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.


June 12, 2018 - USDA World Supply and Demand Estimates

Corn

Market Reaction: July 2018 corn futures closed up 10 ¼ cents at $3.77 ½ with a trading range for the day of $3.67 ¼ to $3.79 ½. December 2018 corn futures closed up 10 cents at $3.98 ¼ with a trading range for the day of $3.88 ½ to $4.00. Corn fundamentals are supportive for higher prices than last year, however volatility will likely remain as trade and weather drive price changes on a week-to-week basis.

USDA Summary: This month’s 2018/19 U.S. corn outlook is for reduced beginning stocks, lower feed and residual use, greater corn used for ethanol production, and lower ending stocks.  Beginning stocks are down largely reflecting a 75-million-bushel increase in projected exports for 2017/18 to 2.300 billion bushels, which if realized would be the highest since 2007/08.  Exports during the month of April were record high, besting the prior monthly shipment record set in November 1989.  Export inspection data for the month of May implies continued robust global demand for U.S. corn, while old crop outstanding sales at this point in the marketing year are record high.  Projected 2018/19 corn used for ethanol is raised 50 million bushels. Corn feed and residual use is lowered 25 million bushels with increased ethanol by-product production and higher expected prices.  With supply falling and use rising, ending stocks are lowered 105 million bushels to 1.577 billion bushels, which if realized, would be the lowest level since 2013/14.  The season-average farm price is raised 10 cents at the midpoint with a range of $3.40 to $4.40 per bushel.

This month’s 2018/19 foreign coarse grain outlook is for lower production, reduced trade and lower stocks relative to last month.  Russia corn production is down based on government data indicating lower-than-expected planted area.  For 2017/18, Brazil corn production is lowered, as below-normal rainfall in the Center-West and South during May reduces yield prospects for second-crop corn.  Area is also reduced based on the latest government statistics. Major global trade changes for 2018/19 include lower forecast corn exports for Russia, with reductions in corn imports for Vietnam, Iran, and Algeria.  Foreign corn ending stocks are lowered from last month, mostly reflecting reductions for the EU, Brazil, and Vietnam that more than offset increases for Ukraine and South Africa.



 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected May

2018/19 Projected June

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

88

88

0.0

-2.2

Acres Harvested (Million Acres)

83.1

80.8

86.7

82.7

80.7

80.7

0.0

-2.0

U.S. Average Yield (Bu/Acre)

171.0

168.4

174.6

176.6

174

174

0.0

-2.6


Supply (Million Bushels)

Beg. Stocks

1,232

1,731

1,737

2,293

2,182

2,102

-80

-191

Production

14,216

13,602

15,148

14,604

14,040

14,040

0

-564

Imports

32

68

57

45

50

50

0

5

Total Supply

15,479

15,401

16,942

16,942

16,272

16,192

-80

-750


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,280

5,114

5,472

5,500

5,375

5,350

-25

-150

Ethanol

5,200

5,224

5,432

5,575

5,625

5,675

50

100

Food, Seed & Industrial

1,401

1,424

1,451

1,465

1,490

1,490

0

25

Exports

1,867

1,901

2,293

2,300

2,100

2,100

0

-200

Total Use

13,748

13,664

14,649

14,840

14,590

14,615

25

-225

U.S. Ending Stocks

1,731

1,737

2,293

2,102

1,682

1,577

-105

-525

Foreign Stocks

6,529

6,685

6,664

5,484

4,583

4,512

-71

-972


Price and Stocks to Use Ratio

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

$3.70

$3.61

$3.36

$3.25-$3.55

$3.30-$4.30

$3.40-$4.40

$0.00

$0.40

U.S. Stocks/Use

12.59%

12.71%

15.65%

14.78%

11.53%

10.79%

-0.7%

-3.99%

Source: USDA-WASDE June 12, 2018



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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

