Supply and Demand Estimates and Profitability Outlook

 
 
The following is a summary of the USDA's monthly World Agricultural Supply and Demand Estimates (WASDE) report. Domestic balance sheets for corn, soybeans, cotton, and wheat are displayed along with price reaction in futures markets for each commodity on the day of the report release. Additionally, supply and demand estimates for key importing and exporting countries are provided for the current month along with change in estimates from the previous report. The Profitability Outlook section contains estimated returns per acre for each commodity based on 2018 Tennessee state average/trend yields and current price offerings (note: cotton prices include a seed and hauling rebate). Variable expenses are based on the University of Tennessee Extension 2019 Row Crop Budgets. Prices are updated monthly; expenses are updated as warranted during the year and may be different than the expenses contained in the 2019 Row Crop Budgets. This section provides an estimation of the current relative profitability amongst major row crops in Tennessee.
 
The report is prepared monthly by Dr. Aaron Smith and Chuck Danehower.
 

 


 

February 8, 2019 - USDA World Supply and Demand Estimates

 

Corn

Market Reaction: March 2019 corn futures closed down 2 ¼ cents at $3.74 ¼ with a trading range for the day of $3.74 to $3.81 ¾. December 2019 corn futures closed down 1 cents at $3.99 ¼ with a trading range for the day of $3.98 ½ to $4.04. Year-over-year reduction in domestic and foreign stocks continue to be a positive factor for prices. However, reduced ethanol use, greater planted acres in 2019, and continued trade uncertainty provide some degree of skepticism for price improvements.

USDA Summary: This month’s 2018/19 U.S. corn outlook is for lower imports, production, food, seed, and industrial use (FSI), feed and residual use, and stocks. Corn production is estimated at 14.420 billion bushels, down 206 million on reduction in yield to 176.4 bushels per acre. Harvested area is down fractionally.  Total corn use is down 165 million bushels to 14.865 billion. FSI use is lowered 40 million bushels, reflecting reductions to corn used for ethanol and other industrial use. For ethanol, the reduction is based on the most recent data from the Grain Crushings and Co-Products Production report and weekly ethanol production data as reported by the Energy Information Administration for the months of December and January. Other FSI use is lowered 15 million bushels with lower projections for high fructose corn syrup and glucose and dextrose. Feed and residual use is lowered 125 million bushels to 5.375 billion based on a smaller crop and indicated disappearance during September-November as reflected by the December 1 stocks. With supply falling more than use, corn stocks are lowered 46 million bushels. The season-average corn price received by producers is unchanged at a midpoint of $3.60 per bushel.

Global coarse grain production for 2018/19 is forecast lower. This month’s foreign coarse grain outlook is for increased production and consumption, and marginally lower trade. Foreign corn production is forecast higher with increases for Argentina, China, and Ukraine more than offsetting reductions for South Africa and Mexico. Argentina’s corn production is up based on higher expected area and yield, with abundant rainfall and benign temperatures over the past two months boosting yield prospects.  China and Ukraine are higher based on the latest official statistics. South Africa is lowered as heat and dryness during the month of January, particularly in the western producing areas, reduces yield prospects.

Major global trade changes for 2018/19 include increased corn exports for Argentina and Ukraine, partially offset by reductions for South Africa and Mexico. For 2017/18, Argentina’s exports are reduced with a partially offsetting increase for Brazil based on observed shipments to date for the local marketing years that both started in March 2018. Imports are raised for South Africa for the marketing years that both started in May 2018.  For 2018/19, imports are raised for Chile but lowered for Venezuela. Foreign corn ending stocks are higher, mostly reflecting increases for Argentina and China. Global corn stocks, at 12.196 billion, are up 39 million.


