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.


February 9, 2018 - USDA World Supply and Demand Estimates

Corn

Market Reaction: March 2018 corn futures closed up ½ cent at $3.65 ¾ with a trading range for the day of $3.64 ½ to $3.67 ¾. December 2018 corn futures closed up ¼ cents at $3.95 with a trading range for the day of $3.94 to $3.96 ¾. Increased export sales pace reduced domestic ending stocks by 125 million bushels however further reductions will be required to get stocks below last year’s carry-over. Harvest futures are likely to continue to trade between $3.90 and $4.05.   

USDA Summary: This month’s 2017/18 U.S. corn outlook is for increased exports and reduced stocks.  Exports are raised 125 million bushels, reflecting U.S. price competitiveness and reduced exports for Argentina and Ukraine.  With no other use changes, U.S. corn ending stocks are lowered 125 million bushels from last month.  The season-average corn price received by producers is projected at $3.30 per bushel, up 5 cents at the midpoint. 

Global coarse grain production for 2017/18 is projected lower.  This month’s foreign coarse grain outlook is for lower production, greater consumption, and lower stocks relative to last month.  Global corn production is lowered 110 million bushels largely reflecting reductions for Argentina and Ukraine.  For Argentina, persistent heat and dryness during January and early February reduced yield prospects for early-planted corn in key central growing areas.  Production is lowered for Ukraine based on the latest official statistics.  Small increases for Moldova, Mexico, Bangladesh, and Thailand are partly offsetting.

Major global trade changes for 2017/18 include higher projected corn exports for the United States and Brazil, with reductions for Argentina and Ukraine.  Corn imports are raised for Turkey, the EU, and Brazil.  Foreign corn ending stocks are down from last month, mostly reflecting reductions for Argentina and Ukraine that more than offset increases for Mexico, Brazil, and Turkey.  Global corn ending stocks, at 7.996 billion bushels, are down 138 million from last month.

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected January

2017/18 Projected February

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

90.2

90.2

0.0

-3.8

Acres Harvested (Million Acres)

87.5

83.1

80.8

86.7

82.7

82.7

0.0

-4.0

U.S. Average Yield (Bu/Acre)

158.1

171.0

168.4

174.6

176.6

176.6

0.0

2.0


Supply (Million Bushels)

Beg. Stocks

821

1,232

1,731

1,737

2,293

2,293

0

556

Production

13,829

14,216

13,602

15,148

14,604

14,604

0

-544

Imports

36

32

68

57

50

50

0

-7

Total Supply

14,686

15,479

15,401

16,942

16,947

16,947

0

5


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,040

5,280

5,114

5,467

5,550

5,550

0

83

Ethanol

5,124

5,200

5,224

5,439

5,525

5,525

0

86

Food, Seed & Industrial

1,369

1,401

1,424

1,450

1,470

1,470

0

20

Exports

1,920

1,867

1,901

2,293

1,925

2,050

125

-243

Total Use

13,454

13,748

13,664

14,649

14,470

14,595

125

-54

U.S. Ending Stocks

1,232

1,731

1,737

2,293

2,477

2,352

-125

59

Foreign Stocks

5,653

6,529

6,726

6,752

5,655

5,643

-12

-1,109


Price and Stocks to Use Ratio

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

$4.46

$3.70

$3.61

$3.36

$2.95-$3.55

$3.05-$3.55

$0.05

-$0.06

U.S. Stocks/Use

9.16%

12.59%

12.71%

15.65%

17.12%

16.12%

-1.0%

0.46%

Source: USDA-WASDE February 9, 2018



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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,045

