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.
 

 


 

October 11, 2018 - USDA World Supply and Demand Estimates

 

Corn

Market Reaction: December 2018 corn futures closed up 6 ½ cents at $3.69 ¼ with a trading range for the day of $3.60 ¼ to $3.73. December 2019 corn futures closed up 5 ½ cents at $4.02 ¼ with a trading range for the day of $3.94 ½ to $4.03. The market reacted positively to the small yield reduction on this month’s report. The increase in beginning stocks was factored into the market from the release of the September Grain Stocks report. A small increase in exports provides some hope for higher prices.

USDA Summary: This month’s 2018/19 U.S. corn outlook is for lower production, increased exports, reduced feed and residual use and larger ending stocks.  Corn production is forecast at 14.778 billion bushels, down 49 million on a reduced yield forecast.  Harvested area is virtually unchanged from last month.  Corn supplies are forecast record high, as a smaller crop is more than offset by an increase in beginning stocks based on the September 28 Grain Stocks report.  Exports are raised 75 million bushels reflecting U.S. price competitiveness and reduced exports for Russia.  Projected feed and residual use is lowered 25 million bushels based on a lower crop and indicated disappearance during 2017/18. Corn ending stocks for 2018/19 are raised 39 million bushels.  The projected midpoint for the season-average corn price received by producers is unchanged at a range of $3.00 to $4.00 per bushel. 

Global coarse grain production for 2018/19 is forecast down.  The 2018/19 foreign coarse grain outlook is for lower production and consumption, and higher stocks relative to last month.  Foreign corn production is forecast modestly higher reflecting projected increases for Egypt, Mali, Kenya, Canada, the EU, and Serbia that are partly offset by reductions for Russia and Malawi.  The projected corn yield for Russia is lowered based on reported harvest results to date.

Corn exports are reduced for Russia, with more than offsetting increases for the United States, Serbia, and Canada.  Corn imports are raised for Mexico and Israel, with the former based on lowered expected imports of sorghum.  Foreign corn ending stocks are higher, mostly reflecting increases for Mexico, Egypt, and Iran that are partly offset by reductions for South Africa and Turkey.  Global corn stocks, at 6.275 billion bushels, are up 91 million from last month.
 



 

 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected September

2018/19 Projected October

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million)

90.6

88

94

90.2

89.1

89.1

0.0

-1.1

Acres Harvested (Million)

83.1

80.8

86.7

82.7

81.8

81.8

0.0

-0.9

U.S. Average Yield (Bu/Acre)

171.0

168.4

174.6

176.6

181.3

180.7

-0.6

4.1


Supply (Million Bushels)