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected December

2018/19 Projected February

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

90.6

88

94

90.2

89.1

89.1

0.0

-1.1

Acres Harvested (Million Acres)

83.1

80.8

86.7

82.7

81.8

81.7

-0.1

-1.0

U.S. Average Yield (Bu/Acre)

171.0

168.4

174.6

176.6

178.9

176.4

-2.5

-0.2


Supply (Million Bushels)

Beg. Stocks

1,232

1,731

1,737

2,293

2,140

2,140

0

-153

Production

14,216

13,602

15,148

14,605

14,626

14,420

-206

-185

Imports

32

68

57

36

45

40

-5

4

Total Supply

15,479

15,401

16,942

16,939

16,811

16,600

-211

-339


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,280

5,114

5,470

5,304

5,500

5,375

-125

71

Ethanol

5,200

5,224

5,432

5,605

5,600

5,575

-25

-30

Food, Seed & Industrial

1,401

1,424

1,453

1,451

1,480

1,465

-15

14

Exports

1,867

1,901

2,294

2,438

2,450

2,450

0

12

Total Use

13,748

13,664

14,649

14,799

15,030

14,865

-165

66

U.S. Ending Stocks

1,731

1,737

2,293

2,140

1,781

1,735

-46

-405

Foreign Stocks

9,260

10,523

11,495

11,277

10,376

10,460

84

-817


Price and Stocks to Use Ratio

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

$3.70

$3.61

$3.36

$3.36

$3.25-$3.95

$3.35-$3.85

$0.00

$0.24

U.S. Stocks/Use

12.59%

12.71%

15.65%

14.46%

11.85%

11.67%

-0.2%

-2.79%

 

Source: USDA-WASDE February 8, 2019


 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

13,417

43,289

6,287

27,481

44,511

6,589

12,195

US

2,140

14,420

40

5,375

12,415

2,450

1,735

Foreign

11,277

28,869

6,248

22,106

32,096

4,139

10,460

Argentina

153

1,811

0

382

543

1,142

279

Brazil

316

3,720

39

2,205

2,618

1,142

316

South Africa

115

453

4

228

461

63

48

Egypt

72

268

382

539

638

0

84

EU

388

2,390

827

2,527

3,275

59

271

Japan

55

0

610

468

610

0

55

Mexico

226

1,008

657

1,004

1,720

39

131

Southeast Asia

91

1,158

669

1,472

1,785

31

102

South Korea

74

3

402

315

405

0

73

Canada

93

547

47

335

547

63

78

China

8,761

10,131

197

7,677

10,905

2

8,181

Ukraine

58

1,398

1

217

272

1,122

63

ROW

876

5,983

2,411

4,737

8,316

476

781

World Corn Supply and Use (Million Bushels) February-December 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

24

-12

-1

-27

-26

35

39

US

-

-206

-5

-125

-165

-

-46

Foreign

24

194

4

98

139

35

84

Argentina

59

138

-

47

55

39

102

Brazil

-39

-

-

-

-

-

-39

South Africa

12

-20

4

-

-

-12

8

Egypt

-

-

-

-

-

-

-

EU

-

13

-

8

8

-

5

Japan

-

-

-

-

-

-

-

Mexico

-

-16

-

-

-

-12

-4

Southeast Asia

-

-

-

-

-

-

-

South Korea

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

China

-

52

-

39

39

-

13

Ukraine

2

20

-

-

-

20

2

ROW

-9

7

-

4

36

-

-2

 

Source: USDA-WASDE February 8, 2019

 

Cotton

Market Reaction: March 2019 cotton futures closed down 0.26 cents at 72.55 with a trading range for the day of 72.45 to 73.01 cents. December 2019 cotton futures closed down 0.60 cents at 73.93 with a trading range for the day of 73.83 to 74.55 cents. Trade disruption with China and anticipated increased global and U.S. production will likely keep harvest futures trading in the current 72-75 cent band.

USDA Summary: This month’s 2018/19 U.S. cotton forecasts include slightly lower production, mill use, and ending stocks.  Production is reduced 200,000 bales due to small declines outside the Southeast.  Ending stocks and mill use are reduced 100,000 bales each, while exports are unchanged.  The forecast for the marketing-year average price received by producers is reduced 2 cents per pound, to a midpoint of 72 cents.

