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 2018 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 2019 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 2019 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 9, 2019 - USDA World Supply and Demand Estimates

 

Corn

Market Reaction: May 2019 corn futures closed unchanged for the day at $3.60 with a trading range for the day of $3.55 ¼ to $3.62 ¼. December 2019 corn futures closed up ¼ cent at $3.89 ¼ with a trading range for the day of $3.84 ¾ to $3.90 ½. Feed, ethanol, and exports were all decreased, as a result total domestic stocks were projected up 200 million bushels. Small increases in production in Brazil and Argentina were also made. Limited market reaction as markets will now focus on U.S. planting and South American growing conditions.

USDA Summary: This month’s 2018/19 U.S. corn outlook is for lower feed and residual use, reductions in corn used for ethanol and exports, and larger stocks.  Feed and residual use is lowered 75 million bushels to 5.300 billion based on corn stocks reported as of March 1, which indicated disappearance during the December-February quarter declined about 9 percent relative to a year ago.  Corn used to produce ethanol is lowered 50 million bushels to 5.500 billion based on the most recent data from the Grain Crushings and Co-Products Production report, and the pace of weekly ethanol production during March as indicated by Energy Information Administration data.  Exports are reduced 75 million bushels to 2.300 billion, reflecting current outstanding sales and expectations of increased competition from Brazil, Argentina, and Ukraine.  With supply unchanged and use declining, ending stocks are raised 200 million bushels to 2.035 billion.  The season-average corn price received by producers is unchanged at a midpoint of $3.55 per bushel.

The global coarse grain production forecast for 2018/19 is up.  This month’s foreign coarse grain outlook is for larger production, increased trade, greater use, and marginally higher stocks relative to last month.  Brazil corn production is raised, reflecting improved yield prospects for second-crop corn.  Argentina corn is higher based on expectations of larger area. Corn production is raised for the EU, Mexico, and Indonesia, with reductions for the Philippines and Pakistan. Major global trade changes for 2018/19 include higher projected corn exports for Brazil, Argentina, the EU, and Ukraine with a partially offsetting reduction for the United States.  Corn imports are raised for the EU and South Africa, with lower projections for Vietnam and Bangladesh. Foreign corn ending stocks for 2018/19 are raised from last month, mostly reflecting increases for Mexico, Indonesia and South Africa that more than offset declines for Vietnam, Brazil, Pakistan, Bangladesh, and Argentina.


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected March

2018/19 Projected April

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

90.6

88

94

90.2

89.1

89.1

0.0

-1.1

Acres Harvested (Million Acres)

83.1

80.8

86.7

82.7

81.7

81.7

0.0

-1.0

U.S. Average Yield (Bu/Acre)

171.0

168.4

174.6

176.6

176.4

176.4

0.0

-0.2


Supply (Million Bushels)

Beg. Stocks

1,232

1,731

1,737

2,293

2,140

2,140

0

-153

Production

14,216

13,602

15,148

14,609

14,420

14,420

0

-189

Imports

32

68

57

36

40

40

0

4

Total Supply

15,479

15,401

16,942

16,939

16,600

16,600

0

-339


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,280

5,114

5,470

5,304

5,375

5,300

-75

-4

Ethanol

5,200

5,224

5,432

5,605

5,550

5,500

-50

-105

Food, Seed & Industrial

1,401

1,424

1,453

1,451

1,465

1,465

0

14

Exports

1,867

1,901

2,294

2,438

2,375

2,300

-75

-138

Total Use

13,748

13,664

14,649

14,799

14,765

14,565

-200

-234

U.S. Ending Stocks

1,731

1,737

2,293

2,140

1,835

2,035

200

-105

Foreign Stocks

9,260

10,523

11,515

11,261

10,311

10,327

16

-934


Price and Stocks to Use Ratio

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

$3.70

$3.61

$3.36

$3.36

$3.35-$3.75

$3.40-$3.70

$0.00

$0.19

U.S. Stocks/Use

12.59%

12.71%

15.65%

14.46%

12.43%

13.97%

1.5%

-0.49%

Source: USDA-WASDE April 9, 2019


 

World Corn Supply and Use (Million Bushels) 2018/19 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

