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 Extension2019 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 Danny Morris.
 

 


 

June 11, 2019 - USDA World Supply and Demand Estimates

 

Corn

Market Reaction: July 2019 corn futures closed up 12 cents for the day at $4.27 ¾ with a trading range for the day of $4.08 ¼ to $4.30 ¼.  December 2019 corn futures closed up 12 ½ cents at $4.47 with a trading range for the day of $4.27 ½ to $4.49. The yield revision, dropping average national yield 10 bu/acre, was a bit of a surprise. Lower yields were to be expected, due to wet planting conditions, however USDA making the revision on the June report rather than a future report was surprising.

USDA Summary: This month’s 2019/20 U.S. corn outlook is for increased beginning stocks and imports, sharply lower production, reduced feed and residual use and exports, and smaller ending stocks.  Beginning stocks are up reflecting a 100-million-bushel decline in projected exports for 2018/19 to 2.2 billion bushels, based on current outstanding sales and reduced U.S. price competitiveness.  Corn production for 2019/20 is forecast to decline 1.4 billion bushels to 13.7 billion, which if realized would be the lowest since 2015/16.  Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects.  USDA will release its Acreage report on June 28, which will provide survey-based indications of planted and harvested area.  With sharply lower supplies, use is projected to decline 425 million bushels to 14.3 billion, based on reductions to feed and residual use and exports.  With supplies falling more than use, ending stocks are projected to decline 810 million bushels to 1.7 billion, which if realized would be the lowest since 2013/14.  The season-average farm price is raised 50 cents to $3.80 per bushel.

This month’s 2019/20 foreign coarse grain outlook is for lower production, increased trade and lower stocks relative to last month.  Argentina corn production is raised on increased area with higher prices.  Canada corn production is lowered on reductions to both area and yield with planting delays in Ontario.  Russia corn production is higher based on government data indicating larger-than-expected planted area. For 2018/19, Brazil corn production is raised based on the latest government statistics. Major global trade changes for 2019/20 include larger forecast corn exports for Argentina and Russia, with a partly offsetting reduction for Zambia.  For 2018/19, exports are raised for Brazil and Argentina for the local marketing year beginning in March 2019 based on higher-than-expected shipments during May.  Foreign corn ending stocks are lowered from last month mostly reflecting reductions for Argentina, Brazil, Canada, and the EU.



 

2015/16

2016/17

2017/18

2018/19 Est

2019/20 Projected May

2019/20 Projected June

2019/20 Change From Previous Month

Change 2018/19 to 2019/20


Planted and Harvested Acres & Yield

Planted (Million Acres)

88.0

94

90.2

89.1

92.8

89.8

-3.0

0.7

Harvested (Million Acres)

80.8

86.7

82.7

81.7

85.4

82.4

-3.0

0.7

U.S. Average Yield (Bu/Acre)

168.4

174.6

176.6

176.4

176

166

-10.0

-10.4


Supply (Million Bushels)

Beg. Stocks

1,731

1,737

2,293

2,140

2,095

2,195

100

55

Production

13,602

15,148

14,609

14,420

15,030

13,680

-1,350

-740

Imports

68

57

36

35

35

50

15

15

Total Supply

15,401

16,942

16,939

16,595

17,160

15,925

-1,235

-670


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,114

5,470

5,304

5,300

5,450

5,150

-300

-150

Ethanol

5,224

5,432

5,605

5,450

5,500

5,500

0

50

Food, Seed & Industrial

1,424

1,453

1,451

1,450

1,450

1,450

0

0

Exports

1,901

2,294

2,438

2,200

2,275

2,150

-125

-50

Total Use

13,664

14,649

14,799

14,400

14,675

14,250

-425

-150

U.S. Ending Stocks

1,737

2,293

2,140

2,195

2,485

1,675

-810

-520

Foreign Stocks

10,523

11,515

11,215

10,614

9,904

9,762

-142

-852


Price and Stocks to Use Ratio

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

$3.61

$3.36

$3.36

$3.60

$3.30

$3.80

$0.50

$0.20

U.S. Stocks/Use

12.71%

15.65%

14.46%

15.24%

16.93%

11.75%

-5.18%

-3.49%

Source: USDA-WASDE June 11, 2019



World Corn Supply and Use (Million Bushels) 2019/20 - Current Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

12,810

43,273

6,591

27,410

44,645

6,686

11,437

United States

2,196

13,680

50

5,150

12,100

2,150

1,676

Total Foreign

10,614

29,593

6,541

22,260

32,545

4,536

9,762

        Argentina

141

1,968

0

405

591

1,319

200

        Brazil

347

3,976

39

2,283

2,736

1,339

288

        Russia

10

531

2

299

335

197

12

        South Africa

78

551

4

260

484

59

89

        Ukraine

63

1,299

1

197

252

1,063

48

        Egypt

84

283

394

567

665

0

95

        E.U.

