South Carolina Peanut Growers Meeting

Transcription

1 South Carolina Peanut Growers Meeting Santee, SC January 28, 2016 Nathan Smith, Ph.D. Extension Economist

2 Row Crops Market Situation 2015 U.S. yields overall were strong and thus production out-pacing demand. Domestic demand generally stable to growing. Exports slowing down. Low prices compared to two years ago. Lower net income as expenses have not adjusted down with commodity prices. Insurance and gov t payments have become more important.

3 Weekly Corn Weekly Soybeans Weekly Cotton Weekly Wheat

4

5 Peanuts

6 Peanut Situation 2015 Production Up US Planted Acreage up 20% to 1,625,000 acres US Yield Projection 3,963 lb/ac (40 lb > 2014) SC Planted Acreage level at 112,000 acres. SC Yield estimate at 3,200 lb/ac on 82,000 harvested acres. USDA projects overall peanut use up 9.5% Peanut Butter use up 7% driving overall edible use up to 3.8% Food use up 2.3%

7 Peanut Acreage State * % Change 1,000 acres AL % FL % GA % MS % SE , % NM % OK % TX % SW % NC % SC % VA % VC % US 1,067 1,354 1, % Arkansas FSA reported acreage = 16,311 acres in 2015, up from 10,495 in 2014 Source: USDA NASS Crop Production Reports

8 2016 Cost and Returns Projections

9 SUMMARY OF SOUTH CAROLINA CROP ENTERPRISE ESTIMATES, 2016 January 2016 Conventional Tillage NON-IRRIGATED Cotton Peanuts Corn Soybeans EXPECTED YIELD per ACRE 750 lbs 3,800 lbs 120 bu 35 bu EXPECTED SEASON AVG PRICE $0.65 /lb $425 /ton $4.50 /bu $8.60 /bu GROSS RETURN per ACRE TOTAL VARIABLE COSTS per ACRE RETURN ABOVE VARIABLE COST per A $488 $459 $29 $808 $741 $67 $540 $463 $77 $301 $324 -$23 BREAKEVEN PRICE (Variable Cost) $0.61 /lb $390 /ton $3.86 /bu $9.26 /bu TOTAL SPECIFIED FIXED COSTS per ACR $169 $174 $90 $73 TOTAL COST EXCL. LAND & MGT per A RETURN TO LAND AND MGT per ACRE $628 -$140 $915 -$107 $553 -$13 $397 -$96 BREAKEVEN PRICE (Total Costs) $0.84 /lb $481 /ton $4.61 /bu $11.34 /bu BREAKEVEN YIELD per ACRE 966 lbs 4,304 lbs 123 bu 46 bu

10 Corn vs Peanut $6.00 Corn Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields * Corn Price ($/bu) $5.00 $4.00 $3.00 $2.00 $2.91 $3.07 $3.23 $3.38 $3.54 $3.70 $3.86 $4.02 $4.18 $4.33 $4.49 $4.65 $4.81 $4.97 $5.13 $1.00 $- Non Irrigated Corn Irrigated Corn $330 $340 $350 $360 $370 $380 $390 $400 $410 $420 $430 $440 $450 $460 $470 Peanut Price ($/ton) * The above chart is based on the following assumptions: 1) Irrigated corn is compared to irrigated peanut and non-irrigated corn is compared to non-irrigated peanut. 2) Irrigated corn yield is 200 bu. and irrigated peanut yield is 5000 lbs. 3) Non-irrigated corn yield is 120 bu. and non-irrigated peanut yield is 3800 lbs.

11 Soybean vs. Peanut $16.00 Soybean Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields * Soybean Price ($/bu) $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $6.00 $6.54 $7.09 $7.63 $8.17 $8.71 $9.26 $13.60 $13.06 $12.51 $11.97 $11.43 $10.89 $10.34 $9.80 $2.00 $- Non Irrigated Soybean Irrigated Soybean $330 $340 $350 $360 $370 $380 $390 $400 $410 $420 $430 $440 $450 $460 $470 Peanut Price ($/ton) * The above chart is based on the following assumptions: 1) Irrigated soybean is compared to irrigated peanut and non-irrigated soybean is compared to non-irrigated peanut.

12 Cotton vs. Peanut Cotton Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields * Cotton Price ($/lb) $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.46 $0.49 $0.51 $0.54 $0.56 $0.59 $0.61 $0.64 $0.66 $0.69 $0.71 $0.74 $0.76 $0.79 $0.81 $0.20 $0.10 $- $330 $340 $350 $360 $370 $380 $390 $400 $410 $420 $430 $440 $450 $460 $470 Non Irrigated Cotton Irrigated Cotton Peanut Price ($/ton) * The above chart is based on the following assumptions: 1) Irrigated cotton is compared to irrigated peanut and non-irrigated cotton is compared to non-irrigated peanut. 2) Irrigated cotton yield is 1100 lbs. and irrigated peanut yield is 5000 lbs. 3) Non-irrigated cotton yield is 750 lbs. and non-irrigated peanut yield is 3800 lbs. 4) Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.

13 Profit Scoreboard Commodity Avg Yield Avg Price Out of Pocket & Total Costs Potential Returns Chance of Positive Returns Corn Dryland 120 bu $4.50 VC $463 $100 68% TC $604 $-41 37% Cotton Dryland 750 lb $0.65 VC $459 $109 75% TC $631 -$63 27% Peanut Dryland 3800 lb $425 VC $741 $136 71% TC $933 $-84 38% Soybean Dryland 35 bu $9.00 VC $324 $-9 43% TC $464 -$149 9%

14 Source: Scott A. Mickey, Central SC Farm Management Association

15 South Carolina Major Row Crops Planted Acres* (1,000 Acres) P Corn Cotton Peanuts Soybeans Tobacco (harvested Wheat Total Compiled by Nathan Smith, Clemson Extension Economist, Source: NASS USDA, QuickStats *January 12, 2016 USDA NASS Annual Crop Production

16 2016 Considerations Having a home for peanuts, more of a concern in Georgia. Rotations Contracts Tonnage Redemption of Loan Peanuts Payment Limits

17 3,352,750 total tons 1.5 mil acres => 4,770lb 1.6 mil acres=> 4,191lb

18 2014 Peanut PLC Payments 2014 Marketing Year Average Price = $440 per ton according to NASS August Agricultural Prices Report. $535 Reference Price - $440 MYA = $95/ton PLC payment rate. Adjust for 85% of base and sequestration and comes to about $75/ton per base acre.

19 Example PLC Peanut Program Reference Price $ /lb $ /ton 2014 MYA Price $ /lb $ /ton 2014 National Loan Rate $ /lb $ /ton *PLC Rate $ /lb $95.00 /ton PLC Yield per acre 3,000 lbs 1.5 tons Base Acres 1 85% of Base Acres 0.85 PLC Payment $ /ba $80.75 /ton Minus 6.8% Sequester $8.24 Total PLC Payment $ /ba $74.29 /ton *Ref Price - Higher of MYA Price or Loan Rate ba = base acre

20 Peanut Contract Market Loan Gain issue on loan peanuts. Passage of the Omnibus spending bill that included reinstating commodity marketing certificates should help for 2015 and Add an entity if possible to increase the payment limitation. Modify contracts? share in MLG s, control of redemption of the peanuts.

21 Runners $ Virginias $491.60

22 Issues for 2016 Large supply of peanuts Contracted vs Un-contracted PLC payments

23 Food for Thought Tough times will be followed by better times, what can you do to be ready and able to take advantage when things do turn around?

24 Questions? Nathan Smith