Where is that break-even level in corn?

Monday, September 23, 2013

Higher costs point to higher break-even price level. At a $300 per acre cash rent, total costs equal $863 per acre ($563 non-land costs + $300 land rent). At a 195 bushel yield, the break-even price is $4.43 per bushel ($863 total costs / 195 bushels per acre). Prices below $4.43 would result in negative returns.

However, the $300 acre cash rent numbers were written in June of 2013, while the below graph was released in August and indicated a much higher cash rent cost. 190+ yields, which are used in the above example is considered “excellent” farm land in the below chart.

Using $388/acre instead of the above example at $300/acre, gives a break even price of $4.8769 (using the same yield of 195). For 2014, using $374 and the same non-land costs, gives a $4.80 break even. I recognize, this $4.80 might be a little high due to fertilize costs coming down a bit, but still I’d think we’re in the $4.70-$4.75 breakeven range for 2014. So, a producer paying the average cash rent and looking at CZ14 prices of $4.90, in my opinion, wouldn't be super excited about selling at the current levels.


Share your thoughts below.