While commodity prices can change in a flash, it's still a good bet that more than 90 million acres of corn will be planted in 2008 to satisfy a strong demand. That has a lot of producers continuing to weigh the opportunities of ditching traditional crop rotations and planting continuous corn.
“A key issue for producers is whether corn on corn is a long-term or year-by-year decision,” says Jess Lowenberg-DeBoer, agricultural economist at Purdue University. “For key portions of the Midwest, the jury is still out on the economic viability of long-term corn-on-corn production.” Continuous corn production means higher production costs.
Bruce Erickson, director of cropping systems management at Purdue University, says producers should consider three key factors if contemplating a shift to more corn: their area's (and their farm's) ratio of corn yield to soybean yield, the price ratio of corn to soybeans, and overall input costs.
“There are areas of the country that have raised continuous corn, successfully, for many years,” Erickson says. “In those areas, corn has typically done better relative to soybeans.” A typical ratio of corn production to soybean production is around 3 bu. to 1 bu. (assuming 150-bu./acre corn yields and 50-bu./acre soybean yields). In better corn-producing areas, that ratio can be somewhat higher than 3 to 1, whereas in areas that favor soybeans the ratio may be less than that.
Another ratio is the corn price to soybean price. Driving the market one year ago was a price ratio that heavily favored corn. But markets, like they always do, have adjusted to the conditions, and recently that ratio has narrowed. “Historically, what we typically observe is a 2.5 to 1 ratio,” Erickson explains. “So if corn is at $3.75, an equivalent soybean price would be $9.37.”
The final factor in the corn or soybeans decision is input costs. And with corn-on-corn production typically needing 30 to 40 lbs. of additional nitrogen per year, and nitrogen prices skyrocketing, many producers may decide to return to a corn-soybean rotation.
The Big N
It's no secret that nitrogen costs have headed skyward, and there's no indication that they will be coming down any time soon. “Producers planting corn after corn can expect to pay an average of $50 [per acre] more in fertilizer,” says Dan Froehlich, U.S. agronomy manager for The Mosaic Company.
It's important that producers look at previous yield levels and determine the level of nutrients that are being pulled off each year. Nitrogen is a key driver, but phosphorous, potassium and the many micronutrients also must be considered.
It's easy for continuous corn production to take too much phosphorous or potassium out of the soils. If that gets out of whack, corn yields can drop dramatically. “Restoring proper levels is not a simple fix, and it can be expensive,” Froehlich says. “It's important to review your yields. If you're harvesting 180-bu. corn and you've been fertilizing for 150-bu. corn, it doesn't take long before phosphorous and potassium levels can drop too far. If there's not enough, corn yields can easily drop 30 bu. an acre, and it can take a couple of years to build those nutrient levels back up. Sulfur and zinc deficiencies are becoming more common in high-yielding, continuous corn systems.”
Emerson Nafziger, agronomy professor at the University of Illinois, says early data from 2007 research plots, along with conversations with producers, show that corn-on-corn yields were quite good this year. Normally, first-year corn-on-corn production can expect about a 10% yield drag.
Part of the reason was the good growing season in much of the Corn Belt. “Conditions were optimum right after planting, which allowed for good corn emergence,” Nafziger says.
What is also fueling the good returns with corn-on-corn production is the excellent genetic packages of today's hybrids as well as traits providing corn rootworm and corn borer protection that get corn stands off to a great start.
Froehlich says that the stacked traits tended to shine in areas where the corn crop was under some amount of stress. “Root feeding, even in minimal amounts, can disrupt nutrient uptake in the plant,” he says.
More tillage, residue management
Producers must also consider that additional tillage may be necessary to deal with the tremendous amount of residue from continuous corn production.
“Managing residue may be the single biggest challenge to successful corn-on-corn production,” Froehlich says. In a typical corn-soybean rotation, a crop will produce approximately 5 tons of residue after corn, and only about 1 ton of residue after soybeans.
Erickson says that, in general, producers who plant continuous corn rely a little more on tillage to help manage the additional residue.
Another factor is the volume of grain when choosing corn over soybeans. “With corn, you're harvesting a lot more bushels,” Erickson says. “And that means more hauling, potentially more labor costs, additional storage, and perhaps additional drying costs if needed.”
Froehlich says the additional time to harvest corn increases labor as well as machinery costs. Bigger machinery might take some of the pressure off, but that also increases costs.
Then there's the extended harvest season. “More corn to harvest means a longer harvest period, which in turn subjects producers to additional risk of weather-related harvest delays and field loss,” Froehlich says. “Physically handling additional corn as it comes off the field becomes a bigger challenge.”
Strong commodity prices are expected to continue, which will be of great benefit in the face of the rising cost of inputs, including fertilizer, land and seed. However, these higher input costs pose a greater risk if commodity prices drop sharply.
One thing is certain: The corn and soybean market will continue to be volatile.
- What's your farm's ratio of corn yield to soybean yield?
- What's the ratio of corn price to soybean price?
- What are your total input costs?