Supply and Demand Estimates and Profitability Outlook


 
The following is a summary of the USDA's monthly World Agricultural Supply and Demand Estimates (WASDE) report. Domestic balance sheets for corn, soybeans, cotton, and wheat are displayed along with price reaction in futures markets for each commodity on the day of the report release. Additionally, supply and demand estimates for key importing and exporting countries are provided for the current month along with change in estimates from the previous report. The Profitability Outlook section contains estimated returns per acre for each commodity based  on 2016 Tennessee state average/trend yields and current price offerings (note: cotton prices include a seed and hauling rebate). Variable expenses are based on the University of Tennessee Extension 2017 Row Crop Budgets. Prices are updated monthly; expenses are updated as warranted during the year and may be different than the expenses contained in the 2017 Row Crop Budgets. This section provides an estimation of the current relative profitability amongst major row crops in Tennessee.
The report is prepared monthly by Dr. Aaron Smith and Chuck Danehower.


October 12, 2017 - USDA World Supply and Demand Estimates

Corn

Market Reaction: December 2017 corn futures closed up 3 cents at $3.49 with a trading range for the day of $3.42 ½ to $3.54. December 2018 corn futures closed up 2 ½ cents at $3.94 ¾ with a trading range for the day of $3.89 ¼ to $3.99 ¾. The December 2017 contract set a new low at 11am when the report was released, however prices increased 11 cents in the minutes after the report was released before retreating throughout the remainder of the day to close up 3 cents. Yield was increased 1.9 bu/acre (bearish), harvested acreage was decreased 400,000 acres (bullish), and total use was increased 35 million bushels (bullish). At the end of the day, US ending stocks were projected up 5 million bushels at 2.34 billion (bearish) and foreign stocks were projected down 65 million bushels at 5.571 billion (bullish).

USDA Summary: This month’s 2017/18 U.S. corn outlook is for larger production, increased feed and residual use, and nearly unchanged ending stocks.  Corn production is forecast at 14.28 billion bushels, up 96 million from last month.  Corn supplies are higher, as a larger crop more than offsets a reduction in beginning stocks based on the Grain Stocks report.  Projected feed and residual use is increased 25 million bushels.  With supply and use changes essentially offsetting, corn ending stocks are up 5 million bushels from last month.  The projected range for the season-average corn price received by producers is unchanged at $2.80 to $3.60 per bushel.

Global coarse grain production for 2017/18 is forecast up.  The 2017/18 foreign coarse grain outlook is for greater production, consumption, and reduced stocks relative to last month.  Foreign corn production is forecast higher, with the largest reductions for Russia, Ukraine, Ethiopia, and Tanzania more than offset by increases for a number of countries including Nigeria, Turkey, and Mozambique.  The projected corn yields for Russia and Ukraine are reduced based on reported harvest results to date.  Historical revisions are made to Nigeria’s corn, sorghum, and millet production estimates to better reflect statistics published by the government. Corn exports are raised for Mexico and Argentina, with largely offsetting reductions for Russia and Ukraine.  Argentina’s 2016/17 exports are lowered for the local marketing year beginning March 2017 reflecting a slower-than-expected pace of exports to date.  Projected 2017/18 food, seed and industrial use for corn in China is raised based on recent trade data indicating a higher-than-expected level of corn product exports.  Foreign corn ending stocks for 2017/18 are down from last month, mostly reflecting declines for China and Mexico that are only partially offset by increases for Argentina and Turkey.  Global corn stocks, at 7.913 billion, are down 59 million from last month.
 

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected September

2017/18 Projected October

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

90.9

90.4

-0.5

-3.6

Acres Harvested (Million Acres)

87.5

83.1

80.8

86.7

83.5

83.1

-0.4

-3.6

U.S. Average Yield (Bu/Acre)

158.1

171.0

168.4

174.6

169.9

171.8

1.9

-2.8


Supply (Million Bushels)

Beg. Stocks

821

1,232

1,731

1,737

2,350

2,295

-55

558

Production

13,829

14,216

13,602

15,148

14,184

14,280

96

-868

Imports

36

32

68

57

50

50

0

-7

Total Supply

14,686

15,479

15,401

16,942

16,585

16,625

40

-317


Use & Ending Stocks (Million Bushels)

