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 2016 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 2017 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 2017 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.


December 12, 2017 - USDA World Supply and Demand Estimates

Corn

Market Reaction: March 2018 corn futures closed down 1 ¼ cents at $3.47 ¾ with a trading range for the day of $3.47 ½ to $3.53. December 2018 corn futures closed down 1 ¼ cents at $3.80 ¼ with a trading range for the day of $3.80 to $3.85 ½.  No major surprises on the domestic balance sheet. Ethanol use was increased 50 million bushels which dropped ending stocks by the same amount. Globally, the major news was no news, as the USDA did not amend South American production choosing to hold off on potential revisions until January when more will be known about the South American crop. Domestic stocks (over 2.4 billion bushels) still remain problematic for short term price improvements; however looking at the global picture a projected decrease in foreign stocks of over 1 billion (**if realized**) from the 2016/2017 to 2017/2018 marketing year provides hope for price improvements.

USDA Summary: This month’s 2017/18 U.S. corn outlook is for increased corn used to produce ethanol and reduced ending stocks.  Corn used to produce ethanol is raised 50 million bushels to 5.525 billion, based on increased sorghum export commitments, and the most recent data from the Grain Crushings and Co-Products Production report, which estimated a lower-than-expected amount of sorghum used to produce ethanol during October.  With no other use changes, ending stocks are down 50 million bushels from last month.  The projected season-average farm price is unchanged this month at a midpoint of $3.20 per bushel but the range is narrowed 5 cents on each end to $2.85 to $3.55 per bushel.  

Global coarse grain production for 2017/18 is forecast higher. The 2017/18 foreign coarse grain outlook is for larger production, increased consumption, and higher stocks relative to last month.  Foreign corn production is forecast higher with increases for China, the EU, Laos, and Guatemala more than offsetting a reduction for Russia.  China’s corn production is raised based on the latest data from the National Bureau of Statistics.  EU corn production is higher, mostly reflecting an increase for Romania that more than offsets declines for several countries.  Corn exports are lowered for Russia but raised for the EU.  Foreign corn ending stocks are raised from last month, largely reflecting increases for China, the EU, and Brazil that more than offset declines for Egypt and Mexico.  Global corn stocks, at 8.035 billion bushels, are up slightly from last month.
 

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected November

2017/18 Projected December

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

95.4

90.6

88

94

90.4

90.4

0.0

-3.6

Acres Harvested (Million Acres)

87.5

83.1

80.8

86.7

83.1

83.1

0.0

-3.6

U.S. Average Yield (Bu/Acre)

158.1

171.0

168.4

174.6

175.4

175.4

0.0

0.8


Supply (Million Bushels)

Beg. Stocks

821

1,232

1,731

1,737

2,295

2,295

0

558

Production

13,829

14,216

13,602

15,148

14,578

14,578

0

-570

Imports

36

32

68

57

50

50

0

-7

Total Supply

14,686

15,479

15,401

16,942

16,922

16,922

0

-20


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,040

5,280

5,114

5,463

5,575

5,575

0

112

Ethanol

5,124

5,200

5,224

5,439

5,475

5,525

50

86

Food, Seed & Industrial

1,369

1,401

1,424

1,452

1,460

1,460

0

8

Exports

1,920

1,867

1,901

2,293

1,925

1,925

0

-368

Total Use

13,454

13,748

13,664

14,647

14,435

14,485

50

-162

U.S. Ending Stocks

1,232

1,731

1,737

2,295

2,487

2,437

-50

142

Foreign Stocks

5,653

6,529

6,723

6,655

5,538

5,597

59

-1,058


Price and Stocks to Use Ratio

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

$4.46

$3.70

$3.61

$3.36

$2.80-$3.60

$2.85-$3.55

$0.00

-$0.15

U.S. Stocks/Use

9.16%

12.59%

12.71%

15.67%

17.23%

16.82%

-0.4%

1.16%

  Source: USDA-WASDE December 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