13,401

43,595

6,376

27,696

44,634

6,620

12,362

US

2,140

14,420

40

5,300

12,265

2,300

2,035

Foreign

11,261

29,175

6,336

22,396

32,370

4,320

10,327

Argentina

153

1,850

0

382

543

1,201

259

Brazil

288

3,779

39

2,205

2,618

1,220

268

South Africa

106

433

39

260

484

39

55

Egypt

72

268

382

539

638

0

84

EU

388

2,480

886

2,638

3,405

79

270

Japan

55

0

610

468

610

0

55

Mexico

222

1,051

657

1,004

1,720

39

171

Southeast Asia

91

1,166

646

1,461

1,770

39

94

South Korea

74

3

402

315

405

0

73

Canada

93

547

67

346

559

63

85

China

8,761

10,131

197

7,795

11,023

2

8,063

Ukraine

58

1,410

1

189

244

1,161

63

ROW

900

6,057

2,409

4,794

8,349

476

786

World Corn Supply and Use (Million Bushels) April-March 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-30

245

45

22

-1

47

216

US

-

-

-

-75

-125

-75

200

Foreign

-29

245

45

97

124

122

16

Argentina

-28

39

-

-

-

20

-8

Brazil

7

59

-

-

-

79

-12

South Africa

-8

-

35

31

39

-24

12

Egypt

-

-

-

-

-

-

-

EU

-

83

39

79

98

20

5

Japan

-

-

-

-

-

-

-

Mexico

-3

43

-

-

-

-

40

Southeast Asia

-

8

-24

-12

-16

8

-8

South Korea

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Ukraine

-

12

-

-8

-8

20

-

ROW

2

-

-6

6

10

-

-13

Source: USDA-WASDE April 9, 2019
 

Cotton

Market Reaction: May 2019 cotton futures closed down 0.83 cents at 78.09 with a trading range for the day of 77.57 to 79.31 cents. December 2019 cotton futures closed down 0.27 cents at 76.89 with a trading range for the day of 76.25 to 77.43 cents. Cotton was down for the day but the short term trend remains up. Lower projected domestic acreage for the 2019 crop, as indicated in the Prospective Plantings report, has helped fuel the recent rally. WASDE projections for the 2019 crop will be released starting with the May report.

USDA Summary: The 2018/19 U.S. cotton supply and demand forecasts show lower consumption and higher ending stocks relative to last month.  At 3.1 million bales, U.S. cotton consumption is now forecast to reach its lowest level since the 1890s.  Ending stocks are now forecast at 4.4 million bales, a 100,000-bale increase from both the previous 2018/19 estimate and from the current estimate for 2017/18.  The season-average farm price is unchanged with a mid-point of 70 cents per pound.

Lower world consumption this month results in higher projected 2018/19 ending stocks, with little net change in the other components of the global balance sheet.  World mill use is forecast about 400,000 bales lower this month.  A 300,000-bale decline in Turkey—and smaller declines in the United States and Vietnam—more than offset smaller increases elsewhere.  Lower imports for India, Turkey, and Vietnam are largely offset by an upward revision for China.  Lower exports for India and Burkina Faso are largely offset by Australia and Turkey.  Higher production for China is largely offset by a decline for Burkina Faso. World ending stocks in 2018/19 are forecast about 360,000 bales higher this month, with an increase in China’s stocks more than offsetting a decline in stocks outside of China.


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected March

2018/19 Projected April

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

11.04

8.58

10.07

12.72

14.1

14.1

0

1.38

Acres Harvested (Million Acres)

9.35

8.07

9.51

11.1

10.53

10.53

0

-0.57

U.S. Average Yield (lbs/acre)

838

766

867

905

838

838

0

-67


Supply (Million Bales)

Beg. Stocks

2.35

3.65

3.8

2.75

4.3

4.3

0

1.55

Production

16.32

12.89

17.17

20.92

18.39

18.39

0

-2.53

Imports

0.01

0.03

0.01

0

0.01

0.01

0

0.01

Total Supply

18.68

16.57

20.98

23.68

22.7

22.7

0

-0.98


Use & Ending Stocks (Million Bales)