285

2,527

787

2,401

3,208

79

313

        Japan

55

0

614

468

614

0

55

        Mexico

203

1,063

728

1,063

1,791

59

144

        Southeast Asia

113

1,248

646

1,527

1,835

39

133

        South Korea

73

3

413

323

417

0

72

        Canada

80

551

39

335

539

59

72

        China

8,261

9,999

276

7,480

10,984

1

7,552

ROW

822

5,591

2,598

4,651

8,094

324

689

World Corn Supply and Use (Million Bushels) 2019/20: Current - Previous Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-22

-1,362

15

-348

-431

-70

-952

United States

100

-1,350

15

-300

-300

-125

-810

Total Foreign

-122

-12

-

-48

-132

56

-143

        Argentina

-98

39

-

-

-

39

-98

        Brazil

-39

-

-

-

-

-

-39

        Russia

-

20

-

-

-

20

-

        South Africa

22

-

-

-

-

-

22

        Ukraine

-

-

-

-

-

-

-

        Egypt

-

-

-

-

-

-

-

        E.U.

-12

-

-

-

-

-

-12

        Japan

-

-

-

-

-

-

-

        Mexico

-

-

-

-

-

-

-

        Southeast Asia

4

-

-

-

-

-

4

        South Korea

-

-

-

-

-

-

-

        Canada

-

-55

-

-39

-39

-

-16

        China

-

-

-

-

-

-

-

ROW

1

-16

-

-9

-92

-4

-4

Source: USDA-WASDE June 11, 2019
 

Cotton

Market Reaction: July 2019 cotton futures closed down 0.34 cents at 65.65 with a trading range for the day of 65.29 to 66.36 cents. December 2019 cotton futures closed down 0.53 cents at 65.04 with a trading range for the day of 64.7 to 66.03 cents. Cotton prices continued to move the opposite direction of grains and oilseeds. Yield potential/abandonment, in Texas, as the growing season progresses will be closely monitored moving forward.

USDA Summary: The 2019/20 U.S. cotton supply and demand projections are unchanged from last month, with the exception of a 1-cent decline in the season-average upland farm price, to 64 cents per pound.  The 2018/19 U.S. cotton balance sheet is unchanged.

The world 2019/20 cotton projections include higher beginning stocks, slightly lower production, lower consumption and trade, and higher ending stocks.  Ending stocks for 2019/20 are projected 1.6 million bales higher than in May, due to a 1.1-million-bale increase in beginning stocks and a 660,000-bale decline in consumption.  Beginning stocks are higher largely due to larger 2018/19 production in India and lower 2018/19 consumption in China.  World consumption and imports in 2019/20 are projected lower largely due to a 500,000-bale decline in each variable’s forecast for China.  Lower exports are expected for Australia due to lower production, but higher expected exports from India are partly offsetting.


 

2015/16

2016/17

2017/18

2018/19 Est

2019/20 Projected May

2019/20 Projected June

2019/20 Change From Previous Month

Change 2018/19 to 2019/20


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

8.58

10.07

12.72

14.1

13.78

13.78

0

-0.32

Acres Harvested (Million Acres)

8.07

9.51

11.1

10.53

12.54

12.54

0

2.01

U.S. Average Yield (lbs/acre)

766

867

905

838

842

842

0

4


Supply (Million Bales)

Beg. Stocks

3.65

3.8

2.75

4.3

4.65

4.65

0

0.35

Production

12.89

17.17

20.92

18.39

22

22

0

3.61

Imports

0.03

0.01

0

0.01

0.01

0.01

0

0

Total Supply

16.57

20.98

23.68

22.7

26.66

 

-26.66

-22.7


Use & Ending Stocks (Million Bales)