Beg. Stocks

1,232

1,731

1,737

2,293

2,002

2,140

138

-153

Production

14,216

13,602

15,148

14,604

14,827

14,778

-49

174

Imports

32

68

57

36

50

50

0

14

Total Supply

15,479

15,401

16,942

16,934

16,879

16,968

89

34


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,280

5,114

5,470

5,302

5,575

5,550

-25

248

Ethanol

5,200

5,224

5,432

5,601

5,650

5,650

0

49

Food, Seed & Industrial

1,401

1,424

1,453

1,453

1,480

1,480

0

27

Exports

1,867

1,901

2,294

2,438

2,400

2,475

75

37

Total Use

13,748

13,664

14,649

14,793

15,105

15,155

50

362

U.S. Ending Stocks

1,731

1,737

2,293

2,140

1,774

1,813

39

-327

Foreign Stocks

6,529

6,685

6,674

5,663

4,408

4,460

52

-1,203


Price and Stocks to Use Ratio

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

$3.70

$3.61

$3.36

$3.36

$3.00-$4.00

$3.00-$4.00

$0.00

$0.14

U.S. Stocks/Use

12.59%

12.71%

15.65%

14.78%

11.74%

11.96%

0.2%

-2.82%


Source: USDA-WASDE October 11, 2018


 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

7,803

42,057

6,095

26,649

43,587

6,416

6,273

US

2,140

14,778

50

5,550

12,680

2,475

1,813

Foreign

5,663

27,279

6,045

21,099

30,907

3,941

4,460

Argentina

94

1,614

0

335

488

1,063

157

Brazil

414

3,720

39

2,205

2,618

1,142

414

South Africa

103

512

0

260

496

75

44

Egypt

70

268

382

539

638

0

81

EU

374

2,401

768

2,500

3,248

59

237

Japan

52

0

591

457

598

0

44

Mexico

215

1,024

657

1,004

1,720

59

117

Southeast Asia

91

1,151

610

1,421

1,732

30

90

South Korea

75

3

402

315

405

0

74

Canada

93

571

20

327

539

63

81

China

3,132

8,858

197

6,850

9,881

2

2,303

Ukraine

56

1,220

1

193

244

984

48

ROW

893

5,937

2,379

4,694

8,298

464

769

World Corn Supply and Use (Million Bushels) October-September 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

160

-27

33

-

41

50

91

US

138

-49

-

-25

-25

75

39

Foreign

22

22

33

25

66

-26

52

Argentina

-

-

-

-

-

-

-

Brazil

-

-

-

-

-

-

-

South Africa

-11

-

-

-

-

-

-11

Egypt

-

16

-

4

4

-

12

EU

-

8

-

-

-

-

8

Japan

-

-

-

-

-

-

-

Mexico

26

-

20

20

20

-

26

Southeast Asia

8

-4

-

-4

-4

-

8

South Korea

-

-

-

-

-

-

-

Canada

-

8

-

-

-

6

2

China

-

-

-

-

-

-

-

Ukraine

-

-

-

-

-

-

-

ROW

-1

-6

14

5

46

-31

8

 

Source: USDA-WASDE October 11, 2018

 

 
 
 

Cotton

Market Reaction: December 2018 cotton futures closed up 0.01 cents at 76.81 with a trading range for the day of 76.15 to 77.76 cents. December 2019 cotton futures closed up 0.20 cents at 76.2 with a trading range for the day of 75.65 to 76.6 cents. Beginning stocks in India were decreased by 2.9 million bales however the market has been discounting the USDA’s Indian stocks for months now.

USDA Summary: The 2018/19 U.S. cotton supply and demand estimates show higher ending stocks, based on slightly larger production and lower exports relative to last month.  Production is raised 81,000 bales, with higher production in Texas and Georgia largely offset by lower production in the Carolinas.  Domestic mill use is unchanged from last month, but the export forecast is reduced 200,000 bales to 15.5 million, due to reduced world trade and consumption.  Ending stocks are forecast at 5.0 million bales, and the resulting stocks-to-use ratio of 26 percent is slightly higher than the previous month’s forecast, and the highest since 2015/16.  The forecast range for the marketing year average farm price is 69.0 to 77.0 cents per pound; the midpoint of 73.0 cents is down 2 cents from the previous month’s projection.

The 2018/19 global ending stocks forecast is lowered 4 percent this month as lower production and sharply lower beginning stocks offset marginally smaller consumption.  Stocks are lowered mainly in India, as revisions are made to production, consumption, and loss over 2002/03-2013/14 to better reflect Indian government data (consumption) and the impact of shifting producers’ marketing patterns (see the October 2018 issue of the FAS Cotton: World Markets and Trade publication).  Production forecasts are lowered for Australia, and raised for Greece and the United States.  Consumption and imports are lowered for Turkey.  Global beginning stocks are lowered 2.9 million bales and ending stocks are lowered 3.0 million bales.  Ending stocks in 2018/19 are down 6.4 million bales from last year, largely reflecting an expected 8.2-million-bale decline in China.

 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected September

2018/19 Projected October

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million)

11.04

8.58

10.07

12.61

14.04

14.04

0

1.43

Acres Harvested (Million)

9.35

8.07

9.51

11.1

10.55

10.53

-0.02

-0.57

U.S. Average Yield (lbs/acre)

838

766

867

905

895

901

6

-4


Supply (Million Bales)

Beg. Stocks

2.35

3.65

3.8

2.75

4.3

4.3

0

1.55

Production

16.32

12.89

17.17

20.92

19.68

19.76

0.08

-1.16

Imports

0.01

0.03

0.01

0

0.01

0.01

0

0.01

Total Supply

18.68

16.57

20.98

23.68

23.99

24.07

0.08

0.39


Use & Ending Stocks (Million Bales)