41,011

5,778

25,612

42,061

6,058

7,995

US

2,293

14,604

50

5,550

12,545

2,050

2,352

Foreign

6,752

26,407

5,728

20,062

29,516

4,008

5,643

Argentina

227

1,535

0

315

472

1,083

207

Brazil

461

3,740

16

2,047

2,421

1,378

418

South Africa

118

492

4

228

461

67

87

Egypt

74

236

394

528

626

0

78

EU

297

2,366

638

2,212

2,953

79

269

Japan

52

0

591

453

594

0

48

Mexico

213

1,043

650

957

1,665

51

190

Southeast Asia

125

1,161

579

1,425

1,724

32

107

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

61

950

1

138

189

787

35

ROW

1,006

5,826

2,318

4,598

8,025

478

928

World Corn Supply and Use (Million Bushels) 2017/18 February-January

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

40

-111

28

-

66

94

-137

US

-

-

-

-

-

125

-125

Foreign

40

-111

28

-

66

-31

-13

Argentina

0

-118

-

-20

-20

-59

-39

Brazil

45

-

4

-

-

39

10

South Africa

-

-

-

-

-

-

-

Egypt

-

-

-

-

-

-

-

EU

-

-

8

8

8

-

-

Japan

-

-

-

-

-

-

-

Mexico

-

12

-

-

-

-

12

Southeast Asia

-

4

-

4

4

-

-1

South Korea

-

-

-

-

-

-

-

Canada

-

-

-

-

-

-

-

China

-

-

-

-

-

-

-

Ukraine

-1

-35

-

-12

-12

-20

-5

ROW

-4

26

16

20

86

8

11

Source: USDA-WASDE February 9, 2018

 

Cotton

Market Reaction: March 2018 cotton futures closed up 0.66 cents at 76.62 with a trading range for the day of 75.89 to 77.52 cents. December 2018 cotton futures closed up 0.14 cents at 75.14 with a trading range for the day of 74.9 to 75.65 cents. Harvest futures remained entrenched, trading between 74 and 76 cents. Nearby futures are likely to remain volatile due to large on-call sales and uncertainty regarding export sales (shipments versus outstanding sales).

USDA Summary: The 2017/18 U.S. cotton supply and demand forecasts show slightly lower exports and higher ending stocks relative to last month.  Production and domestic mill use are unchanged.  The export forecast is lowered 300,000 bales to 14.5 million based on a lagging pace of shipments to date.  Ending stocks are now estimated at 6.0 million bales, equivalent to 34 percent of total disappearance.  The marketing year average price received by producers is projected to average between 67 and 71 cents per pound, unchanged from January’s range.
The 2017/18 world cotton forecasts include slightly higher production, lower consumption, and higher ending stocks.  World production is 400,000 bales higher than last month, as higher estimates for China, Brazil, and South Africa offset lower expectations for India and Australia.  Global consumption is forecast 325,000 bales lower, as decreases for India and Thailand offset an increase for Vietnam.  World ending stocks are projected 760,000 bales higher as a 1.1-million-bale increase in China’s projected ending stocks—and higher U.S. stocks—offsets declines for India, Australia, Turkmenistan, Tajikistan, and Vietnam.


 

2013/14

2014/15

2015/16

2016/17 Est

2017/18 Projected January

2017/18 Projected February

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

12.61

12.61

0

2.54

Acres Harvested (Million Acres)

7.54

9.35

8.07

9.51

11.35

11.35

0

1.84

U.S. Average Yield (lbs/acre)

821

838

766

867

899

899

0

32


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

21.26

21.26

0

4.09

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

24.02

24.02

0

3.04


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

14.8

14.5

-0.3

-0.42

Total Use

14.08

14.82

12.6

18.17

18.15

17.85

-0.3

-0.32

U.S. Ending Stocks

2.35

3.65

3.8

2.75

5.7

6

0.3

3.25

Foreign Stocks

100.63

108.09

91.54

84.91

82.09

82.55

0.46

-2.36

Chinese Stocks

62.71

66.92

58.2

48.42

39.77

40.87

1.1

-7.55


Price and Stocks to Use Ratio

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

$0.779

$0.613

$0.612

$0.68

$0.67-$0.71

$0.67-$0.71

$0.000

$0.010

U.S. Stocks/Use

17%

25%

30%

15%

31%

34%

2.21%

18.48%

Chinese Stocks/Use

182%

197%

166%

129%

99%

102%

2.75%

-26.95%


Source: USDA-WASDE February 9, 2018



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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

