Supply and Demand Estimates and Profitability Outlook


 
The following is a summary of the USDA's monthly World Agricultural Supply and Demand Estimates (WASDE) report. Domestic balance sheets for corn, soybeans, cotton, and wheat are displayed along with price reaction in futures markets for each commodity on the day of the report release. Additionally, supply and demand estimates for key importing and exporting countries are provided for the current month along with change in estimates from the previous report. The Profitability Outlook section contains estimated returns per acre for each commodity based  on 2017 Tennessee state average/trend yields and current price offerings (note: cotton prices include a seed and hauling rebate). Variable expenses are based on the University of Tennessee Extension 2018 Row Crop Budgets. Prices are updated monthly; expenses are updated as warranted during the year and may be different than the expenses contained in the 2018 Row Crop Budgets. This section provides an estimation of the current relative profitability amongst major row crops in Tennessee.
The report is prepared monthly by Dr. Aaron Smith and Chuck Danehower.


April 10, 2018 - USDA World Supply and Demand Estimates

Corn

Market Reaction: May 2018 corn futures closed down 1 ½ cents at $3.89 ¼ with a trading range for the day of $3.88 ½ to $3.92 ¼. December 2018 corn futures closed down ¾ cents at $4.10 ¼ with a trading range for the day of $4.12 ½ to $4.16 ½. No major surprises for corn in this month’s report. Reductions in South American production of 217 bushels were expected due to the drought in Argentina. A year-over-year projected decrease in ending stocks of 1.3 billion bushels should continue to support prices.

USDA Summary: This month’s 2017/18 U.S. corn outlook is for reduced feed and residual use, slightly lower food, seed, and industrial (FSI) use, and increased ending stocks.  FSI is lowered 5 million bushels, as a 10-million-bushel reduction in the amount of corn used for glucose and dextrose is partially offset by a 5-million-bushel increase in corn used for starch.  Projected feed and residual use is lowered 50 million bushels to 5,500 million bushels based on indicated disappearance during the first half of the marketing year in the March 29 Grain Stocks report.  With supply unchanged and total use declining, ending stocks are raised 55 million bushels.  The projected range for the season-average corn price received by producers is unchanged at the midpoint with the range narrowed to $3.20 to $3.50 per bushel.

Global coarse grain production for 2017/18 is forecast lower than last month.  This month’s foreign coarse grain outlook is for lower production, consumption, trade, and stocks relative to last month.  Argentina corn production is down based on reductions to both harvested area and yield.  Yield results have been below expectations, while dry conditions are expected to increase the amount of corn harvested for forage or grazed.  Brazil corn production is reduced reflecting expectations of lower second-crop corn area.  If realized, the combined corn production of Argentina and Brazil for 2017/18 would be 571 million bushels below the record reached in 2016/17.  Other coarse grain production changes of note for 2017/18 include lower barley production for Belarus and reduced corn production for Paraguay, with corn production increases for Mexico and South Africa. 

Major global trade changes for 2017/18 include lower projected corn exports for Brazil and Argentina, with reduced export competition from these countries expected to impact the first half of the 2018/19 marketing year in the United States.  Corn imports are lowered for Iran, Malaysia, Taiwan, Mexico, and Chile, with partially offsetting increases for Bangladesh and Turkey.  Foreign corn ending stocks are lowered 110 million bushels from last month, with the largest declines for Argentina, Paraguay, and Brazil.

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected March

2017/18 Projected April

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

95.4

90.6

88

94

90.2

90.2

0.0

-3.8

Acres Harvested (Million Acres)

87.5

83.1

80.8

86.7

82.7

82.7

0.0

-4.0

U.S. Average Yield (Bu/Acre)

158.1

171.0

168.4

174.6

176.6

176.6

0.0

2.0


Supply (Million Bushels)

