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 Yields Relative to Corn Yields

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

6. Central Illinois (High Productivity) Budgets

7. Acres for Different Rotations (½ corn – ½ beans in 2004)
1/2 - 1/ /3 – 1/3
2005
corn after beans % %
corn after corn % %
soybeans % %
2006 and years after
corn after beans % %
corn after corn % %
soybeans % %

8. 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 x $149
corn- after-corn x $144 soybeans

9. 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)

10. Break-even Soybean Yields
Corn Soybean Soybean
Yield Cost Increase Yield * $ $ $
* Soybean yield for ½ - ½ rotation to remain optimal given previous budgets, this slides corn-after-soybean yield and soybean cost increase

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

12. 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