8,950

41,130

5,767

25,684

42,045

5,969

8,034

US

2,295

14,578

50

5,575

12,560

1,925

2,438

Foreign

6,655

26,553

5,717

20,109

29,485

4,044

5,597

Argentina

227

1,653

0

335

492

1,142

247

Brazil

377

3,740

12

2,047

2,421

1,339

369

South Africa

118

492

4

228

461

67

87

Egypt

74

236

394

528

626

0

78

EU

297

2,366

630

2,205

2,945

79

269

Japan

52

0

591

453

594

0

48

Mexico

213

1,031

650

957

1,665

51

178

Southeast Asia

124

1,179

555

1,421

1,720

28

109

South Korea

72

3

382

295

386

0

71

Canada

80

555

39

331

551

51

72

China

3,965

8,499

118

6,535

9,448

2

3,132

Ukraine

62

984

1

150

201

807

40

ROW

993

5,812

2,341

4,625

7,975

478

897

World Corn Supply and Use (Million Bushels) 2017/18 December-November

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

30

33

-4

-5

55

-

9

US

-

-

-

-

50

-

-50

Foreign

30

34

-4

-5

5

-

58

Argentina

-

-

-

-

-

-

-

Brazil

12

-

-

-

-

-

12

South Africa

-

-

-

-

-

-

-

Egypt

-9

-

-

-

-

-

-9

EU

18

20

-

-

4

20

15

Japan

-

-

-

-

-

-

-

Mexico

-7

-

-

-

-

-

-7

Southeast Asia

4

-

-

-

-

-

4

South Korea

-

-

-

-

-

-

-

Canada

-2

-

-

-

-

-

-2

China

-

35

-

-

-

-

35

Ukraine

-2

-

-

-

-

-

-2

ROW

16

-21

-4

-5

1

-20

12

  Source: USDA-WASDE December 12, 2017

 

Cotton

Market Reaction: March 2018 cotton futures closed down 0.09 cents at 72.91 with a trading range for the day of 72.76 to 74.19 cents. December 2018 cotton futures closed down 0.37 cents at 71.56 with a trading range for the day of 71.51 to 72.27 cents. At face value, today’s WASDE should have been bullish (increased exports, reduced domestic and foreign stocks); however the pre-report expectation was for a reduction in domestic production and larger increase to exports. Cotton futures prices may have a difficult time improving beyond current highs unless additional export sales and shipments are confirmed. A slip back into the high 60 cent range is not out of the question, so protect the downside.

USDA Summary: This month’s 2017/18 U.S. cotton forecasts include higher exports, slightly higher production, and lower ending stocks.  Production is raised 63,000 bales as increases in the Southwest are largely offset by decreases in other regions.  Domestic mill use is unchanged, but exports are raised 300,000 bales due to reduced production in other countries.  Ending stocks are now projected at 5.8 million bales, 200,000 lower than forecast in November, but more than double their 2016/17 level.  The forecast range for the marketing year average price received by producers is raised 3 cents at each end, to a midpoint of 66 cents.

The global 2017/18 cotton forecasts include lower beginning stocks, production, and ending stocks.  Global production is reduced 1.5 million bales as reductions for Pakistan, India, Burkina Faso, Argentina, and Australia are only partly offset by increases in Turkey and Central Asia.  A 1.0-million-bale decline in India’s estimated beginning stocks results in a similar decline in global 2017/18 beginning stocks.  The revision in India’s beginning stocks reflects higher estimated consumption since 2015/16, and both India’s and world 2017/18 consumption is forecast higher this month—a 335,000-bale increase in the global forecast.  World consumption is forecast to grow at a 4.2 percent annual rate in 2017/18, more than double its long-run level.  Projected world ending stocks are 2.9 million bales lower this month than in November, and at 87.9 million bales are now forecast marginally higher than the year before.

 

2013/14

2014/15

2015/16

2016/17 Est

2017/18 Projected November

2017/18 Projected December

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

10.41

11.04

8.58

10.07

12.62

12.62

0

2.55

Acres Harvested (Million Acres)

7.54

9.35

8.07

9.51

11.41

11.41

0

1.9

U.S. Average Yield (lbs/acre)

821

838

766

867

900

902

2

35


Supply (Million Bales)

Beg. Stocks

3.8

2.35

3.65

3.8

2.75

2.75

0

-1.05

Production

12.91

16.32

12.89

17.17

21.38

21.44

0.06

4.27

Imports

0.01

0.01

0.03

0.01

0.01

0.01

0

0

Total Supply

16.72

18.68

16.57

20.98

24.14

24.2

0.06

3.22


Use & Ending Stocks (Million Bales)