Domestic

3.58

3.45

3.25

3.23

3.2

3.1

-0.1

-0.13

Exports

11.25

9.15

14.92

15.85

15

15

0

-0.85

Total Use

14.82

12.6

18.17

19.07

18.2

18.1

-0.1

-0.97

U.S. Ending Stocks

3.65

3.8

2.75

4.3

4.3

4.4

0.1

0.1

Foreign Stocks

108.09

91.11

77.65

76.75

71.79

72.04

0.25

-4.71

Chinese Stocks

66.92

58.2

45.92

38.02

32.37

33.12

0.75

-4.9


Price and Stocks to Use Ratio

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

$0.613

$0.612

$0.68

$0.686

$0.69-$0.71

$0.69-$0.71

$0.000

$0.014

U.S. Stocks/Use

25%

30%

15%

23%

24%

24%

0.68%

1.76%

Chinese Stocks/Use

197%

166%

119%

93%

80%

82%

1.85%

-10.95%

Source: USDA-WASDE April 9, 2019

 

World Cotton Supply and Use (Million 480 lb Bales) 2018/19 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

81.05

118.93

42.09

123.18

42.09

0.36

76.44

US

4.3

18.39

0.01

3.1

15

0.2

4.4

Foreign

76.75

100.54

42.09

120.08

27.09

0.16

72.04

Central Asia

2.71

5.48

0

3.66

2.26

0

2.26

Afr. Fr. Zone

1.83

5.38

0

0.14

5.32

0

1.75

Australia

3.04

2.5

0

0.04

3.8

0

1.7

Brazil

8.66

11.8

0.05

3.5

6

0

11.01

India

9.23

27

1.4

24.8

4.2

0

8.63

Mexico

0.66

1.73

0.85

1.95

0.6

0.03

0.66

China

38.02

27.75

8

40.5

0.15

0

33.12

EU

0.25

1.72

0.69

0.74

1.58

0.05

0.3

Turkey

1.78

3.7

3

6.5

0.45

0

1.53

Pakistan

2.83

7.7

3

10.6

0.13

0.03

2.78

Indonesia

0.62

0

3.5

3.5

0.01

0

0.61

Thailand

0.2

0

1.18

1.15

0

0.03

0.2

Bangladesh

1.86

0.14

8

8

0

0.01

1.98

Vietnam

1.19

0

7.3

7.2

0

0

1.29

ROW

3.87

5.64

5.11

7.8

2.59

0.01

4.22

World Cotton Supply and Use (Million 480 lb Bales) April-March 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

-0.09

0.04

-0.09

-0.41

-0.09

0.00

0.35

US

-

-

-

-0.1

-

-

0.1

Foreign

-0.09

0.04

-0.08

-0.31

-0.09

-

0.25

Central Asia

-

-0.07

-

0.05

-

-

-0.13

Afr. Fr. Zone

-

-0.2

-

-

-0.15

-

-0.05

Australia

-

-

-

-

0.2

-

-0.2

Brazil

-

0.05

-0.05

-

-

-

-

India

-

-

-0.2

-

-0.3

-

0.1

Mexico

-

-

-

-

-

-

-

China

-

0.25

0.5

-

-

-

0.75

EU

-0.02

0.03

-0.01

-

0.03

-

-0.01

Turkey

-0.1

-

-0.2

-0.3

0.1

-

-0.1

Pakistan

-

-

-

-

-

-

-

Indonesia

-

-

-0.05

-0.05

-

-

-

Thailand

0.02

-

-

0

-

-

0.02

Bangladesh

-

-

-

-

-

-

-

Vietnam

-

-

-0.1

-0.1

-

-

-

ROW

0.01

-0.02

0.02

0.09

0.03

-

-0.13

Source: USDA-WASDE April 9, 2019


 

 
 

Soybeans

Futures Market Reaction: May 2019 soybean futures were unchanged for the day closing at $8.98 ¾ with a trading range for the day of $8.94 ¾ to $9.02 ¼.  November 2019 soybean futures closed down ½ cent at $9.31 ¾ with a trading range for the day of $9.28 to $9.34 ¾. Only minor revisions were made to domestic and international supply and demand estimates. Global trade and U.S. planted acres will continue to drive prices.

USDA Summary: U.S. soybean supply and use changes for 2018/19 include lower imports, higher seed use, and lower ending stocks.  Soybean imports are reduced in line with reported trade through January while lower seed use reflects plantings indicated in the March 29 Prospective Plantings report.  With soybean crush and exports unchanged, ending stocks are projected at 895 million bushels, down 5 million.  Soybean oil changes include increased imports and domestic disappearance for biodiesel and for food use, and lower ending stocks.  The season-average soybean price is forecast at $8.35 to $8.85, unchanged at the midpoint.  Soybean oil price is projected at 28.0 to 30.0 cents per pound, down 1 cent at the midpoint.  Soybean meal prices are projected at $305 to $325 per short ton, unchanged at the midpoint.

