By TIM ALEXANDER

Illinois Correspondent

URBANA, Ill. — Current market conditions support an acreage increase in corn and a reduction in soybeans in 2019, according to University of Illinois farm economist Gary W. Schnitkey and his colleague, Krista Swanson.

In a report issued by the U of I College of Agricultural, Consumer and Environmental Sciences, the economists said though planted acreage for all principal crops will decrease from 2018 totals, soybean acreage will likely slide the most.

“As we move into 2019, the prospects of large adjustments to crop acreage increasingly focus on soybean acreage,” the pair explained in their essay, Corn and Soybean Acreage Prospects for 2019. “Acreage adjustments in many major growing areas may be in the form of crop adjustments instead of acreage losses.

“The current price environment across principal crops points to constant or modest changes in total planted acreage in 2019, and holds the potential for fewer overall soybean and corn acres.”

The economists issued some frightening projections for 2019 corn and soybean returns in their Halloween-eve report, which can be viewed in its entirety on the U of I farmdoc website.

“Projections are much lower for 2019, with operator and land return projected at $180 per acre, a $140 drop from the 2018 projection,” stated Schnitkey and Swanson. “At an average cash rent of $261 per acre, farmer return would be at -$81 per acre. The -$81 per acre projected loss for 2019 more than offsets the $56 positive return in 2018.

“Losses at this level would result in serious deterioration of financial position on many farms.”

Four items caused a sharp decline in projected 2019 returns, including yield trend projections lower than actual yields over the past few years, declining soybean prices, uncertainty over whether the USDA Market Facilitation Program (MFP) will continue, and rising energy and fertilizer costs.

The authors added, however, that higher returns could be achieved if MFP payments continue into 2019, continued higher-than-trend-line yields are achieved and/or “significant” pre-harvest hedging on soybeans occurs.

“I would say they pretty much hit the nail square on the head with their analysis,” said Rodney Weinzierl, executive director of the Illinois Corn Growers Assoc. (ICGA). “Obviously it is only a prediction, but at least it gives some directions to producers as to how the coming year looks with the variables that Dr. Schnitkey used.

“I think he has identified the right variables that will be in play, so the question becomes which direction those variables go in.”

The report puts losses for corn in 2019 on a near-even par with losses in soybean production, but farmers will most likely opt to plant more corn acreage due to market factors, according to Weinzierl.

“Corn is projected at a loss of $80 and beans are a loss of $82. The last several years, beans have looked more profitable, so farmers have slowly worked acreage up on soybeans. But corn carryout this coming year is projected to be less than going in, so even though we had a large corn crop, we are still reducing overall stocks. That signals corn for more acreage regardless of anything else going on,” he said.

“Soybean carryout stocks have gone up 2.5 or even three times this coming year. Soybean stocks are being affected because of (trade retaliation) from China, and the U.S. has a big bean crop this year. Brazil has also planted a large crop, and so far their growing season is looking good.

“From an overall marketing standpoint, corn is more attractive than beans right now.”

Current 2018 projections have yields in central Illinois at 233 bushels per acre for corn and 70 for soybeans, both of which are well above trend yields for the region. Regardless of whether the Trump administration extends the MFP into 2019 (providing trade disputes with China and other nations are not resolved before then), Schnitkey and Swanson warn that a return to trend or below-trend yields – such as during the 2012 drought – would result in extremely low returns in central Illinois and elsewhere.

“Under these ‘lower’ yields scenario, it is difficult to build a scenario where operator and land returns are high enough to cover cash rents,” they explained. “When trend yields again occur, a great deal of financial stress will be felt in Illinois and across the Corn Belt more generally, particularly if there is no significant positive price response to those lower yields.”

In Illinois, corn fetched an average $3.38 per bushel in September, up 11 cents from the same time last year. Soybeans sold for $9.08 in September, which was down 43 cents from the $9.51 paid in Illinois at the same time in 2017, according to the Oct. 30 Illinois Agricultural Prices report from the USDA.