Domestic

3.55

3.58

3.45

3.25

3.35

3.35

0

0.1

Exports

10.53

11.25

9.15

14.92

14.5

14.8

0.3

-0.12

Total Use

14.08

14.82

12.6

18.17

17.85

18.15

0.3

-0.02

U.S. Ending Stocks

2.35

3.65

3.8

2.75

6.1

5.8

-0.3

3.05

Foreign Stocks

100.63

108.09

91.56

84.9

84.78

82.2

-2.58

-2.7

Chinese Stocks

62.71

66.92

58.2

48.42

39.67

39.67

0

-8.75


Price and Stocks to Use Ratio

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

$0.779

$0.613

$0.612

$0.68

$0.60-$0.66

$0.63-$0.69

$0.030

-$0.020

U.S. Stocks/Use

17%

25%

30%

15%

34%

32%

-2.22%

16.82%

Chinese Stocks/Use

182%

197%

166%

129%

102%

102%

0.00%

-27.40%

  Source: USDA-WASDE December 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

87.65

119.96

38.48

119.59

38.46

0.06

88

US

2.75

21.44

0.01

3.35

14.8

0.25

5.8

Foreign

84.9

98.52

38.47

116.24

23.66

-0.2

82.2

Central Asia

2.39

6.3

0

3.22

2.49

0

2.98

Afr. Fr. Zone

1.78

5.1

0

0.13

4.46

0

2.3

Australia

2.39

4.7

0

0.04

4.3

-0.15

2.91

Brazil

7.61

7.8

0.13

3.4

4

-0.15

8.28

India

11.13

29.5

1.6

24.75

4.3

0

13.18

Mexico

0.44

1.5

0.8

1.8

0.28

0.03

0.64

China

48.42

25

5.3

39

0.05

0

39.67

EU

0.27

1.52

0.71

0.74

1.41

0

0.36

Turkey

1.58

4

3.5

7

0.3

0

1.78

Pakistan

2.27

8.2

2.7

10.4

0.3

0.03

2.44

Indonesia

0.62

0

3.45

3.4

0.01

0

0.67

Thailand

0.2

0

1.25

1.2

0

0.03

0.23

Bangladesh

1.66

0.13

7.25

7.2

0

0.01

1.82

Vietnam

0.88

0

6.5

6.1

0

0

1.29

ROW

3.26

4.77

5.28

7.86

1.76

0.01

3.65

World Cotton Supply and Use (Million 480 lb Bales) 2017/18 December-November

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

-1.02

-1.5

0.45

0.34

0.42

0.07

-2.88

US

-

0.06

-

-

0.3

0.06

-0.3

Foreign

-1.02

-1.56

0.45

0.34

0.12

-

-2.58

Central Asia

0.03

0.17

-

0.01

0.18

-

0.02

Afr. Fr. Zone

0.05

-0.21

-

-

-0.12

-

-0.04

Australia

-

-0.1

-

-

0.2

-

-0.3

Brazil

-

-

-

-

0.25

-

-0.25

India

-1

-0.5

-

0.25

-0.3

-

-1.45

Mexico

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Turkey

-0.1

0.2

0.1

0.25

0.02

-

-0.07

Pakistan

-

-0.95

0.3

-0.2

-0.05

-

-0.4

Indonesia

-

-

0.1

0.1

-

-

-

Thailand

-

-

-0.05

-0.05

-

-

-

Bangladesh

-

-

-

-

-

-

-

Vietnam

-

-

-

-

-

-

-

ROW

-

-0.17

-

-0.02

-0.06

0.01

-0.09

  Source: USDA-WASDE December 12, 2017


 

Soybeans

Futures Market Reaction: January 2018 soybean futures were down 6 ¾ cents at $9.75 ¾ with a trading range for the day of $9.75 to $9.86 ¼. November 2018 soybean futures closed down 4 ½ cents at $9.94 ¾ with a trading range for the day of $9.94 to $10.02 ½. U.S. soybean exports were dropped 25 million bushels which may be premature; however this will be dependent on the growing South American crop. No revisions were made to Brazil and Argentina production which creates the potential for an interesting January WASDE report. Chinese (and global) demand for soybeans remains strong; however the share of the supply - U.S. versus South America remains a moving estimate. Soybean price direction will be dictated by South American Crop progress and production projections as we move into 2018.  

USDA Summary: Total U.S. oilseed production for 2017/18 is projected up slightly due to a small increase in cottonseed.  Soybean exports are reduced 25 million bushels to 2,225 million on stronger-than-expected competition from Argentina and Brazil during the first quarter of the marketing year.  Seed use is raised in line with projected plantings in the recently released tables to be included in the upcoming Long Term Agricultural Projections to 2027 report https://www.usda.gov/oce/commodity/projections.htm.  Soybean ending stocks for 2017/18 are projected at 445 million bushels, up 20 million from last month and still the highest since 2006/07.The U.S. season-average soybean price range for 2017/18 is narrowed to $8.60 to $10.00 per bushel.  The soybean meal and soybean oil price ranges are unchanged at $295 to $335 per short ton and 32.5 to 36.5 cents per pound, respectively.

