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

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

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

Fertilizer Prices 4 report on Feb. 4, 2011

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 Variable Costs (Average Cropland) Crops 2010 $/acre 2011 $/acre Oct $/acre Jan. % ∆ 10 to 11 % ∆ Oct. to Jan. Continuous Corn %7% Rotation Corn %10% Rotation Soybeans %7% Wheat %11% Double Crop Soybeans %5%

7 Contribution Margins, 2010 – 2011 (Average Cropland) Crops 2010 $/acre 2011 $/acre Oct $/acre Jan % ∆ 10 to 11 Continuous Corn % Rotation Corn % Rotation Soybeans % Wheat % Double-Crop Soybeans %

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

Total Costs Per Bushel Rotation Low YieldAverage YieldHigh Yield $/Bushel Rotation Corn Rotation Beans Overhead costs based on corn–bean rotation on 3000 acre farm.

Returns Above Total Costs Per Acre, Acres & Rotation Low YieldAverage YieldHigh Yield $/Acre acre corn-bean acre corn-bean

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

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

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