1. January 2011 Purdue Crop Cost & Return Guide Craig Dobbins, Alan Miller, Bruce Erickson Purdue University is an Equal Opportunity/Equal Access institution.

2. Changes from Oct 2010 Corn price up $0.74/bu. Bean price up $1.52/bu. Wheat price up $1.21/bu. Costs up for fertilizer & diesel fuel Costs down for pesticides & dryer fuel Per acre costs higher Contribution margins higher 2

3. Diesel Fuel Prices Climbing 3 Report on Feb. 4, 2011

4. Fertilizer Prices 4 report on Feb. 4, 2011

5. Management Implications Under current market prices –Where possible, wheat & double-crop beans are the best alternative $600 per acre contribution margin –Corn – soybean & corn – soybean – wheat rotations have similar contribution margins on lower yield land –Rotation corn & soybeans favored over wheat on average & high yield land –Corn – soybean rotation better than continuous corn –Increased unit costs –Most producers will cover all costs 5

6. 6 Variable Costs (Average Cropland) Crops 2010 $/acre 2011 $/acre Oct. 2011 $/acre Jan. % ∆ 10 to 11 % ∆ Oct. to Jan. Continuous Corn35538741517%7% Rotation Corn34236139716%10% Rotation Soybeans1831872009%7% Wheat14916318121%11% Double Crop Soybeans 15616517412%5%

7. 7 Contribution Margins, 2010 – 2011 (Average Cropland) Crops 2010 $/acre 2011 $/acre Oct. 2011 $/acre Jan % ∆ 10 to 11 Continuous Corn27132142255.7% Rotation Corn32638649551.8% Rotation Soybeans28737444354.4% Wheat194321394203.1% Double-Crop Soybeans12216720668.9%

8. Contribution Margin by Rotation, 2011 – Jan. 1 Crops in Rotation Low Yield ($/acre) Average Yield ($/acre) High Yield ($/acre) Corn – Wheat/DC Beans417547708 Corn – Soybeans341469609 Corn – Soybean – Wheat341444567 Soybean – Corn – Corn325453596 Corn – Corn293422572 1 Sum 2011 contribution margins for individual crops, then divide by years in rotation. 8

9. Total Costs Per Bushel 2009 - 2011 1 Rotation Low YieldAverage YieldHigh Yield $/Bushel 091011091011091011 Rotation Corn 4.874.304.674.373.894.193.903.543.80 Rotation Beans 11.1310.5611.059.969.409.739.178.759.03 12 1 Overhead costs based on corn–bean rotation on 3000 acre farm.

10. Returns Above Total Costs Per Acre, 2009 - 2011 Acres & Rotation Low YieldAverage YieldHigh Yield $/Acre 091011080911080911 1000-acre corn-bean -122-43811621918225877279 3000-acre corn-bean -85-811519650212297114315 10

11. Changes from October 2010 Corn, soybean, & wheat price up sharply from October 2010 Diesel & fertilizer prices increasing Propane & some herbicide prices decline Per bushel costs increase Contribution margins rocket upward 11

12. Management Implications Under current market prices –Wheat & double crop beans are the best alternative where possible –Rotation corn & soybeans or corn, soybeans, & wheat provide similar return on lower yield land –Rotation corn & soybeans favored on average & high quality land –Rotation corn & soybeans still better relative to continuous corn –Increased unit costs –Most producers will cover all costs 12

13. Questions, Comments Purdue University is an Equal Opportunity/Equal Access institution.