Prospective Plantings report, based on a survey of more than 80,000 operators, estimated corn plantings of 92.8 million acres this year, up 4 percent from 2018, while soybeans fall by 5 percent to 84.6 million acres. In 2018, soybeans edged corn by 517,000 acres to be the most widely planted U.S. crop. The Sino-U.S. trade war reduced the luster of soybeans.