Feed and Residual

5,040

5,280

5,114

5,464

5,475

5,500

25

36

Ethanol

5,124

5,200

5,224

5,438

5,475

5,475

0

37

Food, Seed & Industrial

1,369

1,401

1,424

1,452

1,450

1,460

10

8

Exports

1,920

1,867

1,901

2,293

1,850

1,850

0

-443

Total Use

13,454

13,748

13,664

14,647

14,250

14,285

35

-362

U.S. Ending Stocks

1,232

1,731

1,737

2,295

2,335

2,340

5

45

Foreign Stocks

5,653

6,529

6,687

6,641

5,636

5,571

-65

-1,070


Price and Stocks to Use Ratio

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

$4.46

$3.70

$3.61

$3.36

$2.80-$3.60

$2.80-$3.60

$0.00

-$0.15

U.S. Stocks/Use

9.16%

12.59%

12.71%

15.67%

16.39%

16.38%

0.0%

0.71%

  Source: USDA-WASDE October 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

8,936

40,895

5,740

25,608

41,920

5,933

7,911

US

2,295

14,280

50

5,500

12,435

1,850

2,340

Foreign

6,641

26,615

5,690

20,108

29,485

4,083

5,571

Argentina

219

1,653

0

335

492

1,142

239

Brazil

365

3,740

12

2,047

2,421

1,339

357

South Africa

118

492

4

228

461

67

87

Egypt

83

236

394

528

626

0

87

EU

279

2,338

630

2,205

2,941

59

247

Japan

49

0

591

453

594

0

45

Mexico

220

1,031

610

913

1,622

51

188

Southeast Asia

130

1,189

555

1,421

1,728

28

118

South Korea

72

3

402

315

405

0

71

Canada

86

555

31

323

543

51

78

China

3,986

8,464

118

6,535

9,448

2

3,118

Ukraine

61

1,063

1

177

232

846

46

ROW

973

5,850

2,342

4,628

7,971

498

891

World Corn Supply and Use (Million Bushels) 2017/18 October-September

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

1

243

-59

8

303

5

-59

US

-55

96

-

25

35

-

6

Foreign

56

147

-59

-17

268

5

-65

Argentina

79

-

-

-

-

20

59

Brazil

-

-

-

-

-

-

-

South Africa

-

-

-

-

-

-

-

Egypt

-

-

-

-

-

-

-

EU

24

-

-

8

8

-

16

Japan

-

-

-

-

-

-

-

Mexico

-35

8

-

8

8

24

-58

Southeast Asia

-13

-

-39

-43

-43

-

-9

South Korea

-3

-

-

-

-

-

-3

Canada

-9

8

-

-

-

-

-1

China

-1

-

-

-

79

1

-81

Ukraine

-

-20

-

-

-

-20

-

ROW

14

151

-20

10

217

-20

12

  Source: USDA-WASDE October 12, 2017

 

Cotton

Market Reaction: December 2017 cotton futures closed down 0.89 cents at 67.84 with a trading range for the day of 67.66 to 69.11 cents. December 2018 cotton futures closed down 0.81 cents at 67.72 with a trading range for the day of 67.62 to 68.5 cents. The large reduction in production that some were anticipating as a result of hurricanes Harvey and Irma did not materialize on this report, however production was reduced 640,000 bales due to a 100,000 acre decrease in harvested acres and a 19 lb/acre yield reduction. Exports were reduced 400,000 bales, which is peculiar given the current export sales pace so far this marketing year.

USDA Summary: The 2017/18 U.S. cotton supply and demand estimates show lower production, exports, and ending stocks relative to last month.  Production is reduced 643,000 bales, largely in Texas and Georgia.  Domestic mill use is unchanged from last month, but the export forecast is reduced 400,000 bales to 14.5 million, due to reduced U.S. production and strong competitor shipments.  Ending stocks are forecast 200,000 bales below the previous month’s forecast.  The resulting stocks-to-use ratio of 32.5 percent is virtually unchanged from the previous month’s forecast, and the highest since 2008/09.  The forecast range for the marketing year average farm price is 55.0 to 65.0 cents per pound; the midpoint of 60.0 cents is unchanged from the previous month’s projection.