87.66

121.37

38.23

120.5

38.22

-0.02

88.55

US

2.75

21.26

0.01

3.35

14.5

0.17

6

Foreign

84.91

100.11

38.22

117.15

23.72

-0.19

82.55

Central Asia

2.39

6.32

0

3.2

2.75

0

2.76

Afr. Fr. Zone

1.77

5.16

0

0.13

4.19

0

2.62

Australia

2.39

4.4

0

0.04

4.4

-0.15

2.51

Brazil

7.61

8

0.1

3.4

4.2

-0.15

8.26

India

11.13

28.5

1.7

24.5

4.2

0

12.63

Mexico

0.44

1.54

0.83

1.85

0.3

0.03

0.63

China

48.42

27.5

5

40

0.05

0

40.87

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

3.5

3.45

0.01

0

0.67

Thailand

0.2

0

1.05

1.05

0

0.03

0.18

Bangladesh

1.66

0.13

7.25

7.2

0

0.01

1.82

Vietnam

0.88

0

6.6

6.35

0

0

1.14

ROW

3.28

4.84

5.28

7.84

1.61

0.01

3.88

World Cotton Supply and Use (Million 480 lb Bales) 2017/18 February-January

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

0.02

0.4

-0.14

-0.33

-0.16

0

0.76

US

-

-

-

-

-0.3

-

0.3

Foreign

0.02

0.41

-0.14

-0.33

0.14

0.01

0.46

Central Asia

-

-

-

-0.03

0.25

-

-0.22

Afr. Fr. Zone

-

0.02

-

-

-0.17

-

0.2

Australia

-

-0.2

-

-

0.1

-

-0.3

Brazil

-

0.2

-0.03

-

0.1

-

0.08

India

-

-0.8

0.1

-0.25

-0.1

-

-0.35

Mexico

-

-

-

-

-

-

-

China

-

1.1

-

-

-

-

1.1

EU

-

-

-

-

-

-

-

Turkey

-

-

-

-

-

-

-

Pakistan

-

-

-

-

-

-

-

Indonesia

-

-

-

-

-

-

-

Thailand

-

-

-0.2

-0.15

-

-

-0.05

Bangladesh

-

-

-

-

-

-

-

Vietnam

-

-

-

0.1

-

-

-0.1

ROW

0.02

0.08

-0.01

0

-0.04

0

0.1

Source: USDA-WASDE February 9, 2018


 

Soybeans

Futures Market Reaction: March 2018 soybean futures were up 4 ¾ cents at $9.87 ¾ with a trading range for the day of $9.77 ¾ to $9.96. November 2018 soybean futures closed up 4 cents at $10.04 ½ with a trading range for the day of $9.96 to $10.10. Soybean markets received mixed signals on this report. Supportive for prices were decreases to global ending stocks and reduced Argentinian production. Bearish for prices were increased domestic stocks, reduced U.S. exports, and increased Brazilian production. The U.S. ending stocks estimate, at 530 million bushels, is concerning and will likely restrict price advances, unless future downward revisions occur.

USDA Summary: This month’s 2017/18 U.S. soybean outlook is for reduced exports and increased ending stocks.  Soybean exports for 2017/18 are projected at 2,100 million bushels, down 60 million from last month, reflecting shipments and sales through January and increased export competition on larger supplies in Brazil.  With soybean crush unchanged, soybean ending stocks are raised 60 million bushels to 530 million. The U.S. season-average soybean price range for 2017/18 is projected at $8.90 to $9.70 per bushel, unchanged at the midpoint.  Soybean oil prices are forecast at 31 to 34 cents per pound, down 1 cent at the midpoint.  Soybean meal prices are projected at $305 to $335 per short ton, up $5 at the midpoint.
Global oilseed production for 2017/18 is projected down, with lower soybean production partly offset by higher cottonseed.  Soybean production is reduced 62 million bushels to 12.746 billion.  Soybean production for Brazil is projected at 4.115 billion bushels, up 73 million, as favorable weather throughout the growing season has raised yield prospects.  Argentina production is reduced 73 million bushels to 1.984 billion on lower harvested area and reduced yields resulting from periods of unseasonable warmth and dryness.  Soybean production is also reduced for several other countries including Paraguay, Bolivia, India, Ukraine, and South Africa. 

