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SOYBEAN YIELDS: A STRATEGIC ISSUE?

SOYBEAN YIELDS: A STRATEGIC ISSUE?. Gary Schnitkey Agricultural Economist. In recent years, corn has become more profitable than soybeans. Main reason: Soybeans Yields Relative to Corn Yields. Rolling 5-Year Average Corn-Soybean Yield Ratios, Illinois.

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SOYBEAN YIELDS: A STRATEGIC ISSUE?

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  1. SOYBEAN YIELDS: A STRATEGIC ISSUE? Gary Schnitkey Agricultural Economist

  2. In recent years, corn has become more profitable than soybeans

  3. Main reason: Soybeans YieldsRelative to Corn Yields

  4. Rolling 5-Year Average Corn-Soybean Yield Ratios, Illinois

  5. Central Illinois (High Productivity) Budgets

  6. Acres for Different Rotations(½ corn – ½ beans in 2004) --------- Rotation -------- 1/2 - 1/2 2/3 – 1/3 2005 corn after beans 50% 50% corn after corn 0% 17% soybeans 50% 33% 2006 and years after corn after beans 50% 33% corn after corn 0% 33% soybeans 50% 33%

  7. Economic Returns • In 2005, economical to grow corn-after-corn versus soybeans • In 2006, 1/2 corn – 1/2 soybeans higher 1/2 corn – 1/2 beans = $171 = .5 x $197 corn-after-beans + .5 x $144 beans 2/3 corn – 1/3 beans = $163 = .33 x $197 corn-after-beans + .33 x $149 corn- after-corn + .33 x $144 soybeans

  8. Sensitivity Analysis * % Corn-After- Soybean Return Corn Yield Loss Decrease (per acre) 0% -$34 5% $7 10% $44 15% $83 * Soybean return decrease for more corn than in ½ corn – ½ soybean rotation to be profitable (i.e., long-run)

  9. Break-even Soybean Yields Corn Soybean Soybean Yield Cost Increase Yield * 173 0 41 173 $15 44 173 $30 47 173 $50 50 180 0 43 180 30 49 * Soybean yield for ½ - ½ rotation to remain optimal given previous budgets, this slides corn-after-soybean yield and soybean cost increase

  10. Profitability Differences • Evidence that some farms have higher corn enterprise profits than other farms and vice versa • See fefo 05-01

  11. Summary • Some concern that soybean profits have not kept up with corn profits, largely due to yields. Soybean rust plays into concerns • Some farms may be looking at decreasing soybean acres, not uniform across farms or regions

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