CHAMPAIGN – Ag economists from the University of Illinois glanced into their crystal balls when it comes to agricultural finances moving into 2017.
During this week’s Illinois Farm Economics Summit at the I-Hotel and Conference Center in Champaign, U of I’s Darrell Good cautioned growers not to get used to the decent soybean prices as of late. He believes prices below $9.00 are likely for the 2017-2018 marketing year.
“Something will change at some point,” Good said.
Soybeans have been seeing strength due to higher oil prices and strong demand. Whether or not this will continue for another year is the big question currently. Soybean plantings could increase significantly next year which could lead to a big switch from corn acres.
“Soybean yields have been particularly high,” added Good.
Good doesn’t see an urgency in protecting new crop 2017 corn since there could be a “modest” reduction in stocks. There is downside risk for new crop soybeans, so farmers are encouraged to lock in $10.00 beans whenever possible.
Farm financial specialist Gary Schnitkey said estimated incomes for Illinois grain farms in 2016 were a bit better than originally expected. Gross revenue hit a high in 2012 and incomes have been falling since. Also, the downward trend continues with corn revenue.
The recent ARC payments are being figured into revenue figures. Schnitkey projects ARC-County payments dropping from $45 to $20 per acre.
“It will vary from that $20 per acre down to zero,” Schnitkey said.
Corn revenue is down, but soybean revenue is up. Soybeans have seen remarkably high yields and the soybean prices are high relative to corn. Cash rents have also come down a bit from their high in 2014.
2017 isn’t looking too pretty for farmers as incomes could be worse than 2015. Most growers would be looking at negative incomes using projections of $3.60 corn and $8.75 beans. Even with the same yields as this year, there would still be lower revenue since ARC-County payments will be lower.
“It’s going to be really hard for corn to be more profitable than soybeans,” Schnitkey admitted.
Helpful tips to consider for 2017 include: assessing working capital and determining how to use it, refinancing if needed, locking in low interest rates, consider a variable cash rent, switch to less tillage and not buying machinery.
The Illinois Farm Economics Summit included farmers, bankers, agronomists and others involved in agriculture.