Domestic

3.45

3.25

3.23

3.1

3.1

3.1

0

0

Exports

9.15

14.92

15.85

15

17

17

0

2

Total Use

12.6

18.17

19.07

18.1

20.1

20.1

0

2

U.S. Ending Stocks

3.8

2.75

4.3

4.4

6.4

6.4

0

2

Foreign Stocks

91.11

77.65

76.64

72.88

69.29

70.86

1.57

-2.02

Chinese Stocks

58.2

45.92

38.02

34.37

30.74

31.49

0.75

-2.88


Price and Stocks to Use Ratio

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

$0.61

$0.68

$0.69

$0.70

$0.65

$0.64

-$0.01

-$0.06

U.S. Stocks/Use

30%

15%

23%

24%

32%

32%

0%

8%

Chinese Stocks/Use

166%

119%

93%

86%

74%

77%

3%

-9%

Source: USDA-WASDE June 11, 2019

 

World Cotton Supply and Use (Million 480 lb Bales) 2019/20 - Current Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

77.53

125.32

44.74

125.27

44.75

0.31

77.26

United States

4.65

22

0.01

3.1

17

0.16

6.4

Total Foreign

72.88

103.32

44.74

122.17

27.75

0.16

70.86

       Central Asia

2.29

5.82

0

3.99

1.79

0

2.33

       Afr. Fr. Zone

1.59

6.01

0

0.14

5.61

0

1.85

       Australia

1.2

1.9

0

0.04

1.8

0

1.27

       Brazil

12.21

12

0.08

3.6

8.2

0

12.48

       India

7.78

28.5

1.4

25.3

4.8

0

7.58

       Mexico

0.72

1.75

0.85

2

0.55

0.03

0.75

       China

34.37

27.75

10.5

41

0.13

0

31.49

       E.U.

0.26

1.78

0.67

0.73

1.67

0.05

0.26

       Turkey

1.63

4.1

3

6.7

0.38

0

1.65

       Pakistan

2.83

8

2.9

10.7

0.15

0.03

2.86

       Indonesia

0.61

0

3.2

3.2

0.01

0

0.61

       Thailand

0.2

0

1.18

1.15

0

0.03

0.21

       Bangladesh

1.98

0.14

8.3

8.3

0

0.01

2.11

       Vietnam

1.24

0

7.6

7.5

0

0

1.34

ROW

3.97

5.57

5.05

7.82

2.66

0.00

4.07

World Cotton Supply and Use (Million 480 lb Bales) 2019/20: Current-Previous Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

1.06

-0.13

-0.61

-0.66

-0.6

0.00

1.57

United States

-

-

-

-

-

-

-

Total Foreign

1.06

-0.13

-0.61

-0.66

-0.6

-

1.57

       Central Asia

-0.01

0.25

-

-

-

-

0.23

       Afr. Fr. Zone

-0.05

-

-

-

-0.09

-

0.04

       Australia

-0.1

-0.3

-

-

-0.6

-

0.2

       Brazil

-

-

-

-

-

-

-

       India

0.65

-

-

-

0.3

-

0.35

       Mexico

-

-

-

-

-

-

-

       China

0.75

-

-0.5

-0.5

-

-

0.75

       E.U.

-0.05

-

-

-

-0.02

-

-0.03

       Turkey

0.1

-

-

-

-

-

0.1

       Pakistan

0.05

-

-

-

-

-

0.05

       Indonesia

-

-

-

-

-

-

-

       Thailand

-

-

-

-

-

-

-

       Bangladesh

-

-

-0.1

-0.1

-

-

-

       Vietnam

-0.05

-

-

-0.1

-

-

0.05

ROW

-0.23

-0.08

-0.01

-

-0.19

-

-0.17

Source: USDA-WASDE June 11, 2019


 

 
 

Soybeans

Futures Market Reaction: July 2019 soybean futures were up ¾ cent for the day closing at $8.59 ¼ with a trading range for the day of $8.50 ¼ to $8.63 ½. November 2019 soybean futures closed up 1 ¼ cents at $8.87 with a trading range for the day of $8.77 ¾ to $8.90 ¾. Soybean prices have benefitted from rising corn prices; however long term price prospects could turn lower with increased planted acres, trendline or above trendline yields, or further deterioration in export demand.