Beg. Stocks

821

1,232

1,731

1,737

2,293

2,293

0

556

Production

13,829

14,216

13,602

15,148

14,604

14,604

0

-544

Imports

36

32

68

57

50

50

0

-7

Total Supply

14,686

15,479

15,401

16,942

16,947

16,947

0

5


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,040

5,280

5,114

5,472

5,550

5,500

-50

28

Ethanol

5,124

5,200

5,224

5,432

5,575

5,575

0

143

Food, Seed & Industrial

1,369

1,401

1,424

1,451

1,470

1,465

-5

14

Exports

1,920

1,867

1,901

2,293

2,225

2,225

0

-68

Total Use

13,454

13,748

13,664

14,649

14,820

14,765

-55

116

U.S. Ending Stocks

1,232

1,731

1,737

2,293

2,127

2,182

55

-111

Foreign Stocks

5,653

6,529

6,685

6,797

5,713

5,604

-109

-1,193


Price and Stocks to Use Ratio

U.S. Avg. Season Price ($/Bu)

$4.46

$3.70

$3.61

$3.36

$3.15-$3.55

$3.20-$3.50

$0.00

-$0.01

U.S. Stocks/Use

9.16%

12.59%

12.71%

15.65%

14.35%

14.78%

0.4%

-0.87%

Source: USDA-WASDE April 10, 2018


World Corn Supply and Use (Million Bushels) 2017/18 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,090

40,788

5,770

25,590

42,092

6,006

7,786

US

2,293

14,604

50

5,500

12,540

2,225

2,183

Foreign

6,796

26,184

5,720

20,090

29,552

3,782

5,604

Argentina

208

1,299

0

256

405

945

157

Brazil

552

3,622

16

2,087

2,461

1,299

430

South Africa

131

520

0

248

480

67

104

Egypt

74

236

394

528

626

0

78

EU

297

2,407

638

2,216

2,984

79

279

Japan

52

0

591

453

594

0

48

Mexico

213

1,055

638

957

1,665

51

190

Southeast Asia

124

1,157

559

1,402

1,709

34

98

South Korea

72

3

382

295

386

0

71

Canada

80

555

47

339

559

51

72

China

3,965

8,499

157

6,574

9,488

2

3,132

Ukraine

61

950

1

138

189

787

35

ROW

967

5,882

2,297

4,599

8,006

466

911

World Corn Supply and Use (Million Bushels) 2017/18 April-March

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-38

-223

-43

-150

-206

-132

-55

US

-

-

-

-50

-55

0

55

Foreign

-38

-223

-43

-100

-151

-132

-109

Argentina

-19

-118

-

-39

-47

-39

-51

Brazil

-

-98

-

-

-

-79

-20

South Africa

13

8

-4

-

-

-

17

Egypt

-

-

-

-

-

-

-

EU

-

-

-

-28

-

-

-

Japan

-

-

-

-

-

-

-

Mexico

-

12

-12

-

-

-

-

Southeast Asia

-

-4

-20

-24

-16

2

-10

South Korea

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Ukraine

-

-

-

-

-

-

-

ROW

-31

-22

-7

-10

-88

-16

-46

Source: USDA-WASDE April 10, 2018

 

Cotton

Market Reaction: May 2018 cotton futures closed up 0.62 cents at 83.53 with a trading range for the day of 82.31 to 83.59 cents. December 2018 cotton futures closed up 0.21 cents at 78.38 with a trading range for the day of 77.92 to 78.40 cents. Only minor revisions to supply and demand for cotton on the April WASDE.

USDA Summary: The 2017/18 U.S. cotton supply and demand forecasts show higher exports and lower ending stocks relative to last month.  Production and domestic mill use are unchanged. The export forecast is raised 200,000 bales, to 15.0 million, based on the pace of recent sales and shipments.  Ending stocks are now forecast at 5.3 million bales, equivalent to 29 percent of total disappearance.  The marketing year price received by producers is projected to average 68 cents per pound, a reduction of 1 cent from last month.

Lower global beginning stocks this month result in lower projected 2017/18 ending stocks despite higher world production and lower consumption.  World beginning stocks are 900,000 bales lower this month, largely attributable to historical revisions for Brazil and Australia.  World production is about 250,000 bales higher as a larger Brazilian crop more than offsets a decline for Sudan.  Consumption is about 400,000 bales lower as lower consumption in India, Indonesia, and some smaller countries more than offsets Vietnam’s increase.  Ending stocks for 2017/18 are nearly 600,000 bales lower in total this month as reductions for Brazil, Sudan, the United States, and Australia more than offset an increase for Pakistan.