The global oilseed supply and demand forecasts for 2017/18 include higher production, exports, and ending stocks compared to last month.  Global oilseed exports for 2017/18 are raised with higher soybean exports for Argentina and Brazil and higher rapeseed exports for Canada.  Partly offsetting are lower soybean exports for the United States and Canada, and lower sunflowerseed exports for Argentina.  Global soybean stocks are up 15 million bushels to 3.281 million, with lower stocks in South America offset by higher stocks in the United States, Canada, and the EU.


 

2013/14 

2014/15 

2015/16

2016/17 Est.

2017/18 Projected November

2017/18 Projected December

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

76.8

83.3

82.7

83.4

90.2

90.2

0.0

6.8

Acres Harvested (Million Acres)

76.3

82.6

81.7

82.7

89.5

89.5

0.0

6.8

U.S. Average Yield (Bu/Acre)

44.0

47.5

48

52

49.5

49.5

0.0

-2.5


Supply (Million Bushels)

Beg. Stocks

141

92

191

197

301

301

0

104

Production

3,358

3,927

3,926

4,296

4,425

4,425

0

129

Imports

72

33

24

22

25

25

0

3

Total Supply

3,570

4,052

4,140

4,515

4,752

4,752

0

237


Use & Ending Stocks (Million Bushels)

Crushing

1,734

1,873

1,886

1,899

1,940

1,940

0

41

Exports

1,638

1,842

1,942

2,174

2,250

2,225

-25

51

Seed and Residual

107

146

115

141

136

141

5

0

Total Use

3,478

3,862

3,944

4,214

4,326

4,306

-20

92

U.S. Ending Stocks

92

191

197

301

425

445

20

144

Foreign Stocks

2,211

2,658

2,666

3,249

3,172

3,167

-5

-82


Price and Stocks to Use Ratio

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

$13.00

$10.10

$8.95

$9.47

$8.45-$10.15

$8.60-$10.00

$0.00

-$0.17

U.S. Stocks/Use

2.65%

4.95%

4.99%

7.14%

9.82%

10.33%

0.51%

3.19%

  Source: USDA-WASDE December 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,550

12,804

5,527

11,081

12,666

5,602

3,613

US

301

4,425

25

1,940

2,081

2,225

445

Foreign

3,249

8,379

5,502

9,141

10,585

3,377

3,167

Argentina

1,338

2,094

62

1,648

1,817

312

1,366

Brazil

913

3,968

7

1,543

1,679

2,407

803

Paraguay

30

345

0

136

139

220

17

China

749

522

3,564

3,491

4,071

6

758

EU

39

91

514

533

593

7

44

Japan

8

10

121

86

129

0

10

Mexico

6

18

158

173

175

0

6

ROW

166

1,330

1,074

1,531

1,982

424

164

World Soybean Supply and Use (Million Bushels) 2017/18 December-November

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

12

-15

11

-15

-9

1

15

US

-

-

-

-

5

-25

20

Foreign

12

-15

11

-15

-14

26

-5

Argentina

-3

-

7

-

-

18

-14

Brazil

4

-

-

-

-

18

-15

Paraguay

6

-

-

-

1

-

5

China

-

-

-

-

-

-

-

EU

6

-

-

-

-

-

6

Japan

-

-

-

-

-

-

-

Mexico

2

-

-

-

-

-

1

ROW

-2

-15

3

-15

-14

-11

12

   Source: USDA-WASDE December 12, 2017
 

Wheat

Futures Market Reaction: March 2018 wheat futures closed down 2 ¾ cents at $4.10 ¾ with a trading range for the day of $4.10 ½ to $4.18 ¾.  July 2018 wheat futures closed down 4 ¼ cents at $4.37 ¼ with a trading range for the day of $4.37 to $4.45 ¾. Wheat remains in the status quo – massive supply and stagnant demand. Dramatic price improvements seem very unlikely given the current fundamental outlook.