USDA Summary: This month’s U.S. soybean supply and use projections for 2019/20 include higher beginning and ending stocks.  Beginning stocks are raised reflecting a 75-million-bushel reduction in projected exports for 2018/19 based on lower-than-expected shipments in May and a lower import forecast for China.  Although adverse weather has significantly slowed soybean planting progress this year, area and production forecasts are unchanged with several weeks remaining in the planting season.  With soybean use unchanged, 2019/20 ending stocks are projected at 1,045 million bushels, down 25 million from the revised 2018/19 projection.  Other changes for 2018/19 include increased soybean meal imports and exports, reduced soybean oil used for biodiesel production, and higher soybean oil ending stocks. The 2019/20 season-average price for soybeans is forecast at $8.25 per bushel, up 15 cents reflecting the impact of higher corn prices.  Soybean meal prices are forecast at $295 per short ton, up 5 dollars.  The soybean oil price forecast is unchanged at 29.5 cents per pound.

The 2019/20 global soybean supply and use projections include lower production and stocks compared to last month.  Global production is down 11 million bushels to 12.324 billion due to lower crops for Ukraine and Zambia.  The 2019/20 soybean ending stocks are lowered 15 million bushels mainly reflecting lower carryin due to revisions to 2018/19 balance sheets.  Beginning stocks for 2019/20 are reduced for Argentina and China offsetting higher stocks for the United States.  For Argentina, stocks are lowered on a 55-million-bushel increase to exports to 287 million for 2018/19 based on the recent pace of shipments.  Beginning stocks are lowered for China due to a 37-million-bushel decrease to imports to 3.123 billion for 2018/19.


 

2015/16

2016/17

2017/18

2018/19 Est

2019/20 Projected May

2019/20 Projected June

2019/20 Change From Previous Month

Change 2018/19 to 2019/20


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

82.7

83.5

90.2

89.2

84.6

84.6

0.0

-4.6

Acres Harvested (Million Acres)

81.7

82.7

89.5

88.1

83.8

83.8

0.0

-4.3

U.S. Average Yield (Bu/Acre)

48

51.9

49.3

51.6

49.5

49.5

0.0

-2.1


Supply (Million Bushels)

Beg. Stocks

191

197

302

438

995

1,070

75

632

Production

3,926

4,296

4,412

4,544

4,150

4,150

0

-394

Imports

24

22

22

17

20

20

0

3

Total Supply

4,140

4,516

4,735

4,999

5,165

5,240

75

241


Use & Ending Stocks (Million Bushels)

Crushing

1,886

1,901

2,055

2,100

2,115

2,115

0

15

Exports

1,942

2,166

2,129

1,700

1,950

1,950

0

250

Seed and Residual

115

147

113

129

130

130

0

1

Total Use

3,944

4,214

4,297

3,929

4,195

4,195

0

266

U.S. Ending Stocks

197

302

438

1,070

970

1,045

75

-25

Foreign Stocks

2,687

3,213

3,203

3,074

3,185

3,094

-91

20


Price and Stocks to Use Ratio

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

$8.95

$9.47

$9.33

$8.50

$8.10

$8.25

$0.15

-$0.25

U.S. Stocks/Use

4.99%

7.17%

10.19%

27.23%

23.12%

24.91%

1.79%

-2.32%

Source: USDA-WASDE June 11, 2019


World Soybean Supply and Use (Million Bushels) 2019/2020 - Current Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

4,145

13,058

5,542

11,321

13,055

5,550

4,140

United States

1,070

4,150

20

2,115

2,245

1,950

1,045

Total Foreign

3,074

8,909

5,521

9,206

10,810

3,600

3,094

        Argentina

1,082

1,947

143

1,653

1,916

257

999

        Brazil

955

4,519

7

1,608

1,709

2,756

1,018

        Paraguay

7

375

0

145

148

228

7

        China

779

625

3,197

3,160

3,810

5

785

        E.U.

53

102

555

588

649

8

53

        S.E. Asia

38

24

367

170

376

1

50

        Mexico

7

15

213

219

220

0

15

ROW

152

1,301

1,039

1,663

1,982

345

167

World Soybean Supply and Use (Million Bushels) 2019/20: Current-Previous Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

-14

-10

0

-4

-4

-4

-16

United States

75

-

-

-

-

-

75

Total Foreign

-89

-10

-

-4

-4

-4

-91

        Argentina

-53

-

-

-

-

-

-53

        Brazil

-

-

-

-

-

-

-

        Paraguay

-

-

-

-

-

-

-

        China

-37

-

-

-

-

-

-37

        E.U.

