The high commodity prices will likely result in farmers paying higher cash rent next year.
The average price for fall 2020 corn was $4.35 and about $8.57 for soybeans. Although, USDA will not finalize the numbers for a couple of months.
However, much higher prices are already posted for the 2021 crops, with corn at $5.70 and soybeans at $13.85.
Ag economist, Gary Schnitkey says that landowners will surely want a piece of that pie.
“What we typically see is costs rise during periods of higher incomes, which is sort of what you expect, but they never come down as much during periods of lower prices... Economics over the long run will have to match that even though we are looking at higher prices than that now. So, overshooting those costs in cash rents is what gets concerning,” according to Schnitkey.
He says that cash rents in Illinois are a good example. They reached a high early in the last decade of about $300 dollars per acre, then decreased to $275 dollars, but the decrease did not match the lost gross income.
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