The global cotton supply and demand forecasts for 2017/18 include relatively small increases from the previous month for production, consumption, and trade.  Production is raised about 100,000 bales as larger expected crops in Argentina, Brazil, and Greece more than offset the reduction in the forecast for the United States.  Vietnam is the primary driver behind a 250,000-bale increase in projected world consumption, while a 440,000-bale increase in projected 2017/18 world cotton trade reflects increases in India, Australia, and Brazil that more than offset lower expected U.S. exports.

 

2013/14

2014/15

2015/16

2016/17 Est

2017/18 Projected September

2017/18 Projected October

2017/18 Change From Previous Month

Change 2016/17 to 2017/18


Planted and Harvested Acres & Yield

Acres Planted (Million Acres)

10.41

11.04

8.58

10.07

12.62

12.62

0

2.55

Acres Harvested (Million Acres)

7.54

9.35

8.07

9.51

11.51

11.41

-0.1

1.9

U.S. Average Yield (lbs/acre)

821

838

766

867

908

889

-19

22


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

21.76

21.12

-0.64

3.95

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

24.52

23.88

-0.64

2.9


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

14.9

14.5

-0.4

-0.42

Total Use

14.08

14.82

12.6

18.17

18.25

17.85

-0.4

-0.32

U.S. Ending Stocks

2.35

3.65

3.8

2.75

6

5.8

-0.2

3.05

Foreign Stocks

100.63

108.09

92.88

86.82

86.54

86.58

0.04

-0.24

Chinese Stocks

62.71

66.92

58.2

48.42

39.47

39.47

0

-8.95


Price and Stocks to Use Ratio

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

$0.779

$0.613

$0.612

$0.68

$0.54-$0.66

$0.55-$0.65

$0.000

-$0.080

U.S. Stocks/Use

17%

25%

30%

15%

33%

32%

-0.38%

17.36%

Chinese Stocks/Use

182%

197%

166%

129%

103%

103%

0.00%

-26.60%

  Source: USDA-WASDE October 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

89.57

120.86

38.2

118.01

38.22

0.03

92.38

US

2.75

21.12

0.01

3.35

14.5

0.23

5.8

Foreign

86.82

99.75

38.19

114.66

23.72

-0.2

86.58

Central Asia

2.51

6.18

0

2.66

2.69

0

3.33

Afr. Fr. Zone

1.77

5.32

0

0.12

4.57

0

2.41

Australia

2.54

5

0

0.04

4.1

-0.15

3.55

Brazil

7.61

7.8

0.13

3.4

3.65

-0.15

8.63

India

12.12

30

1.6

24.5

4.6

0

14.62

Mexico

0.44

1.45

0.8

1.8

0.23

0.03

0.64

China

48.42

24.5

5.1

38.5

0.05

0

39.47

EU

0.27

1.48

0.72

0.75

1.33

0

0.39

Turkey

1.68

3.8

3.4

6.75

0.28

0

1.85

Pakistan

2.27

9.15

2.4

10.6

0.35

0.03

2.84

Indonesia

0.62

0

3.4

3.3

0.01

0

0.72

Thailand

0.2

0

1.35

1.25

0

0.03

0.28

Bangladesh

1.41

0.13

7.25

6.9

0

0.01

1.87

Vietnam

0.88

0

6.6

6.2

0

0

1.29

ROW

4.08

4.93

5.44

7.89

1.86

0.00

4.69

World Cotton Supply and Use (Million 480 lb Bales) 2017/18 October-September

Country / Region

Beginning Stocks

Production

Imports

Domestic Use

Exports

Loss

Ending Stocks

World

0

0.11

0.38

0.26

0.44

-0.04

-0.16

US

-

-0.64

-

-

-0.4

-0.04

-0.2

Foreign

-

0.76

0.38

0.26

0.84

-

0.04

Central Asia

-0.01

-0.02

-

-

-0.17

-

0.13

Afr. Fr. Zone

-0.01

-

-

-

-0.04

-

0.03

Australia

-

-

-

-

0.3

-

-0.3

Brazil

-

0.3

0.03

-

0.25

-

0.07

India

0.08

0

0.3

-

0.4

-

-0.02

Mexico

-

0.07

-0.15

-

0.03

-

-0.11

China

-

-

-

-

-

-

-

EU

0.04

0.12

-

0.01

0.12

-

0.04

Turkey

0.03

-

-

0.05

-0.05

-

0.03

Pakistan

-

-

-

-

-

-

0

Indonesia

-0.01

-

-

-

-

-

-0.01

Thailand

-

-

-

-

-

-

-

Bangladesh

-

-

-

-

-

-

-

Vietnam

-

-

0.2

0.25

-

-

-0.05

ROW

-0.12

0.28

0

-0.05

0

0

0.23

  Source: USDA-WASDE October 12, 2017


 

