AUSTIN, Texas (DTN) -- USDA expects the average cost of growing an acre of corn to decline in 2024, primarily due to the impact of lower fertilizer expenses. Soybean growing expenses are also lower, and early analysis suggests it's likely the more profitable crop option for next year.

According to the federal agency, it will cost growers an average of $856.43 to raise an acre of corn in 2024. That's down from an estimated $888.23 per acre in 2023 and $926.82 in 2022, according to the Economic Research Service's initial estimates for 2024 and updated projections for 2023.

"The new 2023 estimate reflects lower operating costs of fertilizer, chemicals and seed, offsetting smaller gains in the cost of fuel, operating interest and a higher overhead," DTN lead analyst Todd Hultman said. "The most talked about input of the past two years has been fertilizer."

He said USDA's estimate for fertilizer expenses for corn dropped from $225.78 per acre in 2022 to $189.55 in 2023, a 16% reduction. For 2024, USDA expects the cost of fertilizer to drop another 17% to $156.92 per acre.

While farmers received a reprieve on their fertilizer bill, Hultman notes overall costs are still high, and for 2023, the average amount a farmer needs to break even on corn is $5.08 per bushel, higher than the national average cash price of $4.54 per bushel as of Tuesday, Nov. 14.

University of Illinois' 2024 crop budgets, which also reflect lower fertilizer prices, suggest farmers can anticipate a return on corn of -$81 per acre in 2024, an improvement from the 2023 forecast of -$100 per acre.

Non-land costs are still near historical highs, wrote University of Illinois agricultural economists Gary Schnitkey, Nick Paulson and Jim Baltz and Ohio State University's Carl Zulauf. For 2024, they estimate it will cost $808 to raise an acre of corn on highly productive soil in central Illinois. The average cost from 2014-2019 was $594 per acre, almost $215 less.

"Projected returns in 2023 and 2024 are at levels much like those from 2014 to 2019, a period when financial position stayed constant or declined on many Illinois farms," the economists wrote.

"Declines in corn and soybean prices drive the projected revenue declines for 2023 and 2024. While not back at 2014-2019 levels, the price declines in 2023 and 2024 result in low returns because of much higher costs in 2023 and 2024 relative to the 2014-2019 period."

For soybeans, USDA anticipates it will cost an average of $612.79 to raise an acre in 2024, $8.68 less than in 2023.

Hultman said the operating costs of growing soybeans dropped in 2023, thanks to lower fertilizer, seed, chemical and fuel costs. "However, increases in overhead, largely related to higher interest rates, took away the benefit of all but $5.98 of the lower input costs," he said.

USDA's cost of production for 2023 creates a break-even price of $12.45 per bushel when compared to the national average yield estimate of 49.9 bushels per acre, Hultman said. DTN's national cash average of soybean prices ended at $13.30 a bushel on Tuesday.

University of Illinois' budgets also reflect lower production expenses and lower revenues for soybeans, but they still produce profitable outcomes. For highly productive Illinois soil with an average yield of 72 bushels per acre and an average price of $12.80 per bushel, profits are estimated at $42. That's higher than 2023's $15 per acre forecast but lower than 2022's $162 per acre profit. You can find the University of Illinois's crop budgets here: https://farmdocdaily.illinois.edu/…

"As with all national cost and yield estimates from USDA, the numbers vary widely by region," Hultman said. "National averages won't help with marketing decisions on the farm but do give a general idea of the challenges and opportunities producers face."

Katie Dehlinger can be reached at katie.dehlinger@dtn.com.

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