The world 2018/19 cotton supply and demand estimates include lower production and mill use but higher trade and stocks.  Production is reduced nearly 300,000 bales, as smaller crops in Turkey, India, Burkina Faso and the United States offset increases in China, Brazil, Pakistan, and Australia.  World trade is increased 600,000 bales as higher imports by China, Turkey, and Pakistan more than offset declines in Vietnam and Bangladesh. Exports rose for Brazil, Benin, and India, but fell for Turkey and Burkina Faso. Lower 2017/18 India mill use is largely responsible for a 600,000-bale increase in world 2018/19 beginning stocks.  Projected 2018/19 consumption in India is reduced 500,000 bales since December, and is reduced 1 million bales for China.  Global use is reduced 2 million bales, with smaller declines in Vietnam, Turkey, and the United States.  World 2018/19 ending stocks are now 2.3 million bales above their previous estimate, with a 2.0-million-bale increase for China.


 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected December

2018/19 Projected February

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

11.04

8.58

10.07

12.72

14.04

14.1

0.06

1.38

Acres Harvested (Million Acres)

9.35

8.07

9.51

11.1

10.37

10.53

0.16

-0.57

U.S. Average Yield (lbs/acre)

838

766

867

905

860

838

-22

-67


Supply (Million Bales)

Beg. Stocks

2.35

3.65

3.8

2.75

4.3

4.3

0

1.55

Production

16.32

12.89

17.17

20.92

18.59

18.39

-0.2

-2.53

Imports

0.01

0.03

0.01

0

0.01

0.01

0

0.01

Total Supply

18.68

16.57

20.98

23.68

22.89

22.7

-0.19

-0.98


Use & Ending Stocks (Million Bales)

Domestic

3.58

3.45

3.25

3.23

3.3

3.2

-0.1

-0.03

Exports

11.25

9.15

14.92

15.85

15

15

0

-0.85

Total Use

14.82

12.6

18.17

19.07

18.3

18.2

-0.1

-0.87

U.S. Ending Stocks

3.65

3.8

2.75

4.3

4.4

4.3

-0.1

0

Foreign Stocks

108.09

91.11

77.65

76.75

68.31

71.2

2.89

-5.55

Chinese Stocks

66.92

58.2

45.92

38.02

30.37

32.37

2

-5.65


Price and Stocks to Use Ratio

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

$0.613

$0.612

$0.68

$0.686

$0.71-$0.77

$0.71-$0.73

-$0.020

$0.034

U.S. Stocks/Use

25%

30%

15%

23%

24%

24%

-0.42%

1.08%

Chinese Stocks/Use

197%

166%

119%

93%

73%

80%

6.75%

-12.81%


Source: USDA-WASDE February 8, 2019

 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

81.05

118.45

42.31

123.64

42.32

0.36

75.5

US

4.3

18.39

0.01

3.2

15

0.2

4.3

Foreign

76.75

100.06

42.3

120.44

27.32

0.16

71.2

Central Asia

2.72

5.59

0

3.61

2.26

0

2.44

Afr. Fr. Zone

1.83

5.58

0

0.14

5.47

0

1.8

Australia

2.94

2.6

0

0.04

3.6

0

1.9

Brazil

8.66

11.4

0.13

3.5

6.2

0

10.48

India

9.23

27

1.6

24.8

4.5

0

8.53

Mexico

0.66

1.73

0.85

1.95

0.6

0.03

0.66

China

38.02

27.5

7.5

40.5

0.15

0

32.37

EU

0.27

1.69

0.7

0.74

1.55

0.05

0.31

Turkey

1.88

3.7

3.2

6.8

0.3

0

1.68

Pakistan

2.83

7.5

3

10.6

0.13

0.03

2.58

Indonesia

0.62

0

3.65

3.6

0.01

0

0.66

Thailand

0.18

0

1.18

1.15

0

0.03

0.18

Bangladesh

1.86

0.14

8

8

0

0.01

1.98

Vietnam

1.19

0

7.4

7.3

0

0

1.29

ROW

3.86

5.63

5.09

7.71

2.55

0.01

4.34

World Cotton Supply and Use (Million 480 lb Bales) February-December 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