Domestic

3.58

3.45

3.25

3.23

3.4

3.4

0

0.17

Exports

11.25

9.15

14.92

15.85

15.7

15.5

-0.2

-0.35

Total Use

14.82

12.6

18.17

19.07

19.1

18.9

-0.2

-0.17

U.S. Ending Stocks

3.65

3.8

2.75

4.3

4.7

5

0.3

0.7

Foreign Stocks

108.09

91.11

78.1

76.59

72.76

69.45

-3.31

-7.14

Chinese Stocks

66.92

58.2

45.92

38.02

29.87

29.87

0

-8.15


Price and Stocks to Use Ratio

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

$0.613

$0.612

$0.68

$0.68

$0.70-$0.80

$0.69-$0.77

-$0.020

$0.050

U.S. Stocks/Use

25%

30%

15%

25%

25%

26%

1.85%

1.52%

Chinese Stocks/Use

197%

166%

119%

102%

70%

70%

0.00%

-32.14%


Source: USDA-WASDE October 11, 2018

 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

80.89

121.66

41.44

127.76

41.45

0.33

74.45

US

4.3

19.76

0.01

3.4

15.5

0.17

5

Foreign

76.59

101.89

41.43

124.36

25.95

0.16

69.45

Central Asia

2.72

5.85

0

3.71

2.39

0

2.48

Afr. Fr. Zone

2.25

5.28

0

0.14

4.97

0

2.42

Australia

2.94

2.5

0

0.04

3.6

0

1.81

Brazil

8.66

10

0.08

3.6

5.4

0

9.73

India

8.68

28.7

1.5

25.5

4.4

0

8.98

Mexico

0.66

1.73

0.9

1.9

0.6

0.03

0.76

China

38.02

27.5

7

42.5

0.15

0

29.87

EU

0.26

1.66

0.71

0.75

1.53

0.05

0.29

Turkey

1.88

4.5

3.1

7.3

0.4

0

1.78

Pakistan

2.83

8.5

2.5

11

0.18

0.03

2.63

Indonesia

0.62

0

3.75

3.65

0.01

0

0.71

Thailand

0.18

0

1.13

1.1

0

0.03

0.18

Bangladesh

1.86

0.14

8.1

8

0

0.01

2.08

Vietnam

1.19

0

7.7

7.5

0

0

1.39

ROW

3.84

5.54

4.96

7.67

2.32

0.01

4.34

World Cotton Supply and Use (Million 480 lb Bales) October-September 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

-2.9

-0.31

-0.35

-0.18

-0.35

-0.02

-3.01

US

-

0.08

-

-

-0.2

-0.02

0.3

Foreign

-2.9

-0.4

-0.36

-0.18

-0.15

-

-3.31

Central Asia

0.01

-

-

-

0.01

-

-

Afr. Fr. Zone

-

-

-

-

-

-

-

Australia

-

-0.5

-

-

-0.3

-

-0.2

Brazil

-

-

-

-

-0.1

-

0.1

India

-2.9

-

-

-

-

-

-2.9

Mexico

0.01

-0.02

-

-

0.05

-

-0.07

China

-

-

-

-

-

-

-

EU

0.01

0.1

0.01

-

0.08

-

0.03

Turkey

-0.1

-

-0.4

-0.2

0.02

-

-0.32

Pakistan

-

-

-

-

-

-

-

Indonesia

-

-

-

-

-

-

-

Thailand

-

-

-

-

-

-

-

Bangladesh

-

-

-

-

-

-

-

Vietnam

-

-

-

-

-

-

-

ROW

0.07

0.03

0.04

0.02

0.09

0.00

0.05


Source: USDA-WASDE October 11, 2018


 

 
 

Soybeans

Futures Market Reaction: November 2018 soybean futures were up 6 cents at $8.58 ¼ with a trading range for the day of $8.47 to $8.64. November 2019 soybean futures closed up 6 ¾ cents at $9.25 with a trading range for the day of $9.12 ¾ to $9.27 ½. Increased soybean yield was offset by lower harvested acreage. Beginning stocks were adjusted according to the September Grain Stocks report resulting in an increase in U.S. ending stocks of 40 million bushels to 885 million. The markets appeared to be thankful the domestic carryover was not higher.