 

2013/14

2014/15

2015/16

2016/17 Est

2017/18 Projected March

2017/18 Projected April

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

10.41

11.04

8.58

10.07

12.61

12.61

0

2.54

Acres Harvested (Million Acres)

7.54

9.35

8.07

9.51

11.35

11.35

0

1.84

U.S. Average Yield (lbs/acre)

821

838

766

867

889

889

0

22


Supply (Million Bales)

Beg. Stocks

3.8

2.35

3.65

3.8

2.75

2.75

0

-1.05

Production

12.91

16.32

12.89

17.17

21.03

21.03

0

3.86

Imports

0.01

0.01

0.03

0.01

0.01

0.01

0

0

Total Supply

16.72

18.68

16.57

20.98

23.79

23.79

0

2.81


Use & Ending Stocks (Million Bales)

Domestic

3.55

3.58

3.45

3.25

3.35

3.35

0

0.1

Exports

10.53

11.25

9.15

14.92

14.8

15

0.2

0.08

Total Use

14.08

14.82

12.6

18.17

18.15

18.35

0.2

0.18

U.S. Ending Stocks

2.35

3.65

3.8

2.75

5.5

5.3

-0.2

2.55

Foreign Stocks

100.63

108.09

91.11

84.05

83.35

82.99

-0.36

-1.06

Chinese Stocks

62.71

66.92

58.2

48.42

40.97

40.97

0

-7.45


Price and Stocks to Use Ratio

U.S. Avg. Season Price ($/lb)

$0.779

$0.613

$0.612

$0.68

$0.68-$0.70

$0.67-$0.69

-$0.010

$0.000

U.S. Stocks/Use

17%

25%

30%

15%

30%

29%

-1.42%

13.75%

Chinese Stocks/Use

182%

197%

166%

129%

102%

102%

0.00%

-26.70%

Source: USDA-WASDE April 10, 2018

World Cotton Supply and Use (Million 480 lb Bales) 2017/18 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

86.8

122.18

39.05

120.39

39.06

0.3

88.29

US

2.75

21.03

0.01

3.35

15

0.14

5.3

Foreign

84.05

101.15

39.04

117.04

24.06

0.16

82.99

Central Asia

2.44

6.2

0

3.2

2.76

0

2.68

Afr. Fr. Zone

1.77

5.16

0

0.13

4.19

0

2.62

Australia

2.19

4.7

0

0.04

4.2

0

2.66

Brazil

6.86

8.7

0.05

3.4

4.2

0

8.01

India

11.13

28.5

1.7

24.2

4.5

0

12.63

Mexico

0.44

1.54

0.98

1.85

0.35

0.03

0.73

China

48.42

27.5

5.1

40

0.05

0

40.97

EU

0.27

1.52

0.71

0.74

1.41

0

0.36

Turkey

1.58

4

3.8

7.1

0.35

0

1.93

Pakistan

2.27

8.2

2.9

10.4

0.2

0.03

2.74

Indonesia

0.62

0

3.4

3.35

0.01

0

0.67

Thailand

0.2

0

1

1

0

0.03

0.18

Bangladesh

1.66

0.14

7.4

7.3

0

0.01

1.88

Vietnam

0.88

0

6.8

6.55

0

0

1.14

ROW

3.32

4.99

5.2

7.78

1.84

0.06

3.79

World Cotton Supply and Use (Million 480 lb Bales) 2017/18 April-March

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

-0.9

0.24

0.22

-0.4

0.23

0.3

-0.56

US

-

-

-

-

0.2

-

-0.2

Foreign

-0.9

0.24

0.22

-0.4

0.03

0.3

-0.36

Central Asia

0.05

-

-

-

0.08

-

-0.03

Afr. Fr. Zone

-

-

-

-

-

-

-

Australia

-0.2

-

-

-

-0.2

0.15

-0.15

Brazil

-0.75

0.7

-0.05

-

-

0.15

-0.25

India

-

-

-

-0.3

0.3

-

-

Mexico

-

-

0.1

-

0.05

-

0.05

China

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Turkey

-

-

-

-

-

-

-

Pakistan

-

-

0.2

-

-0.05

-

0.25

Indonesia

-

-

-0.1

-0.1

-

-

-

Thailand

-

-

-0.05

-0.05

-

-

-

Bangladesh

-

0.01

-

-

-

-

0.01

Vietnam

-

-

0.1

0.1

-

-

-

ROW

-

-0.47

0.02

-0.05

-0.15

-

-0.24

Source: USDA-WASDE April 10, 2018


 

Soybeans

Futures Market Reaction: May 2018 soybean futures were up 3 cents at $10.50 with a trading range for the day of $10.45 to $10.64. November 2018 soybean futures closed up 4 ¾ cents at $10.48 with a trading range for the day of $10.41 to $10.59. A substantial drop in Argentine production of 257 million bushels was the headliner, however this reduction had been anticipated and already factored into the market.