USDA Summary: Projected 2017/18 U.S. ending stocks are raised this month by 25 million bushels on reduced exports.  This reduction is primarily attributed to heightened Canadian competition expected from its increased exportable supplies.  Canada and the United States compete in several of the same markets in Latin America and East Asia.  No other supply or use categories are revised this month.  Based on NASS prices reported to date and price expectations for the rest of the marketing year, the projected 2017/18 season-average farm price (SAFP) is unchanged at the midpoint of $4.60 per bushel.  However, the SAFP is narrowed by 10 cents at both ends of the range to $4.50 to $4.70.

Global 2017/18 wheat supplies are increased, primarily on higher production forecasts for Canada and the European Union more than offsetting production declines in Brazil, South Africa, and Yemen.  Canadian wheat production is raised 110 million bushels to 1.102 billion, largely on increased yields in the Prairie Provinces as reported in Statistics Canada’s Production of Principal Field Crops report, released on December 6.  EU wheat production is raised 37 million bushels to 5.603 billion, mainly on higher production in Romania, Poland, Latvia, and Bulgaria.

World 2017/18 trade is greater this month as higher exports from Canada, Russia, and Ukraine more than offset reduced U.S. exports.  Projected imports are increased for Indonesia, China and Brazil.  Indonesia’s imports are raised 37 million bushels to 423 million, primarily on higher expected feed wheat usage.  Total world consumption is projected 77 million bushels higher, primarily on greater usage from Indonesia, Canada, and the EU.  Projected global ending stocks are 33 million bushels higher this month at 9.862 billion, which is a new record.

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected November

2017/18 Projected December

2017/18 Change From Previous Month

Change 2016/17 to 2017/18

 

Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

56.2

56.8

55

50.1

46

46

0

-4.1

Acres Harvested (Million Acres)

45.3

46.4

47.3

43.9

37.6

37.6

0

-6.3

U.S. Average Yield (Bu/Acre)

47.1

43.7

43.6

52.7

46.3

46.3

0

-6.4


Supply (Million Bushels)

Beg. Stocks

718

590

752

976

1,181

1,181

0

205

Production

2,135

2,026

2,062

2,309

1,741

1,741

0

-568

Imports

173

151

113

118

150

150

0

32

Total Supply

3,026

2,768

2,927

3,402

3,071

3,071

0

-331


Use & Ending Stocks (Million Bushels)

Food

955

958

957

949

950

950

0

1

Seed

77

79

67

61

66

66

0

5

Feed

228

114

149

156

120

120

0

-36

Exports

1,176

864

778

1,055

1,000

975

-25

-80

Total Use

2,436

2,015

1,951

2,222

2,136

2,111

-25

-111

U.S. Ending Stocks

590

752

976

1,181

935

960

25

-221

Foreign Stocks

6,524

7,243

7,895

8,201

8,895

8,902

7

701


Price and Stocks to Use Ratio

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

$6.87

$5.99

$4.89

$3.89

$4.40-$4.80

$4.50-$4.70

$0.00

$0.75

U.S. Stocks/Use

24.22%

37.32%

50.03%

53.15%

43.77%

45.48%

1.70%

-7.67%

  Source: USDA-WASDE December 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,382