0.6

-0.29

0.6

-1.99

0.59

0.01

2.31

US

-

-0.2

-

-0.1

-

0.01

-0.1

Foreign

0.6

-0.09

0.59

-1.89

0.59

-

2.41

Central Asia

-

0.12

-

-

0.05

-

0.07

Afr. Fr. Zone

0.03

-0.28

-

-

0.02

-

-0.27

Australia

-

0.1

-

-

-

-

0.09

Brazil

-

0.4

0.05

-

0.4

-

0.05

India

0.55

-0.5

-

-0.5

0.1

-

0.45

Mexico

-

-

-0.05

-

-

-

-0.05

China

-

0.5

0.5

-1

-

-

2

EU

-

0.03

-0.01

-0.01

0.02

-

-0.01

Turkey

-

-0.6

0.3

-0.2

-0.1

-

-

Pakistan

-

0.1

0.1

-

-0.02

-

0.22

Indonesia

-

-

-

-

-

-

-

Thailand

-

-

-

-

-

-

-

Bangladesh

-

-

-0.1

-

-

-

-0.1

Vietnam

-

-

-0.2

-0.2

-

-

-

ROW

0.02

0.04

0.01

0.02

0.12

-

-0.04


Source: USDA-WASDE February 8, 2019


 

 
 

Soybeans

Futures Market Reaction: March 2019 soybean futures were up 1 ¼ cent at $9.14 ½ with a trading range for the day of $9.08 to $9.18. November 2019 soybean futures closed up 1 ¼ cents at $9.57 with a trading range for the day of $9.51 ¼ to $9.60.  Yield and harvested acre reductions were anticipated due to the terrible harvest conditions in many regions in the U.S. Decreased South American production also provides support for prices. Without a resolution to the trade dispute with China prices are likely to languish at current levels for the next month. Volatility based on trade chatter should continue to be expected.

USDA Summary:  U.S. oilseed production for 2018/19 is estimated down from the previous report.  Smaller soybean, canola, peanut, and cottonseed crops are partly offset by an increase for sunflowerseed.  Soybean production is estimated at 4.544 billion bushels, down 56 million.  Harvested area is estimated at 88.1 million acres, down fractionally from the previous report.  Yield is estimated at 51.6 bushels per acre, down 0.5 bushels, led by reductions for North Dakota, South Dakota, and Nebraska.  The soybean crush forecast is raised 10 million bushels to 2,090 million.  Soybean meal production is unchanged as the higher crush is offset by a lower extraction rate.  Lower supplies and increased crush are partly offset with a 25-million-bushel reduction in exports.  Ending stocks are projected at 910 million bushels, down 45 million from the previous forecast. The 2018/19 U.S. season-average farm price forecast for soybeans is projected at $8.10 to $9.10 per bushel, unchanged at the midpoint.  The soybean meal price is forecast at $295 to $335 per short ton, up $5.00 at the midpoint. The soybean oil price forecast of 28.5 to 31.5 cents per pound is unchanged at the midpoint.

The 2018/19 global soybean outlook includes lower production, exports, crush, and stocks.  Global soybean production is lowered 301 million bushels to 13.264 billion with lower crops for Brazil, Argentina, Paraguay, Uruguay, and South Africa.  Production for Brazil is lowered 184 million bushels to 4.299 billion due to dryness in parts of the South and Center-West regions.  Production for Argentina is lowered 18 million bushels to 2.021 billion due to a reduction in harvested area that is partly offset by increased yields.  Global soybean exports are reduced 62 million bushels to 5.673 billion.  Lower exports for Brazil, Uruguay, and Paraguay are partly offset by higher exports for Argentina.  Global imports are also reduced mainly on a 73-million-bushel reduction for China due to lower crush demand.

Global 2018/19 soybean marketing-year ending stocks are lowered 316 million bushels this month to 3.921 billion, which is a 316-million-bushel increase over the 2017/18 estimate.  In addition to crop-related changes, this month’s lower global ending stocks forecast reflects historical balance sheet revisions for Argentina (back to 2009/10) and Brazil (back to 1999/00).  The revisions were motivated by supply and demand conditions indicating that beginning stock levels for the 2017/18 local year should be higher in Brazil and lower in Argentina than previously estimated.  Additionally, these revisions are more in line with historical stocks revisions made in late 2018 by Argentina’s Ministry of Agriculture and Brazil’s Association of Vegetable Oil Industries (ABIOVE).