USDA Summary: U.S. soybean supply and use changes for 2017/18 include increased crush, lower seed and residual use, and lower ending stocks.  Soybean crush is projected at a record 1,970 million bushels, up 10 million reflecting higher soybean meal prices which are supporting crush margins.  Seed use is reduced in line with the plantings indicated in the March 29 Prospective Plantings report.  With exports unchanged, soybean ending stocks are projected at 550 million bushels, down 5 million.  Soybean oil changes include increased production, exports, and ending stocks.  Soybean oil used for biodiesel is reduced this month reflecting lower-than-expected use through the first four months of the marketing year. The season-average soybean price is forecast at $9.10 to $9.50, unchanged at the midpoint.  The soybean oil price is projected at 30.5 to 32.5 cents per pound, also unchanged at the midpoint.  Soybean meal prices are projected at $340 to $360 per short ton, up $10.00 at the midpoint.

The 2017/18 global oilseed supply and demand forecasts include lower production, exports, crush, and ending stocks compared to last month.  Global oilseed production is lowered with a 224-million-bushel reduction for soybean production and slightly higher projections for rapeseed, sunflowerseed, copra, and palm kernel.  Lower soybean production for Argentina, India, and Uruguay is partly offset by higher production for Brazil.  Soybean production for Brazil is forecast at a record 4.226 billion bushels, up 73 million on higher projected yields for Mato Grosso, Mato Grosso do Sul, and Parana due to beneficial rainfall during the growing season.  For Argentina, production is lowered 257 million bushels to 1.47 billion on reduced harvested area and yield, reflecting dry conditions during January through March.  With reduced production, soybean crush for Argentina is lowered 66 million bushels to 1.514 billion bushels, resulting in lower soybean meal and oil supplies traded globally. 

Global oilseed trade for 2017/18 is projected down on lower soybean, peanut, and rapeseed shipments.  Soybean exports are reduced 7 million bushels as higher exports for Brazil, Russia, and Ukraine are offset by lower exports for Argentina and Uruguay.  Global soybean ending stocks are lowered 132 million bushels to 3.336 billion with reductions mainly for Argentina, Brazil, and the EU.


 

2013/14 

2014/15 

2015/16

2016/17 Est.

2017/18 Projected March

2017/18 Projected April

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

76.8

83.3

82.7

83.4

90.1

90.1

0.0

6.7

Acres Harvested (Million Acres)

76.3

82.6

81.7

82.7

89.5

89.5

0.0

6.8

U.S. Average Yield (Bu/Acre)

44.0

47.5

48

52

49.1

49.1

0.0

-2.9


Supply (Million Bushels)

Beg. Stocks

141

92

191

197

302

302

0

105

Production

3,358

3,927

3,926

4,296

4,392

4,392

0

96

Imports

72

33

24

22

25

25

0

3

Total Supply

3,570

4,052

4,140

4,515

4,718

4,718

0

203


Use & Ending Stocks (Million Bushels)

Crushing

1,734

1,873

1,886

1,901

1,960

1,970

10

69

Exports

1,638

1,842

1,942

2,174

2,065

2,065

0

-109

Seed and Residual

107

146

115

139

139

133

-6

-6

Total Use

3,478

3,862

3,944

4,213

4,163

4,168

5

-45

U.S. Ending Stocks

92

191

197

302

555

550

-5

248

Foreign Stocks

2,211

2,658

2,687

3,252

2,914

2,786

-128

-466


Price and Stocks to Use Ratio

U.S. Average Season Price ($/Bu)

$13.00

$10.10

$8.95

$9.47

$9.00-$9.60

$9.10-$9.50

$0.00

-$0.17

U.S. Stocks/Use

2.65%

4.95%

4.99%

7.17%

13.33%

13.20%

-0.14%

6.03%

Source: USDA-WASDE April 10, 2018

World Soybean Supply and Use (Million Bushels) 2017/18 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,554

