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Corn, soybean rallies could boost farms into the black

The rallies in corn and soybean prices have brightened 2016 farm income prospects, but a farm management specialist says there is still a gap between prices and input costs.  Gary Schnitkey at the University of Illinois tells Brownfield that with the rally and normal yields, he projects 2016 income for a typical farm to be $10,000 to $12,000.

“Even though we’ve seen a nice rally in corn and soybeans, we’re still looking at relatively low incomes this year,” Schnitkey told Brownfield Ag News Monday.

Schnitkey says rising input costs from 2008 to 2013 came when farm income was at a level that was better suited to absorb high production costs.

“Those costs went up and they still haven’t come down, even though commodity prices have come down,” said Schnitkey, “so we’re still in a revenue cost squeeze.”

Farmers will want to pay close attention to what prices do in August in reaction to more accurate yield projections, said Schnitkey.

“If we’re still looking at low price, and I would define low prices as below $4.00 per bushel for corn, we’re going to have to make some very significant cost cuts again moving into 2017,” he said.

Schnitkey says $4.20 corn and $10.25 soybeans with normal yields would result in farmers being able to hold off financial deterioration.

AUDIO: Gary Schnitkey (7 min. MP3)