University of Illinois Extension projections indicate returns will be lower and costs higher for Illinois corn and soybean producers in 2005. The full report, "2005 Corn and Soybean Revenue and Cost Estimates," is available online through farmdoc at http://www.farmdoc.uiuc.edu/manage/newsletters/fefo04_19/fefo04_19.html .

"Returns in 2005 are forecast to be considerably below 2003 and 2004 returns and are near 1998, 1999, and 2000 levels," said Gary Schnitkey, U of I Extension farm financial management specialist who co-authored the report with Dale Lattz, also an Extension specialist in farm financial management. "Lower effective prices--market price plus loan deficiency payments--and higher costs contribute to the 2005 returns decreases. Yields used for the 2005 forecast are based on the 2000 through 2004 average yields, which are also lower than the projected 2004 yields.

"Costs are projected higher in 2005, as well. Major increases occur in fertilizer costs. For corn, variable costs are projected to be up by $6 and $9 per acre. For soybeans, those costs may go up by $4 to $5 per acre."

The report looks at four region and yield categories: northern Illinois; central Illinois with high-productivity farmland; central Illinois with low-productivity farmland; and southern Illinois. Forecasts are compared to historical returns for Illinois Farm Business Farm Management (FBFM) grain farms from 2000 to 2003 along with preliminary estimates of 2004 returns.

Schnitkey said corn if is forecasted to be more profitable in 2005 than soybeans.

"Corn returns are forecast to be $51 per acre higher than soybean returns for northern Illinois, $53 for central Illinois with high-productivity farmland, $49 per acre for low-productivity farmland in central Illinois, and $29 per acre in southern Illinois," he said.

Soybean returns are estimated without considering yield losses or cost increases due to soybean rust. Rust could change costs.

As always, projections for next year's return may differ dramatically from actual results, Schnitkey noted.