Soybeans

Futures Market Reaction: November 2017 soybean futures were up 26 ¾ cents at $9.92 with a trading range for the day of $9.59 to $9.97 ¾. November 2018 soybean futures closed up 20 ¾ cents at $10.06 ¾ with a trading range for the day of $9.80 to $10.08 ¼. Soybeans were the reports big winner as a yield reduction of 0.4 bu/acre and decreases in projected domestic and foreign ending stocks by 45 million bushels and 10 million bushels, respectively, fueled a sharp rally. 

USDA Summary: U.S. oilseed production for 2017/18 is projected at down from last month.  Soybean production is forecast at 4,431 million bushels, nearly unchanged from last month with higher harvested area offsetting lower yields.  Harvested area is projected at a record 89.5 million acres, up 0.8 million.  The soybean yield is forecast at 49.5 bushels per acre, down 0.4 bushels.  With lower beginning stocks, soybean supplies for 2017/18 are projected down 44 million bushels.  With use projections unchanged, ending stocks are projected at 430 million bushels.  If realized, ending stocks relative to use would be the highest since 2006/07. The 2017/18 U.S. season-average soybean price is forecast at $8.35 to $10.05 per bushel, unchanged from last month.  Soybean meal and soybean oil price projections are also unchanged at $290 to $330 per short ton and 32.5 to 36.5 cents per pound, respectively.

Global oilseed production for 2017/18 is projected down as reductions for soybeans, rapeseed, and sunflowerseed are partly offset by increases for cottonseed and peanuts.  Global soybean production is projected down 22 million bushels to 12.783 billion on lower forecasts for Russia and Ukraine.  Higher production for China and Mexico is partly offsetting.  Global oilseed exports for 2017/18 are down on lower soybean and sunflowerseed exports.  Soybean exports are lowered for Ukraine while sunflowerseed exports are lowered for Ukraine and Russia.  Global oilseed ending stocks for 2017/18 are projected down mainly reflecting back-year adjustments that reduced soybean carry-in for Brazil and the United States.

 

2013/14 

2014/15 

2015/16

2016/17 Est.

2017/18 Projected September

2017/18 Projected October

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

89.5

90.2

0.7

6.8

Acres Harvested (Million Acres)

76.3

82.6

81.7

82.7

88.7

89.5

0.8

6.8

U.S. Average Yield (Bu/Acre)

44.0

47.5

48

52

49.9

49.5

-0.4

-2.5


Supply (Million Bushels)

Beg. Stocks

141

92

191

197

345

301

-44

104

Production

3,358

3,927

3,926

4,296

4,431

4,431

0

135

Imports

72

33

24

22

25

25

0

3

Total Supply

3,570

4,052

4,140

4,515

4,801

4,757

-44

242


Use & Ending Stocks (Million Bushels)