The 2018/19 global oilseed supply and demand forecasts include increased production, lower exports, and increased stocks compared to last month.  Global oilseed production is raised mainly on higher soybean production for Brazil and rapeseed production for India.  Production for Brazil is increased 18 million bushels to 4.299 billion, reflecting favorable weather in Rio Grande do Sul where the crop is in pod-filling and maturation stages.  Brazil’s 2017/18 soybean crop is also revised higher, supported by recent industry estimates.  Global oilseed exports are reduced mainly on lower rapeseed trade between Canada and China.  With lower rapeseed crush for China, imports are increased for other products, including sunflowerseed meal, rapeseed meal, palm oil, and soybean oil.  Global oilseed ending stocks are raised largely due to higher soybean stocks for Brazil and rapeseed stocks for Canada.


 

2014/15 

2015/16

2016/17

2017/18 Est.

2018/19 Projected March

2018/19 Projected April

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

83.3

82.7

83.5

90.2

89.2

89.2

0.0

-1.0

Acres Harvested (Million Acres)

82.6

81.7

82.7

89.5

88.1

88.1

0.0

-1.4

U.S. Average Yield (Bu/Acre)

47.5

48

51.9

49.3

51.6

51.6

0.0

2.3


Supply (Million Bushels)

Beg. Stocks

92

191

197

302

438

438

0

136

Production

3,927

3,926

4,296

4,412

4,544

4,544

0

132

Imports

33

24

22

22

20

17

-3

-5

Total Supply

4,052

4,140

4,516

4,735

5,002

4,999

-3

264


Use & Ending Stocks (Million Bushels)

Crushing

1,873

1,886

1,901

2,055

2,100

2,100

0

45

Exports

1,842

1,942

2,166

2,129

1,875

1,875

0

-254

Seed and Residual

146

115

147

113

127

129

2

16

Total Use

3,862

3,944

4,214

4,297

4,102

4,104

2

-193

U.S. Ending Stocks

191

197

302

438

900

895

-5

457

Foreign Stocks

2,658

2,687

3,213

3,201

3,038

3,050

12

-151


Price and Stocks to Use Ratio

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

$10.10

$8.95

$9.47

$9.33

$8.10-$9.10

$8.35-$8.85

$0.00

-$0.73

U.S. Stocks/Use

4.95%

4.99%

7.17%

10.19%

21.94%

21.81%

-0.13%

11.61%

Source: USDA-WASDE April 9, 2019


World Soybean Supply and Use (Million Bushels) 2018/19 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,639

13,249

5,555

11,162

12,828

5,671

3,945

US

438

4,544

17

2,100

2,229

1,875

895

Foreign

3,201

8,705

5,538

9,062

10,599

3,796

3,050

Argentina

886

2,021

197

1,580

1,834

231

1,038

Brazil

1,203

4,299

9

1,569

1,655

2,921

934

Paraguay

28

331

0

143

146

206

7

China

864

584

3,233

3,233

3,862

5

816

EU

54

99

581

610

672

5

57

Japan

7

8

121

88

130

0

7

Mexico

7

12

192

202

204

0

8

ROW

152

1,351

1,204

1,637

2,096

428

183

World Soybean Supply and Use (Million Bushels) April-March 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

18

18

-1

-2

23

5

7

US

-

-

-3

-

2

-

-4

Foreign

18

19

2

-3

21

5

12

Argentina

-29

-

-

-

26

-

-55

Brazil

44

18

-

-

-

-

62

Paraguay

-

-

-

-

-

-

-

China

-

-

-

-

-

1

-1

EU

-

-

-

-

-

-

-

Japan

-1

-2

-

2

-

-

-4

Mexico

-

-

-

-

-

-

-

ROW

5

2

1

-4

-5

4

8

Source: USDA-WASDE April 9, 2019
 
 

Wheat

Futures Market Reaction: May 2019 wheat futures closed down 5 ¾ cents at $4.59 ½ with a trading range for the day of $4.56 ¼ to $4.62 ½. July 2019 wheat futures closed down 4 ¾ cents at $4.64 with a trading range for the day of $4.61 to $4.67 ¼. Increased stocks and lower use compared to last month. Global over supply continues to keep wheat prices depressed.