7,586

41,432

5,969

26,105

42,928

6,142

6,090

US

2,102

14,040

50

5,350

12,515

2,100

1,577

Foreign

5,484

27,392

5,919

20,755

30,413

4,042

4,512

Argentina

137

1,614

0

315

472

1,063

216

Brazil

335

3,779

28

2,165

2,579

1,220

343

South Africa

110

551

0

260

496

87

79

Egypt

70

252

382

535

634

0

70

EU

320

2,401

630

2,264

3,051

59

241

Japan

52

0

591

453

594

0

48

Mexico

190

1,024

657

984

1,701

59

111

Southeast Asia

98

1,155

630

1,457

1,768

30

85

South Korea

71

3

382

295

386

0

70

Canada

93

602

20

346

559

61

95

China

3,132

8,858

197

6,771

9,803

2

2,382

Ukraine

55

1,181

1

177

228

945

63

ROW

820

5,971

2,401

4,732

8,142

516

709

World Corn Supply and Use (Million Bushels) June-May 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-85

-144

-55

-97

-53

-79

-176

US

-80

-

-

-25

25

-

-105

Foreign

-5

-143

-55

-72

-78

-79

-70

Argentina

-

-

-

-

-

-

-

Brazil

-35

-

-

-

-

-

-35

South Africa

14

-

-

-

-

-

14

Egypt

-

-

-

-

-

-

-

EU

-

-

-

39

39

-

-39

Japan

4

-

-

-

-

-

4

Mexico

-

-

-

-

-

-

-

Southeast Asia

-

-

-39

-20

-20

-

-20

South Korea

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Ukraine

20

-

-

-

-

-

20

ROW

-7

-144

-16

-92

-98

-79

-14

Source: USDA-WASDE June 12, 2018

 

Cotton

Market Reaction: July 2018 cotton futures closed up 0.46 cents at 95.21 with a trading range for the day of 94.67 to 95.85 cents. December 2018 cotton futures closed up 1.22 cents at 92.90 with a trading range for the day of 91.2 to 93.19 cents. Harvest futures are up over 12 cents since the last WASDE report on May 10. This year has almost been a perfect storm for increased cotton prices – demand is up, stocks are down, and there are production concerns due to drought in several regions. The main question on traders’ minds is will cotton take another leg up or have prices become over inflated creating a looming correction.

USDA Summary: The most significant revision to this month’s U.S. cotton supply and demand estimates is a 500,000-bale increase in 2017/18 exports, to 16.0 million bales, due to above-average late-season shipments.  U.S. ending stocks are now forecast at 4.2 million bales in 2017/18, and 4.7 million bales in 2018/19, for a stocks-to-use ratio of 25 percent.  The projected range of the marketing-year-average farm price is raised 5 cents at each end to 60-80 cents per pound.

The 2018/19 world projections include lower production for China, Pakistan, and Australia offset in part for higher production for Brazil.  World production is nearly 800,000 bales lower this month, while 2018/19 consumption is reduced only 85,000 bales, as a 225,000-bale reduction for South Korea is largely offset by increases for Uzbekistan and Vietnam.  World beginning stocks for 2018/19 are unchanged from a month earlier, but ending stocks are 725,000 bales lower.  At 83.0 million bales, 2018/19 world ending stocks are projected 5.2 million bales lower than a year earlier, but stocks outside of China are expected to rise for the third consecutive year.



 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected May

2018/19 Projected June

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

12.61

13.47

13.47

0

0.86

Acres Harvested (Million Acres)

9.35

8.07

9.51

11.1

11.13

11.13

0

0.03

U.S. Average Yield (lbs/acre)

838

766

867

905

841

841

0

-64


Supply (Million Bales)

Beg. Stocks

2.35

3.65

3.8

2.75

4.7

4.2

-0.5

1.45

Production

16.32

12.89

17.17

20.92

19.5

19.5

0

-1.42

Imports

0.01

0.03

0.01

0.01

0.01

0.01

0

0

Total Supply

18.68

16.57

20.98

23.68

24.21

23.71

-0.5

0.03


Use & Ending Stocks (Million Bales)