Crushing

1,734

1,873

1,886

1,899

1,940

1,940

0

41

Exports

1,638

1,842

1,942

2,174

2,250

2,250

0

76

Seed and Residual

107

146

115

141

136

136

0

-5

Total Use

3,478

3,862

3,944

4,214

4,326

4,326

0

112

U.S. Ending Stocks

92

191

197

301

475

430

-45

129

Foreign Stocks

2,211

2,658

2,660

3,184

3,109

3,099

-10

-85


Price and Stocks to Use Ratio

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

$13.00

$10.10

$8.95

$9.50

$8.35-$10.05

$8.35-$10.05

$0.00

-$0.30

U.S. Stocks/Use

2.65%

4.95%

4.99%

7.14%

10.98%

9.94%

-1.04%

2.80%

  Source: USDA-WASDE October 12, 2017


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

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

3,486

12,782

5,462

11,069

12,653

5,547

3,529

US

301

4,431

25

1,940

2,076

2,250

431

Foreign

3,184

8,352

5,437

9,129

10,577

3,297

3,099

Argentina

1,322

2,094

55

1,648

1,813

294

1,364

Brazil

899

3,932

7

1,543

1,679

2,352

807

Paraguay

14

345

0

145

147

202

10

China

742

522

3,491

3,454

4,027

6

722

EU

25

91

514

533

593

7

30

Japan

9

10

121

86

129

0

11

Mexico

4

18

158

173

175

0

6

ROW

170

1,340

1,089

1,547

2,014

437

149

World Soybean Supply and Use (Million Bushels) 2017/18 October-September

Country / Region

Beginning Stocks

Production

Imports

Domestic Crush

Domestic Total

Exports

Ending Stocks

World

-40

-21

-8

22

3

-17

-54

US

-44

0

0

0

0

0

-44

Foreign

4

-20

-8

22

3

-17

-10

Argentina

3

0

0

0

0

0

3

Brazil

-20

0

0

0

0

0

-20

Paraguay

0

0

0

0

0

0

0

China

18

7

0

37

18

0

7

EU

-4

0

-18

-22

-22

0

0

Japan

0

0

0

0

0

0

0

Mexico

0

2

0

0

0

0

2

ROW

6

-30

10

7

6

-17

-2

  Source: USDA-WASDE October 12, 2017

 

Wheat

Futures Market Reaction: December 2017 wheat futures closed down 2 ¾ cents at $4.30 ½ with a trading range for the day of $4.28 to $4.37 ¾. July 2018 wheat futures closed 3 ¼ cents at $4.75 ¼ with a trading range for the day of $4.73 to $4.81 ½. The drought in the Northern Plains that fueled a major rally in wheat markets this summer is a distant memory.  Record global stocks and tepid demand will keep wheat languishing below $5.00 for the foreseeable future.

USDA Summary: Projected 2017/18 U.S. wheat supplies are decreased modestly this month as reduced beginning stocks are partially offset by slightly higher wheat production.  Beginning stocks were revised downward in the latest NASS Grain Stocks report while wheat production increased in the NASS Small Grains Annual Summary to 1,741 million bushels.  Although all wheat production increased minimally from last month, the by-class changes are relatively more significant as larger Durum and Hard Red Spring production more than offset declines in Hard Red Winter and Soft Red Winter.  Projected 2017/18 feed and residual is reduced 30 million bushels this month to 120 million as the NASS Grain Stocks report indicated lower-than-expected June-August disappearance.  Additionally, projected 2017/18 U.S. corn supplies are the second highest on record, which is expected to dampen wheat feed and residual use for the rest of 2017/18.  The other wheat use categories are unchanged this month and projected 2017/18 ending stocks are higher at 960 million bushels but still well below last year’s 1,181 million.  The projected 2017/18 season-average farm price is unchanged this month at the midpoint of $4.60 per bushel but the range is narrowed 10 cents on each end to $4.40 to $4.80. 

Global 2017/18 wheat supplies are increased, primarily on higher production forecasts for Russia, EU, and India more than offsetting a decline in Australia.  Based mainly on harvest results to date, Russia’s 2017/18 wheat production is increased 37 million bushels to a new record of 3.013 billion bushels.  This is well above last year’s previous record of 2.664 billion bushels.  EU wheat production is raised 81 million bushels to 5.548 billion, largely on higher production in France.  Australia’s wheat production is reduced 37 million bushels to 790 million on persistent dry conditions in most of eastern Australia.  This would be Australia’s lowest wheat output since the 2008/09 crop year.

Foreign 2017/18 trade is fractionally higher this month as reduced exports by Australia are offset by increased exports from Canada.  Projected imports are lowered for India and Turkey as increased 2017/18 production for both countries is expected to reduce import needs.  Total world consumption is projected higher, primarily on greater usage by India, EU, and Russia on their increased supplies.  Projected global ending stocks are nearly 184 million bushels higher this month at 9.851 billion, which is a new record. 

 

2013/14

2014/15

2015/16

2016/17 Est.