USDA Summary: U.S. oilseed production for 2018/19 is projected down from last month with lower soybean and sunflowerseed production only partly offset with higher canola production.  Soybean production is forecast at 4,690 million bushels, down 3.5 million with higher yields offset by lower harvested area.  The soybean yield is projected at 53.1 bushels per acre, up 0.3 bushels from the September forecast.  Harvested area is reduced 0.6 million acres to 88.3 million.  Increases for North Dakota, Nebraska, and Iowa are more than offset by reductions in many other states.  Soybean supplies for 2018/19 are projected at a record 5,153 million bushels on higher beginning stocks.  With soybean use unchanged, ending stocks are projected at 885 million bushels. The 2018/19 U.S. season-average soybean price is forecast at $7.35 to $9.85, unchanged at the midpoint from last month.  Soybean meal and soybean oil price projections are also unchanged at $290 to $330 per short ton and 28.0 to 32.0 cents per pound, respectively.

Global oilseed production for 2018/19 is projected down from last month.  Global soybean output is projected at a record 13.577 billion bushels, up 7 million with higher production for Canada partly offset by lower projections for India, the United States, and Mexico.  The soybean and peanut crops for India are reduced on lower area harvested based on government reports.    Despite lower global oilseed production, increased beginning stocks, mainly in the United States, results in an increase to global oilseed ending stocks.  Global soybean ending stocks are increased 66 million bushels to 4.042 billion.

 

2014/15 

2015/16

2016/17

2017/18 Est.

2018/19 Projected September

2018/19 Projected October

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

89.6

89.1

-0.5

-1.0

Acres Harvested (Million Acres)

82.6

81.7

82.7

89.5

88.9

88.3

-0.6

-1.2

U.S. Average Yield (Bu/Acre)

47.5

48

52

49.3

52.8

53.1

0.3

3.8


Supply (Million Bushels)

Beg. Stocks

92

191

197

302

395

438

43

136

Production

3,927

3,926

4,296

4,411

4,693

4,690

-3

279

Imports

33

24

22

22

25

25

0

3

Total Supply

4,052

4,140

4,515

4,734

5,113

5,153

40

419


Use & Ending Stocks (Million Bushels)

Crushing

1,873

1,886

1,901

2,055

2,070

2,070

0

15

Exports

1,842

1,942

2,166

2,129

2,060

2,060

0

-69

Seed and Residual

146

115

146

112

137

137

0

25

Total Use

3,862

3,944

4,214

4,296

4,268

4,268

0

-28

U.S. Ending Stocks

191

197

302

438

845

885

40

447

Foreign Stocks

2,658

2,687

3,251

3,113

3,133

3,158

25

45


Price and Stocks to Use Ratio

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

$10.10

$8.95

$9.47

$9.33

$7.35-$9.85

$7.35-$9.85

$0.00

-$0.73

U.S. Stocks/Use

4.95%

4.99%

7.17%

12.66%

19.80%

20.74%

0.94%

8.08%

Source: USDA-WASDE October 11, 2018


 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,551

13,576

5,670

11,324

12,971

5,783

4,043

US

438

4,690

25

2,070

2,208

2,060

885

Foreign

3,113

8,886

5,645

9,255

10,763

3,724

3,158

Argentina

1,211

2,094

82

1,580

1,761

294

1,333

Brazil

852

4,428

13

1,569

1,698

2,756

840

Paraguay

8

360

0

145

148

217

4

China

825

551

3,454

3,436

4,064

4

763

EU

69

99

581

610

671

11

67

Japan

8

10

121

86

129

0

10

Mexico

6

12

180

191

193

0

6

ROW

133

1,332

1,215

1,637

2,101

442

137

World Soybean Supply and Use (Million Bushels) October-September 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

70

6

7

-

-

18

65

US

43

-4

-

-

-

-

40

Foreign

27

10

7

-

-

18

25

Argentina

11

-

-

-

-

-

11

Brazil

7

-

-

-

-

-

7

Paraguay

-7

-

-

-

-

-

-7

China

-

-

-

-

-

-

-

EU

15

-

-

-

-

-

15

Japan

-

-

-

-

-

-

-

Mexico

-

-3

6

-

-

-

2

ROW

0

13

2

0

0

18

-3

Source: USDA-WASDE October 11, 2018
 
 

Wheat

  Futures Market Reaction: December 2018 wheat futures closed down 2 ½ cents at $5.08 with a trading range for the day of $5.06 ½ to $5.21. July 2019 wheat futures closed down ¾ cent at $5.48 with a trading range for the day of $5.45 to $5.57 ¾.