12,302

5,574

10,994

12,567

5,526

3,336

US

302

4,392

25

1,970

2,103

2,065

550

Foreign

3,252

7,911

5,549

9,025

10,465

3,461

2,786

Argentina

1,331

1,470

88

1,515

1,685

154

1,050

Brazil

936

4,226

7

1,580

1,709

2,686

774

Paraguay

24

338

0

136

139

213

11

China

749

522

3,564

3,491

4,071

6

758

EU

40

92

514

536

597

11

39

Japan

8

10

119

86

129

0

8

Mexico

6

18

162

179

180

0

4

ROW

158

1,236

1,094

1,501

1,954

391

142

World Soybean Supply and Use (Million Bushels) 2017/18 April-March

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3

-222

16

-60

-64

-7

-132

US

-

-

-

10

4

-

-5

Foreign

3

-222

16

-70

-69

-7

-128

Argentina

-

-257

-

-65

-65

-96

-96

Brazil

-

73

-

-

-

96

-22

Paraguay

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

EU

-1

-

-

4

4

-

-5

Japan

-

-

-

-

-

-

-

Mexico

-

-

6

6

6

-

-

ROW

4

-39

11

-15

-13

-7

-4

Source: USDA-WASDE April 10, 2018
 

Wheat

Futures Market Reaction: May 2018 wheat futures closed up 1 ¼ cents at $4.92 with a trading range for the day of $4.81 ¾ to $4.94. July 2018 wheat futures closed up 2 ½ cents at $5.08 ½ with a trading range for the day of $4.97 ¾ to $5.10 ½. Wheat’s supply and demand picture remains largely unchanged – record global stocks and stagnant consumption. A weather disruption is the only likely fuel for a rally in wheat markets. 

USDA Summary:  Projected 2017/18 U.S. wheat ending stocks are raised this month by 30 million bushels to 1,064 million, all on lower feed and residual use.  The NASS Grain Stocks report, issued March 29, implied less feed and residual usage for the third quarter (December-February) than previously estimated.  This report also showed record U.S. corn stocks on March 1, which are expected to continue displacing wheat for feed use for the remainder of 2017/18.  No other supply or use categories are changed this month.  Based on NASS prices and marketings reported to date along with price expectations for the rest of 2017/18, the season-average farm price is unchanged at the range of $4.60 to $4.70 per bushel.

World 2017/18 wheat supplies increased this month by nearly 110 million bushels as production is raised to a new record of 27.918 billion, mainly on Morocco’s higher production estimate as it recovered from a severe drought in 2016/17.  Global supplies also increased with a multi-year reduction in Iran’s food, seed, and industrial use, which raised carry-in stocks by nearly 73 million bushels. Projected global 2017/18 trade is virtually unchanged on increased exports from Russia, Kazakhstan, and Argentina nearly offsetting lower exports from the EU and other exporters.  Russia’s exports are raised 37 million bushels to 1.415 billion, which surpasses last year’s record exports by more than 367 million.  Russia continues to displace the EU and other exporters in several markets.  Imports are lowered for Morocco, Brazil, and Colombia while increased for Algeria, Ethiopia, Japan, Kenya, Turkey, and the Philippines.  Projected 2017/18 world consumption is higher, primarily on increases in the EU and Indonesia, which more than offset reductions in Iran, India, and the United States.  However, the increase in global supplies still exceeds the additional consumption as 2017/18 global ending stocks are 85 million bushels higher this month at 9.965 billion, a new record.


 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected March

2017/18 Projected April

2017/18 Change From Previous Month

Change 2016/17 to 2017/18

 

Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

56.2

56.8

55

50.1

46

46

0

-4.1

Acres Harvested (Million Acres)

45.3

46.4

47.3

43.9

37.6

37.6

0

-6.3

U.S. Average Yield (Bu/Acre)

47.1

43.7

43.6

52.7

46.3

46.3

0

-6.4


Supply (Million Bushels)

Beg. Stocks

718

590

752

976

1,181

1,181

0

205

Production

2,135

2,026

2,062

2,309

1,741

1,741

0

-568

Imports

173

151

113

118

155

155

0

37

Total Supply

3,026

2,768

2,927

3,402

3,076

3,076

0

-326


Use & Ending Stocks (Million Bushels)