Global oilseed crush for 2017/18 is projected down.  Reduced soybean crush for Argentina and India accounts for most of the change.  Global oilseed stocks are projected lower with reduced soybean stocks for Argentina, Bolivia, Paraguay, and India more than offsetting an increase for the United States.

 

2013/14 

2014/15 

2015/16

2016/17 Est.

2017/18 Projected January

2017/18 Projected February

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

90.1

90.1

0.0

6.7

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

49.1

49.1

0.0

-2.9


Supply (Million Bushels)

Beg. Stocks

141

92

191

197

302

302

0

105

Production

3,358

3,927

3,926

4,296

4,392

4,392

0

96

Imports

72

33

24

22

25

25

0

3

Total Supply

3,570

4,052

4,140

4,515

4,718

4,718

0

203


Use & Ending Stocks (Million Bushels)

Crushing

1,734

1,873

1,886

1,899

1,950

1,950

0

51

Exports

1,638

1,842

1,942

2,174

2,160

2,100

-60

-74

Seed and Residual

107

146

115

141

139

106

-33

-35

Total Use

3,478

3,862

3,944

4,213

4,248

4,188

-60

-25

U.S. Ending Stocks

92

191

197

302

470

530

60

228

Foreign Stocks

2,211

2,658

2,666

3,231

3,152

3,076

-76

-155


Price and Stocks to Use Ratio

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

$13.00

$10.10

$8.95

$9.47

$8.80-$9.80

$8.90-$9.70

$0.00

-$0.17

U.S. Stocks/Use

2.65%

4.95%

4.99%

7.17%

11.06%

12.66%

1.59%

5.49%


Source: USDA-WASDE February 9, 2018



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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,533

12,747

5,520

11,027

12,610

5,583

3,606

US

302

4,392

25

1,950

2,088

2,100

530

Foreign

3,231

8,356

5,495

9,077

10,522

3,483

3,076

Argentina

1,331

1,984

62

1,605

1,779

312

1,286

Brazil

913

4,115

7

1,543

1,677

2,535

823

Paraguay

24

338

0

136

139

213

11

China

749

522

3,564

3,491

4,071

6

758

EU

39

92

514

533

593

7

44

Japan

8

10

121

86

129

0

10

Mexico

6

18

158

173

175

0

6

ROW

161

1,277

1,067

1,509

1,958

410

137

World Soybean Supply and Use (Million Bushels) 2017/18 February-January

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

-13

-61

3

-50

-47

-9

-16

US

-

-

-

-

-

-60

60

Foreign

-13

-61

3

-50

-47

51

-76

Argentina

-7

-73

-

-43

-38

-

-43

Brazil

-

73

-

-

-2

73

2

Paraguay

-6

-7

-

-

-

-7

-6

China

-

-

-

-

-

-

-

EU

-

-

-

-

-

-

-

Japan

-

-

-

-

-

-

-

Mexico

-

-

-

-

-

-

-

ROW

0

-53

3

-7

-7

-15

-29


Source: USDA-WASDE February 9, 2018
 

Wheat

Futures Market Reaction: March 2018 wheat futures closed down 4 ¼ cents at $4.56 ¼ with a trading range for the day of $4.51 ¼ to $4.64 ½. July 2018 wheat futures closed down 3 ¾ cents at $4.82 ½ with a trading range for the day of $4.78 to $4.90. The July contract is up over 40 cents from the December 12 contract low of $4.37. Drought concerns in the U.S have crept into the market however with record global supplies and domestic ending stocks over 1 billion bushels a substantial rally remains unlikely.

