Iowa State economists say corn and soybean cost of production will fall this year. According to a new study by Iowa State University (ISU) Extension and Outreach, the cost of corn production is expected to drop by 12%, and soybean production will dip by 9% this year.
Alejandro Plastina, assistant professor and extension economist with ISU says “The study shows the driver behind these falling costs is the decline in both rent and machinery costs.”
In May 2016, Ag Decision Maker published an article on farm machinery efficiency. The article gave new information on increasingly efficient machinery, that was incorporated into the formula used to calculate input costs.
“Despite the projected increase in fuel prices, the total machinery costs ended up being lower than what we reported last year because of an improvement in the efficiency of those machines,” Plastina said.
The cost per bushel for mid-range yield corn is projected at $4.08 for corn following corn and $3.51 for corn following soybeans.
Costs per bushel of soybeans are $9.66 for the herbicide tolerant variety and $9.60 for non-herbicide tolerant beans.
“A decline in the price of fertilizer and lime prices, machinery costs and land rents are expected to more than offset increases in herbicide costs,” Plastina said. “If current price projections are realized with the cost structure we are using, then there should be some positive margins this year.”
Further details about the report is available in the February issue of Ag Decision Maker.