Domestic

3.58

3.45

3.25

3.35

3.4

3.4

0

0.05

Exports

11.25

9.15

14.92

16

15.5

15.5

0

-0.5

Total Use

14.82

12.6

18.17

19.35

18.9

18.9

0

-0.45

U.S. Ending Stocks

3.65

3.8

2.75

4.2

5.2

4.7

-0.5

0.5

Foreign Stocks

108.09

91.11

84.17

84.01

83.75

78.32

-5.43

-5.69

Chinese Stocks

66.92

58.2

48.42

41.17

33.42

33.12

-0.3

-8.05


Price and Stocks to Use Ratio

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

$0.613

$0.612

$0.68

$0.67-$0.69

$0.55-$0.75

$0.60-$0.80

$0.050

$0.020

U.S. Stocks/Use

25%

30%

15%

25%

28%

25%

2.58%

-0.07%

Chinese Stocks/Use

197%

166%

129%

102%

81%

80%

-21.89%

-22.62%

Source: USDA-WASDE June 12, 2018


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

88.21

120.4

41.06

125.35

41.07

0.22

83.02

US

4.2

19.5

0.01

3.4

15.5

0.11

4.7

Foreign

84.01

100.9

41.05

121.95

25.57

0.11

78.32

Central Asia

2.73

6.5

0

3.72

2.58

0

2.94

Afr. Fr. Zone

2.65

5.28

0

0.14

4.74

0

3.05

Australia

3.16

3.8

0

0.04

4.4

0

2.52

Brazil

8.28

9

0.08

3.45

4.9

0

9

India

12.48

28.5

1.5

25.2

4.25

0

13.03

Mexico

0.8

1.6

0.93

1.85

0.55

0.03

0.9

China

41.17

26.5

7

41.5

0.05

0

33.12

EU

0.38

1.56

0.71

0.74

1.48

0

0.42

Turkey

2.03

4.3

3.6

7.4

0.35

0

2.18

Pakistan

2.78

8.5

2.2

10.5

0.2

0.03

2.76

Indonesia

0.62

0

3.5

3.5

0.01

0

0.62

Thailand

0.18

0

1.08

1.05

0

0.03

0.18

Bangladesh

1.86

0.14

7.9

7.8

0

0.01

2.08

Vietnam

1.19

0

7.7

7.5

0

0

1.39

ROW

3.7

5.22

4.85

7.56

2.06

0.01

4.13

World Cotton Supply and Use (Million 480 lb Bales) June-May 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

0

-0.79

-0.06

-0.09

-0.05

0

-0.73

US

-0.5

0

0

0

0

0

-0.5

Foreign

0.5

-0.79

-0.07

-0.09

-0.05

0

-0.23

Central Asia

-0.04

-0.02

0

0.06

0.01

0

-0.12

Afr. Fr. Zone

0.08

0.07

0

0

0.01

0

0.14

Australia

0.1

-0.2

0

0

-0.1

0

0

Brazil

0.2

0.2

0

0

0.1

0

0.3

India

-0.15

0

0

0

0

0

-0.15

Mexico

0

0

0.03

0

0

0

0.02

China

0.2

-0.5

0

0

0

0

-0.3

EU

0

0

0

0

0

0

0

Turkey

0.05

0

0

0

0

0

0.05

Pakistan

0

-0.3

0.1

0

-0.05

0

-0.15

Indonesia

0

0

0

0

0

0

0

Thailand

0

0

0

0

0

0

0

Bangladesh

-0.02

0

0

0

0

0

-0.03

Vietnam

0.1

0

0

0.1

0

0

0

ROW

-0.02

-0.04

-0.19

-0.25

-0.02

0

0.01

Source: USDA-WASDE June 12, 2018


 

Soybeans

Futures Market Reaction: July 2018 soybean futures were up ¼ cent at $9.54 with a trading range for the day of $9.52 to $9.63 ¼. November 2018 soybean futures closed up ¾ cents at $9.74 ½ with a trading range for the day of $9.72to $9.83 ½. The past two weeks have seen dramatic decreases in corn and soybean futures prices. The primary catalysts have been good growing conditions across the Corn Belt and an increase in trade concerns that could diminish US exports.