2017/18 Projected September

2017/18 Projected October

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

45.7

46

0.3

-4.1

Acres Harvested (Million Acres)

45.3

46.4

47.3

43.9

38.1

37.6

-0.5

-6.3

U.S. Average Yield (Bu/Acre)

47.1

43.7

43.6

52.7

45.6

46.3

0.7

-6.4


Supply (Million Bushels)

Beg. Stocks

718

590

752

976

1,184

1,181

-3

205

Production

2,135

2,026

2,062

2,309

1,739

1,741

2

-568

Imports

173

151

113

118

150

150

0

32

Total Supply

3,026

2,768

2,927

3,402

3,074

3,071

-3

-331


Use & Ending Stocks (Million Bushels)

Food

955

958

957

949

950

950

0

1

Seed

77

79

67

61

66

66

0

5

Feed

228

114

149

157

150

120

-30

-37

Exports

1,176

864

778

1,055

975

975

0

-80

Total Use

2,436

2,015

1,951

2,222

2,141

2,111

-30

-111

U.S. Ending Stocks

590

752

976

1,181

933

960

27

-221

Foreign Stocks

6,524

7,243

7,887

8,247

8,736

8,892

156

645


Price and Stocks to Use Ratio

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

$6.87

$5.99

$4.89

$3.89

$4.30-$4.90

$4.40-$4.80

$0.00

$0.75

U.S. Stocks/Use

24.22%

37.32%

50.03%

53.15%

43.58%

45.48%

1.90%

-7.67%

  Source: USDA-WASDE October 12, 2017



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

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

9,428

27,602

6,575

5,199

27,177

6,615

9,852

US

1,181

1,741

150

120

1,136

975

960

Foreign

8,247

25,861

6,425

5,079

26,041

5,641

8,892

Argentina

12

643

0

4

217

423

16

Australia

247

790

6

129

257

661

124

Canada

252

992

17

110

301

772

188

EU

385

5,550

239

2,076

4,712

1,047

414

Brazil

87

187

268

18

430

37

76

China

4,080

4,777

110

478

4,262

29

4,676

Sel. Mideast

479

716

669

184

1,478

27

359

N. Africa

509

667

1,042

80

1,656

25

536

Pakistan

159

963

1

33

933

22

168

Southeast Asia

228

0

950

283

887

38

253

India

360

3,615

129

184

3,674

18

411

Russia

398

3,013

18

753

1,598

1,194

637

Kazakhstan

146

514

2

77

254

276

133

Ukraine

65

974

1

129

367

606

67

ROW

838

2,461

2,974

541

5,013

464

835

World Wheat Supply and Use (Million Bushels) 2017/18 October-September

Country / Region

Beginning Stocks

Production

Imports

Domestic Feed

Domestic Total

Exports

Ending Stocks

World

28

233

-15

32

77

0

183

US

-4

1

-

-30

-30

-

28

Foreign

31

231

-15

62

107

-

156

Argentina

-

-

-

-

-

-

-

Australia

7

-37

-

-

-

-18

-12

Canada

-

18

-

-

-

18

-

EU

1

80

-

37

37

-

44

Brazil

6

-4

4

-

-

-

6

China

-

-

-

-

-

-

-

Sel. Mideast

-

-

11

-

6

-

6

N. Africa

7

13

4

-

-11

-

35

Pakistan

-

-

-

-

-

-

-

Southeast Asia

-2

-

-

-

-

-

-2

India

14

87

-18

-

37

-

46

Russia

-

37

-

18

18

-

18

Kazakhstan

-

-

-

-

-

-

-

Ukraine

-

-

-

-

-

-

-

ROW

-1

37

-15

7

20

0

15

  Source: USDA-WASDE October 12, 2017

 

2018 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the October 12, 2017 USDA WASDE reports. This month’s profitability update continues the transition to 2018 as producers have made or will soon be making decisions on 2018 crop selection starting with wheat.  The planning process is on-going and if you are considering wheat, you have to consider how it looks compared to other crops. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2017 state average projection of 170 bushels per acre for corn, 50 bushels per acre for soybeans, 1045 pounds per acre cotton, and 71 bushels per acre wheat. Prices used for 2018 are incorporating the current harvest time basis with 2018 harvest futures prices. Based on these yields and prices, soybeans, corn, and wheat-soybeans are projected to have positive net returns over variable, land, and fixed costs. Cotton is projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. Producers with own or cash rent ground may want to consider wheat and double crop soybeans in their rotation. It may also be viable in a share rent situation. Costs are based on the 2017 UT Extension Row Crop budgets with adjustments made based on current input prices. Milo prices are an estimate as very few quotes are available. It depends on a producer’s situation on what is showing to be the most profitable crop. Producers with cash rent or owned ground will want to look at Returns Over Variable Expenses as their land cost will be fixed and if their machinery cost are truly fixed and no equipment changes will be made. Producers with share rent will want to plug in their appropriate share rent if their equipment cost are fixed. Producers who may be making some equipment changes may want to look at Net Returns. Visit with your supplier on input cost expectations. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. I would like to point out the cotton price of 67 cents that is being used in the profitability outlook. The price of 67 cents is made up of a cash price of 62 cents and gin rebates (seed & hauling) of 5 cents. Producers should look at these returns as what could be if no adjustments are made in their operation and consider it a warning sign that adjustments will need to be made in 2018 to be sustainable. These estimates do not consider any USDA or crop insurance payments from the new farm bill. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  Cotton prices include revenue for cottonseed and hauling. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $ 97, Soybeans - $38, Corn - $121 (includes 170 units of N), Milo - $87, and Wheat/Soybeans - $93. Cost of production will continue to be adjusted as information becomes available. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2017 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