1

-

-

-

-

-

1

        S.E. Asia

-

-

-

-

-

-

-

        Mexico

-

-

-

-

-

-

-

ROW

-

-10

-

-4

-4

-4

-1

Source: USDA-WASDE June 11, 2019
 
 

Wheat

Futures Market Reaction: July 2019 wheat futures closed up 10 ½ cents at $5.18 with a trading range for the day of $5.00 ¼ to $5.18 ¾. July 2020 wheat futures closed up 3 ¼ cents at $5.49 ¼ with a trading range for the day of $5.38 ¼ to $5.50 ½. Wheat prices continue to get pulled higher due to the rally in corn and dry weather concerns reducing the potential size of the Russian crop.

USDA Summary: U.S. 2019/20 wheat supplies are down with lower beginning stocks partly offset by slightly higher production.  Beginning stocks are down 25 million bushels on increased 2018/19 exports.  Winter wheat production is forecast up 6 million bushels to 1,274 million with an increase to Hard Red Winter more than offsetting decreases for Soft Red Winter and White Winter.  Total wheat production is now forecast at 1,903 million bushels, up 5.8 million bushels from the May forecast.  Exports for 2019/20 are unchanged at 900 million bushels but feed and residual use is raised 50 million bushels to 140 million on reduced projected corn supplies.  Ending stocks are lowered 69 million bushels to 1,072 million, and the season-average farm price is raised $0.40 per bushel to $5.10.  The price increase reflects sharply higher wheat futures prices and reduced 2019/20 corn supplies. 

World 2019/20 wheat supplies are raised 180 million bushels on a 59-million-bushel increase in beginning stocks and a 121-million-bushel increase in global production.  India’s wheat crop is raised 44 million bushels on updated government data.  Production in Russia and Ukraine are each raised 37 million bushels reflecting favorable weather to date.  Projected 2019/20 global trade is expanded 29 million bushels with a 37-million-bushel increase for Russia and an 18-million-bushel increase for Ukraine, both due to larger crops.  Russian exports are now projected at 1.36 billion bushels and Ukraine exports are projected at a record 717 million.  Partly offsetting is an 18-million-bushel decrease for EU exports with greater competition from Black Sea origins.  Projected 2019/20 world consumption is raised 132 million bushels on both higher food and feed and residual use.  With supplies rising more than use, ending stocks are projected up 48 million bushels to a record 10.814 billion.
 


 

2015/16

2016/17

2017/18

2018/19  Est.

2019/20 Projected May

2019/20 Projected June

2019/20 Change From Previous Month

Change 2018/19 to 2019/20

 

Planted and Harvested Acres & Yield

Planted (Million Acres)

55

50.1

46.1

47.8

45.8

45.8

0

-2

Harvested (Million Acres)

47.3

43.8

37.6

39.6

39

39

0

-0.6

U.S. Average Yield (Bu/Acre)

43.6

52.7

46.4

47.6

48.6

48.7

0.1

1.1


Supply (Million Bushels)

Beg. Stocks

752

976

1,181

1,099

1,127

1,102

-25

3

Production

2,062

2,309

1,741

1,884

1,897

1,903

6

19

Imports

113

118

157

140

140

140

0

0

Total Supply

2,927

3,402

3,079

3,123

3,164

3,145

-19

22


Use & Ending Stocks (Million Bushels)

Food

957

949

964

960

965

965

0

5

Seed

67

61

63

62

68

68

0

6

Feed

149

160

51

50

90

140

50

90

Exports

778

1,051

901

945

900

900

0

-45

Total Use

1,951

2,222

1,980

2,022

2,023

2,073

50

51

U.S. Ending Stocks

976

1,181

1,099

1,102

1,141

1,072

-69

-30

Foreign Stocks

7,944

8,457

9,224

9,061

9,626

9,744

118

683


Price and Stocks to Use Ratio

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

$4.89

$3.89

$4.72

$5.20

$4.70

$5.10

$0.40

-$0.10

U.S. Stocks/Use

50.03%

53.15%

55.51%

54.50%

56.40%

51.71%

-4.7%

-2.8%

Source: USDA-WASDE June 11, 2019

 

World Wheat Supply and Use (Million Bushels) 2019/20 Current Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