USDA Summary: This month’s U.S. soybean supply and use projections for 2018/19 include lower beginning stocks, slightly higher crush, and lower ending stocks.  Lower beginning stocks reflect higher crush for 2017/18.  Soybean crush for 2017/18 is raised 25 million bushels to 2,015 million reflecting an increase in projected soybean meal domestic disappearance and exports.  Higher soybean meal domestic disappearance reflects stronger-than-expected use for the marketing year through April.  Soybean meal exports are raised based in part on commitments through May.  Soybean ending stocks for 2017/18 are projected at 505 million bushels, down 25 million from last month.  Ending stocks for 2018/19 are projected at 385 million bushels, down 30 million from last month. Price forecasts for 2018/19 are unchanged this month.  The 2018/19 season-average price for soybeans is forecast at $8.75 to $11.25 per bushel; soybean meal and oil prices are projected at $330 to $370 per short ton and 29.5 to 33.5 cents per pound, respectively.

The 2018/19 global oilseed supply and demand forecasts include higher production, exports, and stocks compared to last month.  Higher global soybean production is partly offset by lower rapeseed and cottonseed.  Soybean production is up 26 million bushels to 13.051 billion mainly on higher production for Brazil.  A higher trend yield for the 2018/19 Brazil soybean crop reflects harvest and yield results for the 2017/18 crop, which is increased 73 million bushels to 4.373 billion.  With higher production, soybean exports for Brazil are revised up for both the 2017/18 and 2018/19 marketing years.  Ending stocks for Brazil are also increased with higher production and a lower crush estimate for 2016/17.  Global 2018/19 soybean ending stocks are increased 11 million bushels to 3.197 billion with higher stocks for Brazil partly offset by lower stocks for the United States and Argentina.  Stocks for Argentina are lowered mainly on a 73-million-bushel reduction to the 2017/18 crop to 1.36 billion. 




 

2014/15 

2015/16

2016/17

2017/18 Est.

2018/19 Projected May

2018/19 Projected June

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

83.4

90.1

89

89

0.0

-1.1

Acres Harvested (Million Acres)

82.6

81.7

82.7

89.5

88.2

88.2

0.0

-1.3

U.S. Average Yield (Bu/Acre)

47.5

48

52

49.1

48.5

48.5

0.0

-0.6


Supply (Million Bushels)

Beg. Stocks

92

191

197

302

530

505

-25

203

Production

3,927

3,926

4,296

4,392

4,280

4,280

0

-112

Imports

33

24

22

25

25

25

0

0

Total Supply

4,052

4,140

4,515

4,718

4,835

4,810

-25

92


Use & Ending Stocks (Million Bushels)

Crushing

1,873

1,886

1,901

2,015

1,995

2,000

5

-15

Exports

1,842

1,942

2,174

2,065

2,290

2,290

0

225

Seed and Residual

146

115

139

133

135

135

0

2

Total Use

3,862

3,944

4,213

4,213

4,420

4,425

5

212

U.S. Ending Stocks

191

197

302

505

415

385

-30

-120

Foreign Stocks

2,658

2,687

3,240

2,893

2,771

2,813

42

-80


Price and Stocks to Use Ratio

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

$10.10

$8.95

$9.47

$9.40

$8.75-$11.25

$8.75-$11.25

$0.00

$0.60

U.S. Stocks/Use

4.95%

4.99%

7.17%

12.66%

9.39%

8.70%

-3.27%

-3.95%

Source: USDA-WASDE June 12, 2018


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,398

13,053

5,856

11,518

13,143

5,966

3,197

US

505

4,280

25

2,000

2,135

2,290

385

Foreign

2,893

8,773

5,831

9,518

11,008

3,676

2,813

Argentina

1,034

2,058

68

1,617

1,798

294

1,068

Brazil

900

4,336

8

1,587

1,719

2,680

845

Paraguay

10

360

0

145

148

217

6

China

758

518

3,785

3,748

4,350

6

705

EU

39

101

522

547

608

11

43

Japan

8

10

119

85

128

0

10

Mexico

3

18

171

186

187

0

5

ROW

140

1,373

1,157

1,603

2,070

468

131

World Soybean Supply and Use (Million Bushels) June-May 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

12

26

-6

5

-1

20

12

US

-25

-

-

5

5

-

-30

Foreign

37

26

-6

-

-6

20

42

Argentina

-23

-

-

-

-

-

-23

Brazil

60

37

-6

-

-

24

66

Paraguay

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Japan

-

-

-

-

-

-

-

Mexico

-

-

-

-

-

-

-

ROW

-

-11

-

-

-6

-4

-1

Source: USDA-WASDE June 12, 2018
 

Wheat

Futures Market Reaction: July 2018 wheat futures closed up 20 cents at $5.34 ½ with a trading range for the day of $5.10 ¼ to $5.38 ¼. July 2019 wheat futures closed up 17 ¾ cents at $6.04 with a trading range for the day of $5.82 ¼ to $6.06 ¾. Although wheat stocks are projected to decline from the previous marketing year, it will still be the second highest ending stocks on record. Demand could provide further reductions (and further reduce stocks-to-use) however that will be linked to production of corn and other feed grains this year.

