Decrease in U.S. Corn and Soybean Net Farm Profits Expected in 2016

Given the current commodity price trends and the rising cost of inputs, the average 2016 corn and soybean balance sheets for cash-rented farmland look to be unprofitable, according to University of Minnesota Extension educator, David Bau.

National net farm income has fallen by 36% year on year and approximately 50% from two years ago, falling from $124 billion in 2013, to $91.1 billion in 2014, and then to $58.3 billion in 2015.

Meanwhile the trend in corn and soybean prices continues to be a downward one. In 2013 in Southern Minnesota, average cash price for corn was $6.04 and $13.99 for soybeans. Through September of this year, the average cash price for corn has fallen to $3.52 and $9.32 for soybeans.

As input costs climb – at an average rent of $210 per acre in 2015, input costs would total $849 for corn and $516 for soybeans. If given a good corn yield of 200 bushels per acre, farmers would lose $89 per acre farmed, and at a good soybean yield of 55 bushels per acre, farmers would lose $13.50 per acre.

Forward contract prices in Southern Minnesota for 2016 are $3.63 for corn and $8.30 for soybeans – if input costs remain steady in the coming year, losses will continue.

Rental payments account for a major part of these farmer’s costs, representing 44.5% of costs for soybean farmers and 28.5% of costs for corn farmers, and the market situation should put downward pressure on these rates. However, land owners that are facing increasing tax burdens will be reluctant to agree to reductions, in which case, a sliding rental agreement that splits the risk between the owner and operator and adjusts with commodity prices may be an answer moving forward.

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