10,162

28,691

6,613

5,606

28,038

6,812

10,815

United States

1,102

1,903

140

140

1,173

900

1,071

Total Foreign

9,061

26,788

6,473

5,466

26,865

5,912

9,744

        Argentina

51

735

0

2

219

514

53

        Australia

177

827

6

202

331

496

182

        Canada

175

1,268

17

165

349

882

229

        European Union

353

5,651

202

2,076

4,703

974

529

        Russia

284

2,866

18

698

1,525

1,360

284

        Ukraine

51

1,102

3

143

371

717

68

        Bangladesh

25

40

239

0

268

0

36

        Brazil

55

195

276

18

448

22

55

        China

5,144

4,850

129

772

4,703

48

5,372

        Japan

39

35

217

26

239

10

42

        N. Africa

583

693

1,007

83

1,714

25

544

        Nigeria

7

2

195

2

182

15

7

        Sel. Mideast

413

825

639

144

1,433

26

417

        Southeast Asia

187

0

1,040

328

989

39

198

        India

648

3,718

1

202

3,564

18

785

        Kazakhstan

47

507

2

66

243

276

39

ROW

821

3,473

2,484

538

5,583

491

903

World Wheat Supply and Use (Million Bushels) 2019/20: Current - Previous Month

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

58

123

12

84

132

29

49

United States

-25

6

-

50

50

-

-69

Total Foreign

83

117

12

34

82

29

118

        Argentina

22

-

-

0

7

-

15

        Australia

25

-

-

18

18

-

7

        Canada

-4

-

-

-

-

-

-4

        European Union

-11

-

-

-

-

-18

7

        Russia

37

37

-

18

37

37

-

        Ukraine

12

37

-

4

7

18

23

        Bangladesh

-

-

-

-

-

-

-

        Brazil

6

-7

-

-

-

-7

6

        China

-

-

-

-

-

-

-

        Japan

-

-

-

-

-

-

-

        N. Africa

2

-

-

-

-

-

2

        Nigeria

-

-

-

-

-

-

-

        Sel. Mideast

-14

-

-

-

-

-

-14

        Southeast Asia

2

-

15

-4

-

-

17

        India

5

44

-1

-

-

-

48

        Kazakhstan

1

-

-

-

-

-

1

ROW

1

7

-1

-3

12

-

11

Source: USDA-WASDE June 11, 2019
 

2019 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the June 10, 2019 USDA WASDE reports.

Farmers have already planted the majority of their corn acres in Tennessee with some having already started to plant cotton and soybeans. 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 June 10, 2019. The price of $0.60 per lb. of cotton is based on a cotton loan price of $0.52 and an $0.08 cotton equity. Based on these yields and prices, all crops are projected to have positive net returns over variable, land, and fixed costs. Cotton, soybeans, and wheat result in a net loss after factoring in fixed expenses. Corn is the only exception to this as it is projected to have positive returns above both variable and fixed costs. The uptick in commodity prices over the last 30 days has caused the anticipated profitability for corn, soybeans, and wheat to improve. Cotton profitability has declined as a result of lower prices and declining cotton equities. 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 projected cotton price of 60 cents assumes 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 6/14/2019)

$0.60 lb.

$8.44 bu.

$4.12 bu.

$5.29 bu./$8.44

Revenue

$614

$397

$676

$655

Variable Expenses

$475

$246

$371

$455

Returns Over Variable

$139

$151

$305

$200

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

$150

$97

$167

$160

Returns Over Variable and Land Costs

($12)

$53

$138

$40

Fixed Costs (Capital Recovery and Management Labor)

$110

$65

$64

$114

Returns Over Specified Costs

($122)

($12)

$74

($74)

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 Costs are negative for all principal row crops except corn. Again, the profit potential in corn has improved greatly due to the recent increase in prices. 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: 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 2019 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 5/10/2019)

$0.60 lb.

$8.44 bu.

$4.12 bu.

$5.29 bu./$8.44 bu.

Revenue

$720

$506

$866

$739

Variable Expenses(includes energy cost)

$475

$289

$489

$455

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$159

$131

$291

$198

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

($48)

($1)

$102

$21

Fixed Costs (Capital Recovery and Management Labor)

$125

$81

$84

$114

Returns Over Specified Costs

($173)

($82)

$18

($93)

Breakeven Price at Average Yield and Specified Cost

$0.75

$9.80

$4.04

$5.82/$9.70

​​
  

Past Monthly Comments:   

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