USDA Summary: The outlook for 2018/19 U.S. wheat this month is for unchanged supplies but reduced exports and domestic use.  The NASS Grain Stocks report, issued March 29, implied less feed and residual use for both the second and third quarters.  Total 2018/19 feed and residual use is lowered 10 million bushels to 70 million.  Wheat exports are lowered 20 million bushels to 945 million on a continued sluggish export pace.  By class, Hard Red Winter exports are raised 10 million bushels, which is offset by reductions of 15 million for Hard Red Spring, 10 million for White, and 5 million for Durum.  These demand changes, as well as a small reduction in seed use, led to a 31.5-million-bushel-increase in ending stocks, which are now projected at 1,087 million bushels.  The season-average farm price is raised $0.05 per bushel at the midpoint to $5.20 based on updated NASS price and marketing data. 

World 2018/19 wheat supplies are raised 77 million bushels due mainly to increased beginning stocks that largely reflect multi-year revisions for Iran.  Global production and exports are each reduced fractionally, but domestic consumption is lowered 107 million bushels.  The consumption change stems primarily from lower Iran and EU feed and residual use; Iran is lowered on the series revision and the EU reduction is based on more competitive corn prices and increased coarse grain disappearance.  With supplies increasing and total use declining, global ending stocks are raised 187 million bushels to 10.127 billion.


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected March

2018/19 Projected April

2018/19 Change From Previous Month

Change 2017/18 to 2018/19

 

Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

56.8

55

50.1

46.1

47.8

47.8

0

1.7

Acres Harvested (Million Acres)

46.4

47.3

43.8

37.6

39.6

39.6

0

2

U.S. Average Yield (Bu/Acre)

43.7

43.6

52.7

46.4

47.6

47.6

0

1.2


Supply (Million Bushels)

Beg. Stocks

590

752

976

1,181

1,099

1,099

0

-82

Production

2,026

2,062

2,309

1,741

1,884

1,884

0

143

Imports

151

113

118

157

145

145

0

-12

Total Supply

2,768

2,927

3,402

3,079

3,128

3,128

0

49


Use & Ending Stocks (Million Bushels)

Food

958

957

949

964

965

965

0

1

Seed

79

67

61

63

63

62

-1

-1

Feed

114

149

160

51

80

70

-10

19

Exports

864

778

1,051

901

965

945

-20

44

Total Use

2,015

1,951

2,222

1,980

2,073

2,042

-31

62

U.S. Ending Stocks

752

976

1,181

1,099

1,055

1,087

32

-12

Foreign Stocks

7,243

7,944

8,457

9,259

8,885

9,040

155

-219


Price and Stocks to Use Ratio

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

$5.99

$4.89

$3.89

$4.72

$5.10-$5.20

$5.15-$5.25

$0.05

$0.48

U.S. Stocks/Use

37.32%

50.03%

53.15%

55.51%

50.89%

53.23%

2.34%

-2.27%

Source: USDA-WASDE April 9, 2019

 
 

World Wheat Supply and Use (Million Bushels) 2018/19 (April)

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

10,358

26,928

6,452

5,127

27,159

6,557

10,127

US

1,099

1,885

145

70

1,096

945

1,087

Foreign

9,259

25,044

6,307

5,057

26,063

5,612

9,040

Argentina

35

717

0

4

209

503

39

Australia

216

636

6

209

338

367

151

Canada

218

1,168

17

158

342

882

179

EU

519

5,056

220

1,874

4,519

882

394

Brazil

48

200

276

18

445

29

49

China

4,823

4,829

129

735

4,593

44

5,144

Sel. Mideast

537

657

645

134

1,390

20

429

N. Africa

543

772

992

83

1,697

26

585

Pakistan

177

937

0

44

930

55

130

Southeast Asia

185

0

963

306

942

39

166

India

485

3,663

4

184

3,491

18

643

Russia

442

2,634

18

661

1,488

1,360

247

Kazakhstan

87

513

2

66

243

312

47

Ukraine

46

921

2

88

320

606

43

ROW

898

2,342

3,034

491

5,117

468

795

World Wheat Supply and Use (Million Bushels) April-March 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

84

-5

-34

-93

-108

-17

187

US

-

-

-

-10

-12

-20

32

Foreign

83

-5

-34

-83

-97

3

155

Argentina

-

-

-

2

2

-18

17

Australia

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

EU

-

-

-7

-55

-55

37

11

Brazil

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Sel. Mideast

73

-1

-33

-39

-44

-4

86

N. Africa

10

-

11

-

4

-

18

Pakistan

-

-

-

-

-

-7

7

Southeast Asia

-

-

26

11

11

-

15

India

-

-

-

-

-

-

-

Russia

6

-

-

-

-

-

7

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

2

-

-

-

-

2

ROW

-5

-6

-30

-3

-14

-4

-7

Source: USDA-WASDE April 9, 2019
 

2019 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the April 9, 2019 USDA WASDE reports.