USDA Summary: The outlook for 2018/19 U.S. wheat this month is larger supplies, reduced domestic use, unchanged exports, and higher ending stocks.  Wheat production is raised 7 million bushels to 1,884 million from the NASS Small Grains Summary, issued on September 28.  Projected imports increased 5 million bushels to 140 million on higher-than-expected imports of spring wheat and Durum in the first quarter (June-August).  The NASS Grain Stocks report indicated a 21 percent year-to-year increase in implied disappearance for first quarter feed and residual.  But record-large 2018/19 U.S. corn supplies are expected to restrain feed and residual use for the remainder of the year with the annual estimate reduced by 10 million bushels to 110 million.  Wheat exports are unchanged at 1,025 million bushels but there are offsetting by-class changes with White higher and Hard Red Winter lower.  Projected ending stocks are higher at 956 million bushels but still 13 percent below last year’s revised 1,099 million.  The season-average farm price range is unchanged at the midpoint of $5.10 per bushel and the range is narrowed to $4.80 to $5.40. 

Global 2018/19 wheat supplies are reduced, primarily on lower production forecasts for Australia and Russia.  Australia’s production is decreased 55 million bushels to 680 million on continued dry conditions and possible frost damage.  This would be Australia’s smallest production since 2007/08.  Russia’s wheat production is reduced 37 million bushels to 2.572 billion on lower-than-expected yields in some spring wheat areas.  Projected global 2018/19 trade is lower, almost all on reduced Australian exports, which are down 37 million bushels to 478 million.  Global imports are decreased with Bangladesh, Azerbaijan, and Nigeria accounting for most of the reduction.  Projected 2018/19 world consumption is fractionally lower, primarily on less use in Azerbaijan, Bangladesh, Nigeria, and the United States.  Global ending stocks are reduced 40 million bushels to 9.561 billion, down 5 percent from last year’s record.
 


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected September

2018/19 Projected October

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

47.8

47.8

0

1.8

Acres Harvested (Million Acres)

46.4

47.3

43.9

37.5

39.6

39.6

0

2.1

U.S. Average Yield (Bu/Acre)

43.7

43.6

52.7

46.3

47.4

47.6

0.2

1.3


Supply (Million Bushels)

Beg. Stocks

590

752

976

1,181

1,100

1,099

-1

-82

Production

2,026

2,062

2,309

1,740

1,877

1,884

7

144

Imports

151

113

118

157

135

140

5

-17

Total Supply

2,768

2,927

3,402

3,078

3,112

3,123

11

45


Use & Ending Stocks (Million Bushels)

Food

958

957

949

964

970

970

0

6

Seed

79

67

61

63

62

62

0

-1

Feed

114

149

161

50

120

110

-10

60

Exports

864

778

1,051

901

1,025

1,025

0

124

Total Use

2,015

1,951

2,222

1,979

2,177

2,167

-10

188

U.S. Ending Stocks

752

976

1,181

1,099

935

956

21

-143

Foreign Stocks

7,243

7,944

8,272

9,000

8,666

8,604

-62

-396


Price and Stocks to Use Ratio

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

$5.99

$4.89

$3.89

$4.72

$4.70-$5.50

$4.80-$5.40

$0.00

$0.37

U.S. Stocks/Use

37.32%

50.03%

53.15%

55.53%

42.95%

44.12%

1.17%

-11.42%

Source: USDA-WASDE October 11, 2018

 
 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

10,099

26,857

6,532

5,154

27,396

6,629

9,560

US

1,099

1,885

140

110

1,142

1,025

956

Foreign

9,000

24,972

6,392

5,044

26,254

5,603

8,604

Argentina

37

717

0

4

213

522

19

Australia

198

680

6

154

283

478

123

Canada

227

1,157

17

147

331

882

188

EU

535

5,052

220

1,947

4,593

845

369

Brazil

47

173

276

18

445

11

39

China

4,660

4,703

165

625

4,483

44

5,002

Sel. Mideast

463

693

654

177

1,436

38

336

N. Africa

538

775

952

83

1,687

25

553

Pakistan

177

966

0

44

930

44

170

Southeast Asia

185

0

959

314

957

39

148

India

485

3,663

7

184

3,601

18

536

Russia

399

2,572

18

661

1,488

1,286

216

Kazakhstan

104

551

2

81

257

312

88

Ukraine

46

937

1

107

338

606

39

ROW

899

2,332

3,114

499

5,214

452

777

World Wheat Supply and Use (Million Bushels) October-September 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

