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Wednesday, November 02, 2011

Continuous Corn For 2012:  Strike Out Or Home Run?


Many Cornbelt farmers have had about as much fun as they can stand, planting continuous corn.  Two years of budget busting yields, when they might have made more money rotating beans with corn.  But continuous corn is supposed to generate more revenue, and since that has not happened for two years, you want to know what is going on.  Should you plant continuous corn again next year or order seed beans?

If you are in a quandary about planting continuous corn with a swing and a miss the past two years, there is good reason to fear 2012.  Is a third time a strike out or is the third time the charm?  Let’s take a look at the agronomic and the economic issues to help make your decision for the coming year.

For the agronomy part, the analysis of University of Illinois crop production specialist Emerson Nafziger can help as he wades through the scenarios of 2010 and 2011.

1) The spring of 2010 followed the troublesome fall of 2009 when you did not get a chance for tillage or nitrogen application.  Those were shifted to the spring of 2010, which was also wet.  The soil was cool and wet; it had a lot of surface residue. Rains were heavy, root growth was hampered from compacted soil and Nafziger says it resulted in a poor yield for continuous corn in 2010.

2) The fall of 2010 was different than 2009 because it was dry, with plenty of time for tillage and nitrogen application.  Residue was buried and can’t be blamed.  But wet weather delayed planting in 2011, but when the weather broke and planters returned to the field in a hurry, some cornfields were planted before the soils had adequately dried, and the compaction reversed the fall 2010 tillage.  The 2011 corn looked sickly from the beginning last spring with cool temperatures and heavy rains aggravating the issue.  In ill health, and with restricted root growth from some degree of compaction, the early planted corn with stubby roots fought for moisture after the weather turned dry. 

This fall has been closer to the fall of 2010, and you will have tillage and nitrogen application complete in a timely manner. But there is no way to tell what the spring of 2012 will be like, and if it will hamper continuous corn any more than rotated corn.

That may shift your decision to one of economics.  Even with a 25+/- bushel yield drag for continuous corn over rotated corn, how did the revenue per acre turn out, and are prices high enough to take another chance in 2012 on continuous corn.  For that answer, we’ll visit with University of Illinois farm management specialist Gary Schnitkey for a cost-price analysis

The information you need includes:  soybean returns, corn-after-corn non-land costs, and corn price information.  Your farm information will be different, but here are the steps that you take.  Plug your numbers in where Schnitkey’s examples are:

1) (54 bushel soybean yield x $12.00 soybean price) - $306 non-land costs equal soybean returns of $342 per acre. This soybean return, along with corn-after-corn non-land costs and corn price, are used to find the break-even corn-after-corn yield.

2) For $542 per acre of non-land costs for corn and a $5.50 corn price, the break-even corn-after-corn yield is 161 bushels per acre ($342 soybean return + $542 corn non-land costs) / $5.50 corn price equals 161 bushels.

3) This means that for corn-after-corn to be more profitable than 54 bushel soybean yields, the corn has to yield more than 161 bushels per acre. 

In the example the 161 bushel corn yield was about three times the 54 bushel soybean yield, which Schnitkey says is low for historical ratios.  In the past decade the corn to soybean break-even ratio has average 3.3, which Schnitkey says means corn yields have to be 3.3 times higher than soybean yields to break even.  The relatively low ratio in the example suggests that market signals are favoring corn production over soybean production.

Low yields the past two years for continuous corn have been for different reasons.  Using this fall as a starting point for the 2012 crop may lead many farmers to again trust a continuous corn cropping system, as long as the economics justify it.  Real life example break-even corn-after-corn yields are between 24 and 35 bushels lower than corn-after-soybean yields. The 2012 break-even corn yields relative to soybean yields are low from a historical perspective. While farmers are questioning whether to continue with as much corn-after-corn, market prices and costs suggest corn is relatively more profitable than soybeans from an historical perspective.

Posted by Stu Ellis on 11/02 at 12:00 AM | Permalink

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