USDA Summary: Projected 2017/18 U.S. ending stocks are raised this month by 20 million bushels as higher food use is more than offset by lower exports, while export forecasts for several major competitors are increased.  Estimated food use is increased by 5 million bushels to 955 million, based on the NASS Flour Milling Products report, which indicated higher-than-expected use in the first half of 2017/18.  Additionally, implied flour extraction rates were lower in the second quarter, as compared to last year, and a continuation of this trend is expected to support increased wheat for food usage into the second half of 2017/18.  No other supply or use categories are changed this month.  Based on NASS prices reported to date and price expectations for the rest of the marketing year, the projected season-average farm price (SAFP) remains unchanged at the midpoint of $4.60 per bushel.  However, the projected SAFP range is narrowed by 5 cents at both ends of the range to $4.55 to $4.65.

Global 2017/18 wheat supplies increased, primarily on higher production forecasts for Argentina and Ukraine.  Argentina’s wheat production increased by 18 million bushels to 661 million based on higher-than-expected yields from the later harvest stages.  Ukraine wheat production increased 18 million bushels to 992 million based on updated government data.

World 2017/18 trade is raised this month as higher exports from Russia, Argentina, and Canada more than offset reduced exports from the EU and the United States.  Projected imports are increased for Indonesia and several African countries while reduced for India, the EU, Iran, Brazil, and Mexico.  Indonesia’s imports are raised 37 million bushels to 459 million on increases for both food and feed use.  Indonesia is now the leading global wheat importer, surpassing Egypt, the traditional leader.  Total world consumption is projected 114 million bushels higher, primarily on greater usage from Indonesia and China.  Projected global ending stocks are 70 million bushels lower this month at 9.777 billion but remain significantly higher than a year ago.


 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected January

2017/18 Projected February

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

155

155

0

37

Total Supply

3,026

2,768

2,927

3,402

3,076

3,076

0

-326


Use & Ending Stocks (Million Bushels)

