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

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
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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
Report on Feb. 4, 2011
3
Fertilizer Prices
report on Feb. 4, 2011
4
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
Variable Costs
(Average Cropland)
Crops
Continuous Corn
Rotation Corn
Rotation Soybeans
Wheat
Double Crop
Soybeans
2010 2011 2011
$/acre $/acre $/acre
Oct.
Jan.
355
387
415
342
361
397
183
149
187
163
200
181
156
165
174
%∆
10 to
11
%∆
Oct. to
Jan.
17%
16%
9%
21%
12%
7%
10%
7%
11%
5%
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Contribution Margins, 2010 – 2011
(Average Cropland)
Crops
2010
2011
2011
%∆
$/acre $/acre $/acre 10 to 11
Oct.
Jan
Continuous Corn
Rotation Corn
271
326
321
386
422
495
55.7%
51.8%
Rotation Soybeans
Wheat
Double-Crop Soybeans
287
194
122
374
321
167
443
394
206
54.4%
203.1%
68.9%
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Contribution Margin by Rotation,
2011 – Jan.1
Crops in Rotation
Corn – Wheat/DC Beans
Corn – Soybeans
Corn – Soybean – Wheat
Soybean – Corn – Corn
Corn – Corn
1Sum
Low
Yield
Average
Yield
High
Yield
($/acre)
($/acre)
($/acre)
417
341
341
325
293
547
469
444
453
422
708
609
567
596
572
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2011 contribution margins for individual crops, then divide by years in rotation.
Total Costs Per Bushel
2009 - 20111
Rotation
Low Yield
Average Yield
High Yield
$/Bushel
09
10
11
$/Bushel
09
10
11
$/Bushel
09
10
11
Rotation
4.87
4.30
Corn
Rotation
11.13 10.56
Beans
1Overhead
4.67
4.37
3.89
4.19
3.90
3.54
3.80
11.05
9.96
9.40
9.73
9.17
8.75
9.03
costs based on corn–bean rotation on 3000 acre farm.
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Returns Above Total Costs
Per Acre, 2009 - 2011
Acres &
Rotation
Low Yield
Average Yield
High Yield
$/Acre
$/Acre
$/Acre
09
10
11
08
09
11
08
09
11
1000-acre
corn-bean
-122
-43
81
162
19
182
258
77
279
3000-acre
corn-bean
-85
-8
115 196
50
212
297
114
315
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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
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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
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– Most producers will cover all costs
Questions, Comments
Purdue University is an Equal Opportunity/Equal Access institution.