27,749

6,636

5,242

27,268

6,693

9,863

US

1,181

1,741

150

120

1,136

975

960

Foreign

8,201

26,009

6,486

5,122

26,132

5,718

8,902

Argentina

12

643

0

4

206

430

19

Australia

261

790

6

129

257

643

156

Canada

251

1,102

18

129

320

808

244

EU

396

5,603

220

2,094

4,731

1,047

442

Brazil

80

156

294

18

445

29

56

China

4,080

4,777

129

478

4,262

29

4,694

Sel. Mideast

479

714

687

192

1,487

31

362

N. Africa

511

667

1,042

80

1,656

25

539

Pakistan

159

944

1

29

911

22

171

Southeast Asia

206

0

955

286

894

39

228

India

360

3,615

110

184

3,674

18

392

Russia

398

3,050

18

753

1,617

1,231

618

Kazakhstan

123

514

2

77

254

276

111

Ukraine

65

974

1

125

360

625

55

ROW

819

2,460

3,002

544

5,058

463

815

World Wheat Supply and Use (Million Bushels) 2017/18 December-November

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-10

119

51

70

76

54

33

US

-

-

-

-

-

-25

25

Foreign

-10

119

51

70

76

79

7

Argentina

-

-

-

-

-4

-

4

Australia

-

-

-

-

-

-

-

Canada

-1

110

-

22

22

37

50

EU

10

37

-18

18

18

-

11

Brazil

-

-24

18

-

-

-

-6

China

-

-

18

-

-

-

18

Sel. Mideast

-

-2

-

-

-4

4

-3

N. Africa

-

-

-

-

-

-

-

Pakistan

-

-

-

-

-

-

-

Southeast Asia

-20

-

35

33

37

-

-22

India

-

-

-

-

-

-

-

Russia

-

-

-

-

-

18

-18

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

-

-

-4

-7

18

-11

ROW

1

-3

-2

-

14

2

-16

  Source: USDA-WASDE December 12, 2017
 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the December 12, 2017 USDA WASDE reports. This month’s profitability update continues the transition to 2018 as producers have made or will soon be making decisions on 2018 crop selection starting with wheat.  The planning process is on-going and if you are considering wheat, you have to consider how it looks compared to other crops. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2017 state average projection of 171 bushels per acre for corn, 51 bushels per acre for soybeans, 1031 pounds per acre cotton, and 71 bushels per acre wheat. Prices used for 2018 are current forward prices for 2018 harvest. Based on these yields and prices, soybeans, corn, and wheat-soybeans are projected to have positive net returns over variable, land, and fixed costs. Cotton is projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. Producers with own or cash rent ground may want to consider wheat and double crop soybeans in their rotation. It may also be viable in a share rent situation. Costs are based on the 2017 UT Extension Row Crop budgets with adjustments made based on current input prices. 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 70 cents that is being used in the profitability outlook. The price of 70 cents is made up of a cash price of 65 cents and gin rebates (seed & hauling) of 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 - $ 97, Soybeans - $38, Corn - $121 (includes 170 units of N), Milo - $87, and Wheat/Soybeans - $93. 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 2017 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.


2018 Estimated Returns – Non-Irrigated

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

982 lbs.

47 bu.

161 bu.

90 bu.

70 bu./35 bu.

Price (as of 12/12/17)

$0.70 lb.

$9.85 bu.

$3.50 bu.

$3.20 bu.

$4.40 bu./$9.85 bu.

Revenue

$687

$463

$564

$288

$653

Variable Expenses

$403

$216

$308

$229

$374

Returns Over Variable

$284

$247

$255

$59

$278

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

$170

$114

$138

$69

$159

Returns Over Variable and Land Costs

$115

$133

$118

-$10

$119

Fixed Costs
Depreciation & interest on machinery

$130

$62

$56

$62

$99

Returns Over Specified Costs

-$16

$70

$62

-$72

$20

Breakeven Price at Average Yield and Specified Cost

$0.72

$8.37

$3.12

$4.02

$4.91/$8.29

 

  

2018 Estimated Returns - Irrigation

Considering irrigation, profitability is positive for soybeans and corn considering variable, land and fixed cost. Returns Over Variable and Land Costs are positive for cotton and wheat/soybeans, but not enough to cover fixed costs.  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 $28 per acre for corn, $24 per acre for cotton, and $18 per acre for soybeans and $15 per acre of irrigation repairs and maintenance. Fixed costs of $85 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 2017 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable and Fixed IR Costs as a guide in decision making. Producers with share rent ground should use Returns Over Variable, Fixed IR Costs and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost minus 25% of the irrigation equipment fixed cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. A management cost of $30 per acre is included in Fixed Costs – management labor, depreciation & interest on machinery. This is an additional $15 above the dryland crop management labor. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid. 

2018 Estimated Returns – Irrigation

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

130 bu.

70 bu./45 bu.

Price (as of 12/12/17)

$0.70 lb.

$9.85 bu.

$3.50 bu.

$3.20 bu.

$4.40 bu./$9.85 bu.

Revenue

$840

$591

$735

$416

$751

Variable Expenses( include energy cost)

$452

$250

$402

$291

$409

Fixed Irrigation Costs per Acre

$85

$85

$85

$85

$85

Returns Over Variable & Fixed IR Costs

$303

$256

$248

$40

$258

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

 

$186

$124

$159

$80

$163

Returns Over Variable, IR Fixed Cost and Land Costs

$117

$131

$89

-$40

$95

Fixed Costs- management labor,
depreciation & interest on machinery

$145

$77

$71

$77

$114

Returns Over Specified Costs

-$29

$54

$17

-$117

-$19

Breakeven Price at Average Yield and Specified Cost

$0.72

$8.95

$3.42

$4.10

$4.91/$9.68


  

Past Monthly Comments:   

July 12, 2017     August 10, 2017     September 12, 2017    October 12, 2017      November 9, 2017   December 12, 2017