September 12, 2018 - USDA World Supply and Demand Estimates Corn Market Reaction: December 2018 corn futures closed down 14 ¼ cents at $3.52 ½ with a trading range for the day of $3.50 ¾ to $3.66 ¼. December 2019 corn futures closed down 8 cents at $3.89 with a trading range for the day of $3.86 ¾ to $3.96 ¾. The headline grabber was the 181.3 bu/acre national average yield, an all-time record and up 2.9 bu/acre from last month s estimates. The bad news for prices is domestic production continues to swell. The good news is global corn use remains strong and year-over-year stocks (both domestic and foreign) are anticipated to drop substantially. Access to global markets remains an unknown for this marketing year due to continued trade uncertainty. USDA Summary: This month s U.S. corn outlook is for larger production, increased domestic use, greater exports, and higher ending stocks. Corn production is forecast at 14.827 billion bushels, up 241 million from last month on an increased yield forecast. If realized, the crop would be the second highest on record. Among the major producing states, yields are forecast to be record high in Illinois, Iowa, Nebraska, Indiana, Ohio, and South Dakota. Corn supplies are higher from last month, as a larger crop more than offsets a small decline in beginning stocks due to higher estimated exports for 2017/18. Feed and residual use for is raised 50 million bushels with a larger crop and lower expected prices. Corn used for ethanol is raised 25 million bushels. With supply rising more than use, corn ending stocks are up 90 million bushels from last month. The season-average corn price received by producers is projected 10 cents lower with a midpoint of $3.50 per bushel. Global coarse grain production for is forecast up. The foreign coarse grain outlook is for lower production, greater consumption, increased trade, and reduced stocks relative to last month. Foreign corn production is forecast higher than last month with projected increases for the EU, Angola, Paraguay, Turkey, and Serbia more than offsetting declines for Canada, South Africa, and Guatemala. EU corn production is raised, mostly reflecting increases for Romania, Hungary, Bulgaria, and France. In both Bulgaria and Romania, yields are expected to be record high. Corn exports for are raised for Ukraine, Serbia, and Paraguay, but lowered for Canada and South Africa. Imports are raised for the EU, Japan, Brazil, and Guatemala, with partly offsetting declines for Algeria and Saudi Arabia. For 2017/18, exports are lowered for both Brazil and Argentina, reflecting slower-than-expected trade to date. Foreign corn ending stocks for are down from last month, with declines for Argentina, South Africa, Ukraine, Canada, and Serbia more than offsetting increases for Angola, Paraguay, the EU, Brazil, Turkey, and India. Global corn stocks, at 6.181 billion bushels, are up 59 million from last month.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected August Projected September Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 90.6 88 94 90.2 89.1 89.1 0.0-1.1 83.1 80.8 86.7 82.7 81.8 81.8 0.0-0.9 171.0 168.4 174.6 176.6 178.4 181.3 2.9 4.7 Supply (Million Bushels) Beg. 1,232 1,731 1,737 2,293 2,027 2,002-25 -291 Production 14,216 13,602 15,148 14,604 14,586 14,827 241 223 Imports 32 68 57 40 50 50 0 10 Total Supply 15,479 15,401 16,942 16,937 16,664 16,879 215-58 Use & Ending (Million Bushels) Feed and Residual 5,280 5,114 5,470 5,450 5,525 5,575 50 125 Ethanol 5,200 5,224 5,432 5,600 5,625 5,650 25 50 Food, Seed & Industrial 1,401 1,424 1,453 1,460 1,480 1,480 0 20 Exports 1,867 1,901 2,294 2,425 2,350 2,400 50-25 Total Use 13,748 13,664 14,649 14,935 14,980 15,105 125 170 U.S. Ending 1,731 1,737 2,293 2,002 1,684 1,774 90-228 Foreign 6,529 6,685 6,676 5,641 4,438 4,408-30 -1,233 U.S. Avg. Season Price ($/Bu) $3.70 $3.61 $3.36 $3.40 Price and to Use Ratio $3.10- $4.10 $3.00- $4.00 -$0.10 $0.10 U.S. /Use 12.59% 12.71% 15.65% 14.78% 11.24% 11.74% 0.5% -3.03% Source: USDA-WASDE September 12, 2018