Producers have already started to plant their crop in Tennessee with most farmers having a firm grasp on their final crop mix for 2019. Yields used for non- irrigated estimates are a 5 year Tennessee state average year of 164 bushels per acre for corn, 47 bushels per acre for full-season soybeans, 1023 pounds per acre cotton, and 68 bushels per acre wheat. Prices used for grain sales are based on 2019 harvest cash bids as reported by the USDA Tennessee Cash Grain report dated April 9, 2019. The price of $0.70 per lb. of cotton is based on a cotton loan price of $0.52 and an $0.18 cotton equity. Based on these yields and prices, soybeans and corn are projected to have positive net returns over variable, land, and fixed costs. Cotton and wheat/soybeans are projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. Costs are based on the 2019 UT Extension Row Crop budgets with adjustments made where warranted. 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. The cotton price of 70 cents that is being used in the profitability outlook. The price of 70 cents is made up of a cash price of 70 cents while assuming no gin rebates (seed & hauling) in 2019. Gin rebates for seed and hauling are an estimate as those are generally not known until harvest time and could be in the range of 0 to 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 2019 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 - $ 110, Soybeans - $47, Corn - $161 (includes 180 units of N), and Wheat/Soybeans - $106. These cost reflect a slight increase from 2018 to 2019 along with micronutrients where warranted. Operating expenses 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 with resistant weeds. Production costs are estimates based on the 2019 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated costs for your operation. 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. A whole farm financial plan can be completed for you for free by your Area Farm Management Specialist.


 

Cotton

Soybeans

Corn

Wheat/Soybeans

Yield

1023 lbs.

47 bu.

164 bu.

68 bu./35 bu.

Price (as of 4/9/2019)

$0.70 lb.

$8.90 bu.

$3.64 bu.

$4.73 bu./$8.90 bu.

Revenue

$716

$418

$597

$633

Variable Expenses

$475

$246

$371

$455

Returns Over Variable

$241

$172

$226

$178

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

$176

$103

$147

$155

Returns Over Variable and Land Costs

$65

$70

$79

$23

Fixed Costs (Capital Recovery and Management Labor)

$110

$65

$64

$114

Returns Over Specified Costs

($45)

$5

$15

($91)

Breakeven Price at Average Yield and Specified Cost

$0.76

$8.78

$3.52

$6.15/$9.60


  

2019 Estimated Returns - Irrigation

Considering irrigation, Returns Over Variable, Land, and Fixed cost are negative for all principal row crops. An individual producer's machinery and equipment costs will have a strong influence on profitability. 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 2019 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 over the previous year. Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $32 per acre for corn, $27 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $13 per acre for cotton, 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 - $115, Soybeans - $57, Corn - $198 (includes 240 units of N), and Wheat/Soybeans - $106. 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 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 – Capital Recovery and Management Labor. 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. A whole farm financial plan can be completed for you for free by your Area Farm Management Specialist. 

 

 

Cotton

Soybeans

Corn

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

68 bu./45 bu.

Price (as of 4/9/2019)

$0.70 lb.

$8.90 bu.

$3.64 bu.

$4.73 bu./$8.90 bu.

Revenue

$840

$534

$764

$722

Variable Expenses(includes energy cost)

$475

$289

$489

$455

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$279

$159

$189

$181

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

$207

$132

$189

$177

Returns Over Variable, IR Fixed Cost and Land Costs

$72

$27

$0

$4

Fixed Costs (Capital Recovery and Management Labor)

$125

$81

$84

$114

Returns Over Specified Costs

($53)

($54)

($84)

($110)

Breakeven Price at Average Yield and Specified Cost

$0.75

$9.80

$4.04

$5.82/$9.70

​​
  

Past Monthly Comments:   

July 12, 2018     August 10, 2018     September 12, 2018     October 11, 2018      November 8, 2018     December 11, 2018