18

-76

-49

-18

-17

-36

-41

US

-1

8

5

-10

-10

-

21

Foreign

20

-84

-54

-8

-7

-37

-62

Argentina

11

-

-

-

4

-

7

Australia

-

-55

-

4

4

-37

-22

Canada

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Brazil

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Sel. Mideast

-

-

-

-

-

-

-

N. Africa

-

-

-

-

-

-

-

Pakistan

-

-

-

-

-

-

-

Southeast Asia

-6

-

-4

-

-2

-

-8

India

-

-

-

-

-

-

-

Russia

-

-37

-

-

-

-

-37

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

-

-

-4

-

-

-

ROW

15

8

-51

-7

-12

0

-2

Source: USDA-WASDE October 11, 2018
 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the October 11 12, 2018 USDA WASDE reports. This month’s profitability update continues the transition to 2019 as producers have made or will soon be making decisions on 2019 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 in 2019. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2018 state average projection of 174 bushels per acre for corn, 50 bushels per acre for soybeans, 1034 pounds per acre cotton, and 63 bushels per acre wheat. Prices used for 2019 are estimates based on 2019 harvest futures prices. Based on these yields and prices, soybeans and corn are projected to have positive net returns over variable, land, and fixed costs. Cotton and wheat/soybeans are projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. 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 but will need to be looked at closely. Wheat by itself at average yields is slightly under break-even. Producers planting wheat will want to watch the market closely and take advantage of any market rallies. 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 72 cents that is being used in the profitability outlook. The price of 72 cents is made up of a cash price of 70 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 - $ 102, Soybeans - $38, Corn - $136 (includes 170 units of N), and Wheat/Soybeans - $99. These cost reflect a slight increase from 2018 to 2019. 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

Wheat/Soybeans

Yield

1019 lbs.

47 bu.

165 bu.

68 bu./35 bu.

Price (as of 10/11/18)

$0.72 lb.

$9.05 bu.

$3.87 bu.

$5.52 bu./$9.05 bu.

Revenue

$734

$425

$639

$692

Variable Expenses

$437

$226

$355

$422

Returns Over Variable

$297

$199

$284

$270

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

$181

$104

$157

$169

Returns Over Variable and Land Costs

$116

$95

$127

$101

Fixed Costs
Depreciation & interest on machinery

$134

$64

$57

$111

Returns Over Specified Costs

-$18

$31

$70

-$10

Breakeven Price at Average Yield and Specified Cost

$0.74

$8.39

$3.45

$5.62/$9.15

  

2018 Estimated Returns - Irrigation

Considering irrigation, Returns Over Variable, Land, and Fixed cost are positive for soybeans and corn. Returns Over Variable and Land Costs are positive for cotton and wheat/soybeans, but not enough to cover fixed costs.  An individual producer’s machinery and equipment costs will have a strong influence on profitability. 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 over the previous year.  Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $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 $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 - $106, Soybeans - $38, Corn - $176 (includes 240 units of N), and Wheat/Soybeans - $99. 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 – Irrigated

 

Cotton

Soybeans

Corn

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

68 bu./45 bu.

Price (as of 10/11/18)

$0.72 lb.

$9.05 bu.

$3.87 bu.

$5.52 bu./$9.05 bu.

Revenue

$864

$543

$813

$783

Variable Expenses( include energy cost)

$486

$257

$456

$453

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$292

$200

$270

$243

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

 

$192

$112

$178

$170

Returns Over Variable, IR Fixed Cost and Land Costs

$100

$88

$92

$73

Fixed Costs- management labor,
depreciation & interest on machinery

$149

$79

$72

$126

Returns Over Specified Costs

-$48

$9

$20

-$53

Breakeven Price at Average Yield and Specified Cost

$0.76

$8.78

$3.67

$5.62/$10.07

​​
  

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