USDA Summary: U.S. 2018/19 wheat supplies are increased slightly this month on higher beginning stocks and production.  Winter wheat is forecast up 6 million bushels to 1,198 million with modest increases in all winter wheat classes and total wheat production is now at 1,827 million.  U.S. exports are raised 25 million bushels to 950 million on tightening Russian exportable supplies.  Projected 2018/19 ending stocks are lowered 9 million bushels to 946 million, down 12 percent from last year.  The projected season-average farm price is up $0.10 per bushel with the midpoint at $5.10, compared to the revised 2017/18 price of $4.75.
World 2018/19 wheat supplies decreased this month by 44 million bushels on production declines in Russia, the EU, and Mexico not completely offset by higher projected production from India and the United States.  Russia’s production is lowered by 129 million bushels to 2.517 billion on drier-than-normal conditions this spring in winter wheat areas and excessive wetness in spring wheat regions lowering plantings.  Russia’s wheat production is projected down 19 percent from last year’s record 3.123 million bushels.  EU wheat production is reduced 37 million bushels to 5.49 billion on dry conditions this spring for winter wheat in Germany and Poland.  India’s wheat production is raised 73 million bushels to 3.564 billion, based on record yields and supported by reports of higher procurement for the 2018/19 crop compared to last year. 

Projected global 2018/19 trade is lower, mainly on reduced Russian exportable supplies with a smaller crop.  Russia’s exports are reduced 55 million bushels to 1.286 billion, but Russia still remains the world’s leading wheat exporter.  Global imports are lowered, mainly on reduced imports for India as the government recently raised its wheat import tariff.  Projected 2018/19 world consumption is 110 million bushels lower, primarily on reduced feed usage for Russia and the EU.   Global ending stocks are raised 66 million bushels this month to 9.781 billion but are still below last year’s record 10.009 billion.  




 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected May

2018/19 Projected June

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

47.3

47.3

0

1.3

Acres Harvested (Million Acres)

46.4

47.3

43.9

37.6

38.9

38.9

0

1.3

U.S. Average Yield (Bu/Acre)

43.7

43.6

52.7

46.3

46.8

46.9

0.1

0.6


Supply (Million Bushels)

Beg. Stocks

590

752

976

1,181

1,070

1,080

10

-101

Production

2,026

2,062

2,309

1,741

1,821

1,827

6

86

Imports

151

113

118

155

135

135

0

-20

Total Supply

2,768

2,927

3,402

3,076

3,027

3,043

16

-33


Use & Ending Stocks (Million Bushels)