Food

955

958

957

949

955

955

0

6

Seed

77

79

67

61

62

62

0

1

Feed

228

114

149

156

100

70

-30

-86

Exports

1,176

864

778

1,167

925

925

0

-242

Total Use

2,436

2,015

1,951

2,222

2,042

2,012

-30

-210

U.S. Ending Stocks

590

752

976

1,181

1,034

1,064

30

-117

Foreign Stocks

6,524

7,243

7,944

8,174

8,846

8,902

56

728


Price and Stocks to Use Ratio

U.S. Avg. Season Price ($/Bu)

$6.87

$5.99

$4.89

$3.89

$4.60-$4.70

$4.60-$4.70

$0.00

$0.76

U.S. Stocks/Use

24.22%

37.32%

50.03%

53.15%

50.64%

52.88%

2.25%

-0.27%

Source: USDA-WASDE April 10, 2018

World Wheat Supply and Use (Million Bushels) 2017/18 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,355

27,916

6,680

5,354

27,305

6,688

9,966

US

1,181

1,741

155

70

1,087

925

1,064

Foreign

8,174

26,175

6,526

5,284

26,218

5,763

8,902

Argentina

9

661

0

4

191

470

10

Australia

161

790

6

125

250

588

118

Canada

251

1,102

18

129

320

827

226

EU

396

5,570

202

2,150

4,810

882

477

Brazil

83

157

268

18

441

11

56

China

4,080

4,768

147

496

4,299

37

4,660

Sel. Mideast

549

710

669

197

1,458

37

433

N. Africa

511

698

1,005

83

1,656

29

529

Pakistan

160

977

1

37

919

44

176

Southeast Asia

206

0

1,007

336

959

39

215

India

360

3,620

55

184

3,576

18

441

Russia

398

3,123

15

790

1,653

1,415

467

Kazakhstan

123

544

2

77

254

294

122

Ukraine

65

991

1

129

364

632

62

ROW

822

2,464

3,129

531

5,071

440

911

World Wheat Supply and Use (Million Bushels) 2017/18 April-March

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

73

35

2

42

23

-1

86

US

-

-

-

-30

-30

-

30

Foreign

73

35

3

72

53

-1

56

Argentina

-

-

-

-

-11

11

-

Australia

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

EU

-

-

-

55

79

-37

-42

Brazil

-

-

-18

-

-4

-11

-4

China

-

-

-

-

-

-

-

Sel. Mideast

70

-3

-2

-

-33

3

95

N. Africa

-

31

-18

3

-

2

11

Pakistan

-

4

-

-

-

-

4

Southeast Asia

-

-

7

28

35

-

-28

India

-

-

-

-

-25

-

25

Russia

-

-

-4

-

-

37

-40

Kazakhstan

-

-

-

-

-

18

-18

Ukraine

-

-

-

-

-

-

-

ROW

4

4

37

-14

12

-24

53

Source: USDA-WASDE April 10, 2018
 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the April 10, 2018 World Agricultural Supply & Demand Estimates reports.  Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2017 state average projection of 171 bushels per acre for corn, 51 bushels per acre for soybeans, 1031 pounds per acre cotton, and 71 bushels per acre wheat. Prices used for 2018 are current forward prices for 2018 harvest. Prices continue to fluctuate but more in a narrow band and somewhat with an upward trend. This is a little surprising with the amount of stocks projected at the end of the marketing year and trade issues with China looming. The market appears to be trading weather issues that occurred in Argentina and a slow start to the U.S. crop. Barring a weather disaster here in the U.S., the crop will get planted. Producers should evaluate their marketing plan and look to lock in profits on at least a portion of their crop. Since the March 29th report cotton, corn, and soybeans profitability is essentially unchanged, while wheat/soybeans increased $23 per acre. Costs are based on the 2018 UT Extension Row Crop budgets with adjustments made where warranted.  Milo prices are an estimate as very few quotes are available. It depends on a producer’s situation on what is showing to be the most profitable crop. Producers with cash rent or owned ground will want to look at Returns Over Variable Expenses as their land cost will be fixed and if their machinery cost are truly fixed and no equipment changes will be made. Producers with share rent will want to plug in their appropriate share rent if their equipment cost are fixed. Producers who may be making some equipment changes may want to look at Net Returns. Visit with your supplier on input cost expectations. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. I would like to point out the cotton price of 76 cents that is being used in the profitability outlook. The price of 76 cents is made up of a cash price of 72 cents and gin rebates (seed & hauling) of 4 cents. Gin rebates for seed and hauling are an estimate as those are generally not known until harvest time and could be in the range 0f 0 -5 cents. Producers should look at these returns as what could be if no adjustments are made in their operation and consider it a warning sign that adjustments will need to be made in 2018 to be sustainable. These estimates do not consider any USDA or crop insurance payments from the new farm bill. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  Cotton prices include revenue for cottonseed and hauling. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $ 94, Soybeans - $35, Corn - $128 (includes 170 units of N), Milo - $86, and Wheat/Soybeans - $94. Cost of production will continue to be adjusted as information becomes available. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns – Non-Irrigated