With Argentina’s 2018 crop falling 30 percent below initial projections due to the drought, soybean stocks are assumed to be lower than prior estimates.  The post-drought stocks-to-use ratio had been projected at 38 percent for the 2017/18 local year (April 2018-March 2019).  The USDA’s estimates are guided by Argentina’s official crush, trade, and production data.  Projected stocks are reduced with upward revisions to residuals, which take into account supplies needed for reported use, statistical errors, and possible unreported demand during the past decade. While stocks are reduced for Argentina, Brazil’s stocks are revised higher starting in 1999/00.  Record exports during October 2018-January 2019, the end of Brazil’s 2017/18 local year (February 2018-January 2019), motivated the revisions.  Record late-season exports made it apparent that, in addition to a record crop, beginning stocks were higher than previously estimated.  Brazil’s ending stocks were revised over several years to increase supplies in order to meet reported use through 2017/18.  For more information, read the USDA Foreign Agricultural Service’s Oilseeds: World Markets and Trade and the Economic Research Service’s Oil Crops Outlook February reports.



 

2014/15 

2015/16

2016/17

2017/18 Est.

2018/19 Projected December

2018/19 Projected February

2018/19 Change From Previous Month

Change 2017/18 to 2018/19


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

83.3

82.7

83.5

90.2

89.1

89.2

0.1

-1.0

Acres Harvested (Million Acres)

82.6

81.7

82.7

89.5

88.3

88.1

-0.2

-1.4

U.S. Average Yield (Bu/Acre)

47.5

48

51.9

49.3

52.1

51.6

-0.5

2.3


Supply (Million Bushels)

Beg. Stocks

92

191

197

302

438

438

0

136

Production

3,927

3,926

4,296

4,412

4,600

4,544

-56

132

Imports

33

24

22

22

25

20

-5

-2

Total Supply

4,052

4,140

4,516

4,735

5,063

5,002

-61

267


Use & Ending Stocks (Million Bushels)

Crushing

1,873

1,886

1,901

2,055

2,080

2,090

10

35

Exports

1,842

1,942

2,166

2,129

1,900

1,875

-25

-254

Seed and Residual

146

115

147

113

128

127

-1

14

Total Use

3,862

3,944

4,214

4,297

4,107

4,092

-15

-205

U.S. Ending Stocks

191

197

302

438

955

910

-45

472

Foreign Stocks

2,658

2,687

3,217

3,166

3,283

3,011

-272

-155


Price and Stocks to Use Ratio

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

$10.10

$8.95

$9.47

$9.33

$7.85-$9.35

$8.10-$9.10

$0.00

-$0.73

U.S. Stocks/Use

4.95%

4.99%

7.17%

10.19%

23.25%

22.24%

-1.01%

12.05%


Source: USDA-WASDE February 8, 2019


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,604

13,264

5,564

11,199

12,840

5,672

3,921

US

438

4,544

20

2,090

2,217

1,875

910

Foreign

3,166

8,720

5,544

9,109

10,623

3,797

3,011

Argentina

915

2,021

197

1,587

1,815

231

1,086

Brazil

1,159

4,299

9

1,569

1,655

2,921

890

Paraguay

10

349

0

143

146

206

8

China

864

584

3,233

3,270

3,899

4

780

EU

56

99

581

610

671

10

55

Japan

8

10

121

86

129

0

10

Mexico

7

12

185

195

196

0

8

ROW

147

1,346

1,218

1,649

2,111

424

176

World Soybean Supply and Use (Million Bushels) February-December 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

-118

-302

-38

-125

-77

-64

-316

US

-

-56

-5

10

10

-25

-46

Foreign

-118

-246

-33

-134

-86

-39

-272

Argentina

-353

-18

42

7

54

48

-432

Brazil

234

-184

2

-

2

-55

106

Paraguay

4

-11

-

-

-

-7

-

China

-1

-4

-73

-129

-129

-

51

EU

-

-

-

-

-

-

-

Japan

-

-

-

-

-

-

-

Mexico

-

-

-

-

-

-

-

ROW

-2

-29

-4

-13

-14

-24

4

 
Source: USDA-WASDE February 8, 2019
 
 

Wheat

Futures Market Reaction: March 2019 wheat futures closed up 4 cents at $5.17 ¼ with a trading range for the day of $5.13 ½ to $5.22 ¼. July 2019 wheat futures closed up ½ cent at $5.22 ½ with a trading range for the day of $5.20 ¾ to $5.27 ½. Limited changes were made to the wheat balance sheet. Overall, year-over-year reductions in domestic and foreign stocks provides support for prices.