Food

958

957

949

955

965

965

0

10

Seed

79

67

61

62

62

62

0

0

Feed

114

149

156

70

120

120

0

50

Exports

864

778

1,167

925

925

950

25

25

Total Use

2,015

1,951

2,222

2,012

2,072

2,097

25

85

U.S. Ending Stocks

752

976

1,181

1,064

955

946

-9

-118

Foreign Stocks

7,243

7,944

8,222

8,928

8,758

8,834

76

-94


Price and Stocks to Use Ratio

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

$5.99

$4.89

$3.89

$4.60-$4.70

$4.50-$5.50

$4.60-$5.60

$0.10

$0.45

U.S. Stocks/Use

37.32%

50.03%

53.15%

52.88%

46.09%

45.11%

-0.98%

-7.77%

Source: USDA-WASDE June 12, 2018


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

10,008

27,363

6,749

5,242

27,591

6,883

9,780

US

1,080

1,828

135

120

1,147

950

946

Foreign

8,928

25,535

6,614

5,122

26,444

5,933

8,834

Argentina

9

717

0

4

195

522

10

Australia

187

882

6

147

276

625

175

Canada

199

1,194

18

165

353

863

195

EU

480

5,490

202

2,058

4,722

1,066

385

Brazil

49

180

276

22

448

11

45

China

4,660

4,740

147

551

4,409

44

5,093

Sel. Mideast

461

693

689

176

1,440

42

360

N. Africa

520

775

966

83

1,682

25

554

Pakistan

177

937

0

44

930

37

148

Southeast Asia

215

0

1,025

347

1,001

40

199

India

485

3,564

18

184

3,601

15

452

Russia

394

2,517

18

625

1,451

1,286

192

Kazakhstan

104

514

2

70

246

294

80

Ukraine

62

974

1

125

353

625

60

ROW

925

2,359

3,246

523

5,337

439

886

World Wheat Supply and Use (Million Bushels) June-May 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

70

-113

-43

-107

-110

-41

67

US

10

6

-

-

-

25

-9

Foreign

60

-119

-43

-107

-110

-66

76

Argentina

-

-

-

-

-

-

-

Australia

32

-

-

7

11

-

21

Canada

3

-

-

-

-

-

3

EU

0

-37

-

-37

-37

-

-

Brazil

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Sel. Mideast

3

-

-

-

4

-

-1

N. Africa

-

-

-

-

-

-

-

Pakistan

-1

-

-1

-

-

-

-2

Southeast Asia

-

-

-

-

-

-

-

India

53

73

-55

-

-

-

72

Russia

-37

-129

-

-73

-92

-55

-18

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

-

-

-

-

-

-

ROW

7

-27

12

-4

4

-11

1

Source: USDA-WASDE June 12, 2018
 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the June 12, 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 yield of 171 bushels per acre for corn, 51 bushels per acre for soybeans, and 1031 pounds per acre cotton. Wheat yields for 2018 in Tennessee are projected at 75 bushels per acre based on producer surveys. Prices used for 2018 are current forward prices for 2018 harvest. Since the May 10th report cotton profitability is up $77 per acre, corn down $28 per acre, soybeans profitability is down $22 per acre, while wheat/soybeans increased $2 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 88.50 cents that is being used in the profitability outlook. The price of 88.50 cents is made up of a cash price of 86.50 cents and gin rebates (seed & hauling) of 2 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.

75 bu./35 bu.

Price (as of 6/12/18)

$0.865 lb.

$9.62 bu.

$3.81 bu.

$3.51 bu.

$5.50 bu./$9.62 bu.

Revenue

$869

$452

$613

$316

$733

Variable Expenses

$428

$224

$347

$239

$417

Returns Over Variable

$441

$228

$267

$77

$316

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

$215

$111

$150

$78

$179

Returns Over Variable and Land Costs

$226

$118

$116

-$1

$137

Fixed Costs
Depreciation & interest on machinery

$134

$64

$57

$64

$111

Returns Over Specified Costs

$92

$54

$59

-$55

$26

Breakeven Price at Average Yield and Specified Cost

$0.79

$8.47

$3.44

$4.23

$5.32/$9.25

 


  

2018 Estimated Returns - Irrigation

Considering irrigation, profitability is positive for cotton, corn and soybeans over variable, land and fixed cost. Returns Over Variable and Land Costs are positive for 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 May 10th report cotton profitability is up $95 per acre, corn down $36 per acre, soybeans profitability is down $28 per acre, while wheat/soybeans decreased $3 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.

75 bu./45 bu.

Price (as of 6/12/18)

$0.885 lb.

$9.62 bu.

$3.81 bu.

$3.51 bu.

$5.50 bu./$9.62 bu.

Revenue

$1062

$577

$800

$456

$829

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

$499

$236

$269

$72

$295

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

 

$241

$120

$175

$91

$182

Returns Over Variable, IR Fixed Cost and Land Costs

$257

$116

$93

-$19

$114

Fixed Costs- management labor,
depreciation & interest on machinery

$149

$79

$72

$79

$126

Returns Over Specified Costs

$109

$37

$21

-$98

-$12

Breakeven Price at Average Yield and Specified Cost

$0.79

$9.15

$3.71

$4.26

$5.32/$10.18


  

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