EAST PEORIA, Ill.— Current farmer return expectations are negative for both corn and soybeans across all regions for 2024 for cash rented land at average cash rent levels, suggesting cost adjustments will be needed in 2024 and beyond. This is the conclusion drawn by University of Illinois farm economists and shared by Nick Paulson at the 2024 Farm Economics Summit, held December 10 at the Par-A-Dice Casino Hotel in East Peoria.

Paulson noted that Illinois crop budgets for 2024 had been revised from their initial release in August. The main revision in the budgets, the economist explained, is a reduction in the corn and soybean prices assumed for both 2023 and 2024, resulting in lower return and profitability projections. The latest projections are for $4.50 per bushel corn and $11.50 per bushel soybeans in 2024.

“These prices could go up, but there is also a chance they may go down,” said Paulson.

For central Illinois, crop revenue is expected to be $1,022 per acre for corn and $828 for soybeans, on the high end. Total direct costs, including fertilizers, seed, storage, drying, pesticides and crop insurance, are expected to run $520 per acre for corn and $261 for soybeans. Total power costs are projected at $190 per acre for corn and $165 for soybeans.

Adding in overhead, land costs and non-land costs, corn is expected to return -$154.00 per acre for corn and -$52 per acre for soybeans. Considering total costs, the U of I economists have determined that farmers will need to receive $5.18 per bushel for corn and $12.22 per bushel for soybeans to break even in 2024.

“When you get into a situation like this where commodity prices come down you need to identify cost adjustment areas. Land is one of the very first things you look at; you need to get those cash rents down,” Paulson told the central Illinois area farmers. “That’s an easy thing to say, but it’s a very hard conversation and something that’s very hard to implement. Communication is key, but we are hearing stories about farmers who have been successful negotiating lower cash rents through variable cash leases.”

Though higher interest rates and labor challenges seem here to stay, limiting capital purchases is one way to control costs. Taking a hard look at family living expenses may also be required to limit losses in 2024. Timely marketing of grain and oilseed sales may also be critical in limiting losses, according to the U of I economist.

“Knowing the costs of your business is always critical, and identifying pricing opportunities while limiting costs of production are really good characteristics associated with Farm Business-Farm Management farms that consistently perform better than their peers,” said Paulson. 

“People try to hit home runs in terms of marketing opportunities, but the problem with home run hitters is that sometimes they strike out. What we’ve seen through time is that the operations that consistently outperform their peers are the ones that take a (better) batting average approach,” he added. 

Updated 2023 and 2024 projections made by Paulson and fellow economist Gary Schnitkey are provided in two publications in the Management section of farmdoc (farmdocDAILY.com). The 2024 Crop Budgets are prepared for three regions – northern Illinois, central Illinois, and southern Illinois. Central Illinois is further broken out into budgets for high-productivity and low-productivity farmland. 

The U of I’s 2024 projections do not include any commodity title payments (ARC/PLC) as price levels are above those that would trigger payments. Crop insurance payments were also not included, as guarantees have not been set for 2024. Current futures price levels suggest significantly lower insurance prices and guarantees in 2024 than in 2022 and 2023, the economists noted. 

“The situation represents a much tighter margin environment than was experienced over the 2021 to 2022 crop years when return and income levels were excellent, reaching record levels in 2022.  Lower corn and soybean prices create the need to identify areas to be more efficient from a production cost standpoint across all areas,” according to Paulson and Schnitkey.