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

982 lbs.

47 bu.

161 bu.

90 bu.

70 bu./35 bu.

Price (as of 4/10/18)

$0.76 lb.

$10.43 bu.

$3.94 bu.

$3.64 bu.

$5.19 bu./$10.43 bu.

Revenue

$746

$490

$634

$328

$728

Variable Expenses

$428

$224

$347

$239

$417

Returns Over Variable

$318

$266

$288

$89

$312

Land Costs (25% of Revenue-25% crop insurance)

$184

$120

$156

$81

$178

Returns Over Variable and Land Costs

$134

$146

$132

$8

$134

Fixed Costs
Depreciation & interest on machinery

$134

$64

$57

$64

$111

Returns Over Specified Costs

$0

$82

$75

-$56

$23

Breakeven Price at Average Yield and Specified Cost

$0.76

$8.68

$3.48

$4.26

$5.36/$9.50

 

  

2018 Estimated Returns - Irrigation

Considering irrigation, profitability is positive for corn and soybeans over variable, land and fixed cost. Returns Over Variable and Land Costs are positive for cotton, and wheat/soybeans, but not enough to cover fixed costs. An individual producer’s machinery and equipment costs will have a strong influence on profitability. Since the March 29th report cotton, corn, and soybeans profitability is essentially unchanged, while wheat/soybeans increased $22 per acre Producers should look at these returns as what could be if no adjustments are made in their operation and consider that adjustments may need to be made in 2018 to be sustainable. The table below is an estimate of returns for crops under irrigation. Since irrigated yields are not as of yet kept separate in Tennessee, yields below are an estimate of irrigated yields.  Note that due to an increase in dryland cotton and corn 5 year state average yields, irrigated yields have been increased in this projection.  Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $30 per acre for corn, $26 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $14 per acre for cotton and milo, and $10 per acre for soybeans. Fixed costs of $86 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $101, Soybeans - $37, Corn - $159 (includes 240 units of N), Milo - $103, and Wheat/Soybeans - $93. Cost of production will continue to be adjusted as information becomes available. Hopefully, we will see costs reduced or possibly suitable generic products available.   Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable and Fixed IR Costs as a guide in decision making. Producers with share rent ground should use Returns Over Variable, Fixed IR Costs and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost minus 25% of the irrigation equipment fixed cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. A management cost of $30 per acre is included in Fixed Costs – management labor, depreciation & interest on machinery. This is an additional $15 above the dryland crop management labor. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns – Irrigation

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

130 bu.

70 bu./45 bu.

Price (as of 4/10/18)

$0.76 lb.

$10.43 bu.

$3.94 bu.

$3.64 bu.

$5.19 bu./$10.43 bu.

Revenue

$912

$626

$827

$473

$833

Variable Expenses( include energy cost)

$477

$255

$445

$298

$447

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$349

$285

$296

$89

$299

Land Costs (25% of Revenue-25% crop insurance-25% fixed irrigation costs)

 

$204

$133

$182

$96

$183

Returns Over Variable, IR Fixed Cost and Land Costs

$145

$152

$114

-$6

$116

Fixed Costs- management labor,
depreciation & interest on machinery

$149

$79

$72

$79

$126

Returns Over Specified Costs

-$4

$74

$41

-$85

-$10

Breakeven Price at Average Yield and Specified Cost

$0.76

$9.20

$3.74

$4.29

$5.36/$10.60


  

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