Food

955

958

957

949

950

955

5

6

Seed

77

79

67

61

62

62

0

1

Feed

228

114

149

156

100

100

0

-56

Exports

1,176

864

778

1,167

975

950

-25

-217

Total Use

2,436

2,015

1,951

2,222

2,087

2,067

-20

-155

U.S. Ending Stocks

590

752

976

1,181

989

1,009

20

-172

Foreign Stocks

6,524

7,243

7,901

8,102

8,902

8,768

-134

666


Price and Stocks to Use Ratio

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

$6.87

$5.99

$4.89

$3.89

$4.50-$4.70

$4.55-$4.65

$0.00

$0.75

U.S. Stocks/Use

24.22%

37.32%

50.03%

53.15%

47.39%

48.81%

1.43%

-4.34%


Source: USDA-WASDE February 9, 2018


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,283

27,861

6,625

5,310

27,366

6,676

9,777

US

1,181

1,741

155

100

1,117

950

1,009

Foreign

8,102

26,120

6,470

5,210

26,249

5,726

8,768

Argentina

9

661

0

4

202

459

10

Australia

161

790

6

125

250

588

118

Canada

251

1,102

18

129

320

827

226

EU

396

5,570

202

2,094

4,731

955

482

Brazil

83

156

287

18

445

22

59

China

4,080

4,777

147

496

4,299

37

4,668

Sel. Mideast

479

714

669

195

1,488

33

340

N. Africa

511

667

1,023

80

1,656

25

520

Pakistan

159

974

1

37

919

37

179

Southeast Asia

206

0

992

305

916

39

243

India

360

3,615

73

184

3,674

18

356

Russia

398

3,123

18

790

1,653

1,323

563

Kazakhstan

123

514

2

77

254

276

111

Ukraine

65

991

1

129

364

625

69

ROW

820

2,466

3,030

548

5,079

462

825

World Wheat Supply and Use (Million Bushels) 2017/18 February-January

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

-3

46

4

44

114

31

-71

US

-

-

-

-

5

-25

20

Foreign

-3

46

4

44

108

56

-91

Argentina

1

18

-

-

-

22

-3

Australia

-

-

-

-

-

-

-

Canada

-

-

-

-

-

18

-18

EU

-

-

-18

-

-

-37

18

Brazil

3

-

-7

-

-

-7

3

China

-

-

-

18

37

7

-44

Sel. Mideast

-

-

-7

-

-

2

-9

N. Africa

-

-

-

-

-

-

-

Pakistan

-

-

-

-

-

15

-15

Southeast Asia

-

-

37

18

22

-

15

India

-

-

-18

-

-

-

-18

Russia

-

-

-

-

-

37

-37

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

18

-

4

4

-

14

ROW

-7

10

19

4

46

-1

4


Source: USDA-WASDE February 9, 2018
 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the February 8, 2018 USDA WASDE reports.  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 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. Since the January 12th report, wheat/soybeans net returns have improved $22 per acre, corn improved $15 per acre, soybeans $7 per acre, with no change in cotton. 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 74 cents that is being used in the profitability outlook. The price of 74 cents is made up of a cash price of 69 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 - $ 94, Soybeans - $35, Corn - $128 (includes 170 units of N), Milo - $86, and Wheat/Soybeans - $94. Cost of production will continue to be adjusted as information becomes available. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns – Non-Irrigated


Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

982 lbs.

47 bu.

161 bu.

90 bu.

70 bu./35 bu.

Price (as of 2/8/18)

$0.74 lb.

$9.91 bu.

$3.73 bu.

$3.43 bu.

$4.83 bu./$9.91 bu.

Revenue

$727

$466

$601

$309

$685

Variable Expenses

$428

$224

$347

$239

$417

Returns Over Variable

$298

$242

$254

$70

$268

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

$179

$114

$147

$76

$167

Returns Over Variable and Land Costs

$119

$128

$107

-$6

$101

Fixed Costs
Depreciation & interest on machinery

$134

$64

$57

$64

$111

Returns Over Specified Costs

-$15

$64

$49

-$70

-$10

Breakeven Price at Average Yield and Specified Cost

$0.75

$8.55

$3.42

$4.21

$5.27/$9.37

 

  

2018 Estimated Returns - Irrigation

Considering irrigation, profitability is positive for corn and soybeans over 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. 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.  Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $30 per acre for corn, $26 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $14 per acre for cotton and milo, and $10 per acre for soybeans. Fixed costs of $86 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $101, Soybeans - $37, Corn - $159 (includes 240 units of N), Milo - $103, and Wheat/Soybeans - $93. Cost of production will continue to be adjusted as information becomes available. Hopefully, we will see costs reduced or possibly suitable generic products available.   Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable and Fixed IR Costs as a guide in decision making. Producers with share rent ground should use Returns Over Variable, Fixed IR Costs and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost minus 25% of the irrigation equipment fixed cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. A management cost of $30 per acre is included in Fixed Costs – management labor, depreciation & interest on machinery. This is an additional $15 above the dryland crop management labor. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns – Irrigation


Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

130 bu.

70 bu./45 bu.

Price (as of 2/8/18)

$0.74 lb.

$9.91 bu.

$3.73 bu.

$3.43 bu.

$4.83 bu./$9.91 bu.

Revenue

$888

$595

$783

$446

$784

Variable Expenses( include energy cost)

$477

$255

$445

$298

$447

Fixed Irrigation Costs per Acre

$86

$86

$86

$86

$86

Returns Over Variable & Fixed IR Costs

$325

$254

$252

$62

$250

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

 

$198

$125

$171

$89

$171

Returns Over Variable, IR Fixed Cost and Land Costs

$127

$129

$81

-$27

$80

Fixed Costs- management labor,
depreciation & interest on machinery

$149

$79

$72

$79

$126

Returns Over Specified Costs

-$22

$50

$8

-$105

-$46

Breakeven Price at Average Yield and Specified Cost

$0.76

$9.07

$3.69

$4.24

$5.27/$10.47


  

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