The front of your mind is likely looking out the cab of the combine and you are focused on harvesting corn or soybeans. However, in the back of your mind you are wondering about 2014 and what is in store?
Will the weather cooperate? Will corn prices be above or below $4? And will soybean prices still be strong because of more tight supplies?
All of that makes you wonder if a change is warranted in your cropping pattern. You may have moved away from continuous corn because of lower yields and serious pest issues. But will a soybean crop have the yield and price power to replace corn?
One of the answers to your questions may be found in the ratio between your corn and soybean yields. You have those numbers, but University of Illinois farm management specialist Gary Schnitkey used state yield numbers for Illinois, and you can used the same procedure with your farm numbers to help make your cropping plans for 2014.
What Schnitkey did was to determine the corn to soybean yield ratio over time. His Illinois numbers had a slight uptrend since 1970, and then turned upward at a higher degree since 2000, although the past three years have been at a much lower ratio, so look well back before 2010. Based on the projected 2013 yields of 165 and 47 bushels, a corn to soybean ratio would be 1:3.51. That is determined by dividing the corn yield by the soybean yield, and 165/47 = 3.51. Schnitkey says 3.51 is higher than the ratio for the prior 3 years, but lower than the prior 10 years.
Work out the yield relationships for your farm for as far back as you have yield data. It is even worth looking to crop insurance, elevator settlement sheets, and any other source you might be able to identify to get the numbers. Because of crop dynamics the ratio has changed over time. Schnitkey says his state yield ratios were 3.12 in the 1970’s, 3.16 in the 1980’s, and 3.18 in the 1990’s. That means corn profitability has increased over time since corn yields increased at a more rapid rate than soybean yields. But he is quick to say, “Obviously, other factors impact profits, either reinforcing or mitigating the impacts of yield trends.”
From 2000 to 2009 the ratio rose to 3.59, well above the long term average. Several years of high ratio years resulted from low soybean yields attributed to aphids and certain diseases that had no affect on corn yields, and occurred in years when corn yields were higher. Your yields may well reflect those same yield trends.
Schnitkey says, “From year-to-year, corn yields have been more variable than soybean yield. In years of the high corn yields, the corn-to-soybean yield ratio tended to be higher.” He says in recent years when acres have shifted up or down, some of the movement can be attributed to expectations on relative corn and soybean yields. But he says that leads to the question: Is the decade of the 2000s a better representation of future relative yields or are more recent years a better representation? … remembering that 2000 to 2009 was a period of high ratios and the last three years was a period of lower ratios.
Schnitkey’s answer to his rhetorical question is that the trend lines are relatively stable and will continue into the future. He says, “This implies that the relative low corn yields in 2010 through 2012 were caused by random events similar to those during the late 1980s and early 1990s. A period of above average yields will follow sometime in the future.”
So what should you do for 2014? Based on his calculations of the trend, Schnitkey says, “A 2014 corn-to-soybean yield ratio can be extrapolated into 2014. This extrapolation gives a 3.43 corn-to-soybean yield ratio. This 3.43 extrapolated ratio is below the 3.59 average for the decade of the 2000s, but it is above the 3.08 average from 2010 to 2013.” Keep in mind that his numbers are for the state of Illinois, but for other Corn Belt states the trend may be quite similar. And that may provide some guidance for yield prospects in the coming year. Match those with price prospects and begin your process of managing revenue risk for 2014.
Ratios between corn and soybeans have slowly changed over time, reflecting higher corn yields relative to soybean yields. However the long term trend has taken on more volatility in recent years, with a strong tendency toward corn from 2000 to 2009 and less in the past three growing seasons. But the overall trend may well remain into the future based on several decades of past history.
Your 2014 checklist for success:
- Get a soil test and recommendations from the Texas Soil and Plant Lab.
- Fill your planter with LG Seeds.
- Call Koehl Bros. and order a new bin, because you will need it!
Source: FarmGate blog