USDA Summary: Projected 2018/19 wheat ending stocks are raised 36 million bushels on reduced feed and residual use and lower seed use.  Feed and residual use is lowered 30 million bushels on larger than expected second-quarter stocks reported in today’s NASS Grain Stocks report.  Seed use is down 6 million bushels reflecting 2019/20 winter wheat planted area released today in the NASS Winter Wheat and Canola Seedings report.  Winter wheat planted area is lower than expected on excessive precipitation and cool temperatures during the planting window.  Ending stocks are now projected at 1,010 million bushels.  The season-average farm price is unchanged based on NASS prices reported to date and price expectations for the remainder of the marketing year. 

World production for the 2018/19 market year is raised 48 million bushels, led by a 59-million-bushel increase for Russia, a 22-million-bushel increase for Brazil, and a 18-million-bushel increase for Paraguay.  These changes are partly offset by a 40 million bushel decrease for China and an 11-million-bushel decrease for Argentina.  All these production changes reflect updated government statistics and harvest results.  Global exports are raised 48 million bushels led by a 26-million-bushel increase for Pakistan on reports of new export subsidies.  Russian exports are raised 18 million bushels and Paraguay is raised 15 million bushels, both on larger exportable supplies.  In contrast, Australia’s exports are lowered 18 million bushels on a slow pace to date, and Argentina exports are down 7 million bushels reflecting the smaller crop.  Global use for 2018/19 is raised 73 million bushels, primarily on a73-million-bushel increase in China feed and residual use.  With global use rising more than supplies, world ending stocks are lowered 22 million bushels to 9.829 billion.



 

2014/15

2015/16

2016/17

2017/18 Est.

2018/19 Projected December

2018/19 Projected February

2018/19 Change From Previous Month

Change 2017/18 to 2018/19

 

Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

56.8

55

50.1

46.1

47.8

47.8

0

1.7

Acres Harvested (Million Acres)

46.4

47.3

43.8

37.6

39.6

39.6

0

2

U.S. Average Yield (Bu/Acre)

43.7

43.6

52.7

46.4

47.6

47.6

0

1.2


Supply (Million Bushels)

Beg. Stocks

590

752

976

1,181

1,099

1,099

0

-82

Production

2,026

2,062

2,309

1,741

1,884

1,884

0

143

Imports

151

113

118

157

140

140

0

-17

Total Supply

2,768

2,927

3,402

3,079

3,123

3,123

0

44


Use & Ending Stocks (Million Bushels)

Food

958

957

949

964

970

970

0

6

Seed

79

67

61

63

69

63

-6

0

Feed

114

149

160

51

110

80

-30

29

Exports

864

778

1,051

901

1,000

1,000

0

99

Total Use

2,015

1,951

2,222

1,980

2,149

2,113

-36

133

U.S. Ending Stocks

752

976

1,181

1,099

974

1,010

36

-89

Foreign Stocks

7,243

7,944

8,411

9,190

8,877

8,820

-57

-370


Price and Stocks to Use Ratio

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

$5.99

$4.89

$3.89

$4.72

$5.05-$5.25

$5.05-$5.25

$0.00

$0.43

U.S. Stocks/Use

37.32%

50.03%

53.15%

55.51%

45.32%

47.80%

2.48%

-7.71%


Source: USDA-WASDE February 8, 2019

 
 

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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