985 lbs.

47 bu.

161 bu.

90 bu.

70 bu./35 bu.

Price (as of 10/12/17)

$0.67 lb.

$9.88 bu.

$3.66 bu.

$3.36 bu.

$4.78 bu./$9.88 bu.

Revenue

$660

$464

$589

$302

$680

Variable Expenses

$403

$216

$308

$229

$374

Returns Over Variable

$257

$248

$281

$74

$306

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

$163

$114

$144

$73

$166

Returns Over Variable and Land Costs

$94

$134

$137

$1

$140

Fixed Costs
Depreciation & interest on machinery

$130

$62

$56

$62

$99

Returns Over Specified Costs

-$37

$72

$81

-$61

$41

Breakeven Price at Average Yield and Specified Cost

$0.71

$8.36

$3.16

$4.04

$5.01/$8.30

 

  

2018 Estimated Returns - Irrigation

Considering irrigation, profitability is positive for soybeans, corn, and wheat/soybeans considering variable, land and fixed cost. Returns Over Variable and Land Costs are positive for cotton.  Producers should look at these returns as what could be if no adjustments are made in their operation and consider that adjustments may need to be made in 2018 to be sustainable. The table below is an estimate of returns for crops under irrigation. Since irrigated yields are not as of yet kept separate in Tennessee, yields below are an estimate of irrigated yields.  Note that due to an increase in dryland cotton and corn 5 year state average yields, irrigated yields have been increased in this projection.  Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $28 per acre for corn, $24 per acre for cotton, and $18 per acre for soybeans and $15 per acre of irrigation repairs and maintenance. Fixed costs of $85 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems.  For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $101, Soybeans - $37, Corn - $159 (includes 240 units of N), Milo - $103, and Wheat/Soybeans - $93. Cost of production will continue to be adjusted as information becomes available. Hopefully, we will see costs reduced or possibly suitable generic products available.   Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields.  Production costs are estimates based on the 2017 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable and Fixed IR Costs as a guide in decision making. Producers with share rent ground should use Returns Over Variable, Fixed IR Costs and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost minus 25% of the irrigation equipment fixed cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. A management cost of $30 per acre is included in Fixed Costs – management labor, depreciation & interest on machinery. This is an additional $15 above the dryland crop management labor. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.

2018 Estimated Returns – Irrigation

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

1200 lbs.

60 bu.

210 bu.

130 bu.

70 bu./45 bu.

Price (as of 10/12/17)

$0.67 lb.

$9.88 bu.

$3.66 bu.

$3.66 bu.

$4.78 bu./$9.88 bu.

Revenue

$804

$593

$769

$437

$779

Variable Expenses( include energy cost)

$452

$250

$402

$291

$409

Fixed Irrigation Costs per Acre

$85

$85

$85

$85

$85

Returns Over Variable & Fixed IR Costs

$267

$258

$281

$61

$285

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

 

$177

$125

$168

$85

$170

Returns Over Variable, IR Fixed Cost and Land Costs

$90

$133

$114

-$24

$116

Fixed Costs- management labor, depreciation & interest on machinery

$145

$77

$71

$77

$114

Returns Over Specified Costs

-$56

$55

$43

-$101

$2

Breakeven Price at Average Yield and Specified Cost

$0.72

$8.96

$3.46

$4.14

$5.01/$9.69


 

 

Past Monthly Comments:   

July 12, 2017     August 10, 2017     September 12, 2017    October 12, 2017