10,289

26,997

6,476

5,261

27,456

6,565

9,830

US

1,099

1,885

140

80

1,113

1,000

1,010

Foreign

9,190

25,113

6,336

5,182

26,343

5,565

8,820

Argentina

35

705

0

2

208

514

18

Australia

216

625

6

202

331

367

148

Canada

227

1,168

17

158

342

882

188

EU

519

5,056

239

1,947

4,593

808

413

Brazil

48

200

276

18

445

18

60

China

4,823

4,829

129

735

4,593

44

5,144

Sel. Mideast

464

695

671

188

1,457

24

349

N. Africa

538

778

944

83

1,687

25

549

Pakistan

177

937

0

44

930

62

122

Southeast Asia

185

0

919

292

924

39

141

India

485

3,663

7

184

3,601

18

536

Russia

436

2,631

18

661

1,488

1,360

238

Kazakhstan

87

551

2

81

257

312

71

Ukraine

46

919

1

88

320

606

39

ROW

905

2,356

3,107

498

5,170

484

804

World Wheat Supply and Use (Million Bushels) February-December 2018/19

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

3

49

17

45

73

48

-21

US

-

-

-

-30

-36

-

36

Foreign

3

49

17

75

109

48

-57

Argentina

-2

-11

-

-2

-6

-7

-

Australia

6

-

-

-

-

-18

25

Canada

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Brazil

-

23

-

-

-

7

16

China

-

-39

-18

73

73

-

-132

Sel. Mideast

-

2

17

4

13

-4

10

N. Africa

-

-

-

-

-

-

-

Pakistan

-

-

-

-

-

26

-26

Southeast Asia

-

-

-

-

-

-

-

India

-

-

-

-

-

-

-

Russia

-

59

-

-

-

18

40

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

-

-

-

-

-

-

ROW

-1

16

18

-

28

26

10


Source: USDA-WASDE February 8, 2019
 

2019 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the February 8, 2019 USDA WASDE reports. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2018 state average yield of 168 bushels per acre for corn, 46 bushels per acre for soybeans, 1055 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. 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.  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 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. I would like to point out the cotton price of 69 cents that is being used in the profitability outlook. The price of 69 cents is made up of a cash price of 67 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 2019 to be sustainable. These estimates do not consider any USDA or crop insurance payments from the new farm bill. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $ 109, Soybeans - $51, Corn - $155 (includes 180 units of N), and Wheat/Soybeans - $104. These cost reflect a slight increase from 2018 to 2019. 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.

 

Cotton

Soybeans

Corn

Wheat/Soybeans

Yield

1023 lbs.

47 bu.

164 bu.

68 bu./35 bu.

Price (as of 2/8/19)

$0.69 lb.

$9.23 bu.

$3.87 bu.

$5.32 bu./$9.23 bu.

Revenue

$706

$434

$635

$685

Variable Expenses

$477

$251

$376

$453

Returns Over Variable

$229

$183

$258

$232

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

$174

$107

$156

$168

Returns Over Variable and Land Costs

$55

$77

$103

$64

Fixed Costs
Depreciation & interest on machinery

$110

$65

$64

$114

Returns Over Specified Costs

-$56

$12

$38

-$49

Breakeven Price at Average Yield and Specified Cost

$0.74

$8.97

$3.64

$5.81/$9.69


  

2019 Estimated Returns - Irrigation

Considering irrigation, Returns Over Variable, Land, and Fixed cost are positive for soybeans. Returns Over Variable and Land Costs are positive for cotton, corn, 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 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. Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $32 per acre for corn, $27 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $13 per acre for cotton, and $10 per acre for soybeans. Fixed costs of $86 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $116, Soybeans - $63, Corn - $197 (includes 240 units of N), and Wheat/Soybeans - $104. Cost of production will continue to be adjusted as information becomes available. 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 – 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.

 

Cotton

Soybeans

Corn

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

68 bu./45 bu.

Price (as of 2/8/19)

$0.69 lb.

$9.23 bu.

$3.87 bu.

$5.32 bu./$9.23 bu.

Revenue

$828

$600

$813

$777

Variable Expenses( include energy cost)

$526

$294

$488

$484

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$215

$219

$239

$207

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

 

$186

$127

$182

$170

Returns Over Variable, IR Fixed Cost and Land Costs

$32

$93

$60

$38

Fixed Costs- management labor,
depreciation & interest on machinery

$125

$81

$84

$129

Returns Over Specified Costs

-$93

$13

-$24

-$91

Breakeven Price at Average Yield and Specified Cost

$0.77

$9.04

$3.99

$5.81/$10.67

​​
  

Past Monthly Comments:   

January 12, 2018    February 9, 2018     March 8, 2018     April 10, 2018     May 10, 2018    June 12, 2018     July 12, 2018