Country / Region World Corn Supply and Use (Million Bushels) (September) Beginning Production Imports Feed Total Exports Ending World 7,643 42,084 6,062 26,649 43,546 6,366 6,182 US 2,002 14,827 50 5,575 12,705 2,400 1,774 Foreign 5,641 27,258 6,012 21,074 30,841 3,966 4,408 Argentina 94 1,614 0 335 488 1,063 157 Brazil 414 3,720 39 2,205 2,618 1,142 414 South Africa 114 512 0 260 496 75 55 Egypt 70 252 382 535 634 0 70 EU 374 2,394 768 2,500 3,248 59 229 Japan 52 0 591 457 598 0 44 Mexico 190 1,024 638 984 1,701 59 91 Southeast Asia 83 1,155 610 1,425 1,736 30 82 South Korea 75 3 402 315 405 0 74 Canada 93 563 20 327 539 57 80 China 3,132 8,858 197 6,850 9,881 2 2,303 Ukraine 56 1,220 1 193 244 984 48 ROW 894 5,943 2,365 4,689 8,252 495 761 World Corn Supply and Use (Million Bushels) September-August Country / Region Beginning Production Imports Feed Total Exports Ending World 32 313 65 217 285 83 61 US -25 241-50 75 50 90 Foreign 57 72 65 167 209 33-30 Argentina -44 - - 20 16 - -59 Brazil - - 12 - - - 12 South Africa - -20 - - - -4-16 Egypt - - - - - - - EU 51 39 59 138 138-12 Japan - - 20 16 16-4 Mexico - - - - - - - Southeast Asia -4 - - - - - -4 South Korea - - - - - - - Canada - -20 - -8-8 -4-8 China - - - - - - - Ukraine 1 - - -4-4 20-15 ROW 53 72-25 6 52 21 45 Source: USDA-WASDE September 12, 2018
Cotton Market Reaction: December 2018 cotton futures closed down 0.25 cents at 82.64 with a trading range for the day of 81.59 to 83.45 cents. March 2019 cotton futures closed down 0.28 cents at 83.03 with a trading range for the day of 82.08 to 83.83 cents. Cotton futures remain range bound between 80.5 and 84.5 cents. This report will do little to change the current trend. Prices have been moving lower for a possible test of the lower end of the range, however weather will be important to watch. USDA Summary: The U.S. cotton estimates include larger production, exports, and ending stocks relative to last month. Production is raised 447,000 bales, with increases in the Southwest, Delta, and Southeast. Beginning stocks are revised 100,000 bales lower based on indicated stocks as of July 31, 2018, while domestic mill use is reduced slightly in 2017/18 based on recent activity. The export forecast is raised 200,000 bales. Ending stocks are now projected higher at 4.7 million bales, or 25 percent of total use. The forecast range for the marketing-year average farm price is unchanged at 70 to 80 cents per pound. Larger world cotton production mostly offsets lower beginning stocks, and world ending stocks are only slightly higher this month. Beginning stocks are reduced for India and the United States due to revisions in 2017/18 estimates. Production is raised for China, Brazil, and the United States but is lowered for Australia. Global consumption is increased 300,000 bales due to higher expected use in India, and trade is unchanged. World ending stocks are projected about 400,000 bales higher this month, at 77.5 million bales, equivalent to 61 percent of world consumption. If realized, this stocks/use ratio would be its lowest in 8 years, but higher than in virtually every other year before 2010/11.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (lbs/acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected August Projected September Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 11.04 8.58 10.07 12.61 13.52 14.04 0.52 1.43 9.35 8.07 9.51 11.1 10.14 10.55 0.41-0.55 838 766 867 905 911 895-16 -10 Supply (Million Bales) Beg. 2.35 3.65 3.8 2.75 4.4 4.3-0.1 1.55 Production 16.32 12.89 17.17 20.92 19.24 19.68 0.44-1.24 Imports 0.01 0.03 0.01 0.01 0.01 0.01 0 0 Total Supply 18.68 16.57 20.98 23.68 23.64 23.99 0.35 0.31 Use & Ending (Million Bales) 3.58 3.45 3.25 3.23 3.4 3.4 0 0.17 Exports 11.25 9.15 14.92 15.85 15.5 15.7 0.2-0.15 Total Use 14.82 12.6 18.17 19.07 18.9 19.1 0.2 0.03 U.S. Ending 3.65 3.8 2.75 4.3 4.6 4.7 0.1 0.4 Foreign 108.09 91.11 81.04 79.49 72.5 72.76 0.26-6.73 Chinese 66.92 58.2 45.92 38.02 28.64 28.64 0-9.38 U.S. Avg. Season Price ($/lb) $0.613 $0.612 $0.68 $0.68 Price and to Use Ratio $0.70- $0.80 $0.70- $0.80 $0.000 $0.070 U.S. /Use 25% 30% 15% 25% 24% 25% 0.27% -0.33% Chinese - 197% 166% 119% 102% 67% 67% 0.00% /Use 35.04% Source: USDA-WASDE September 12, 2018
World Cotton Supply and Use (Million 480 lb Bales) (September) Country / Region Beginning Production Imports Use Exports Loss Ending World 83.79 121.97 41.79 127.94 41.8 0.35 77.46 US 4.3 19.68 0.01 3.4 15.7 0.19 4.7 Foreign 79.49 102.29 41.79 124.54 26.1 0.16 72.76 Central Asia 2.71 5.85 0 3.71 2.38 0 2.48 Afr. Fr. Zone 2.25 5.28 0 0.14 4.97 0 2.42 Australia 2.94 3 0 0.04 3.9 0 2.01 Brazil 8.66 10 0.08 3.6 5.5 0 9.63 India 11.58 28.7 1.5 25.5 4.4 0 11.88 Mexico 0.65 1.75 0.9 1.9 0.55 0.03 0.83 China 38.02 27.5 7 42.5 0.15 0 29.87 EU 0.25 1.56 0.7 0.75 1.45 0.05 0.26 Turkey 1.98 4.5 3.5 7.5 0.38 0 2.1 Pakistan 2.83 8.5 2.5 11 0.18 0.03 2.63 Indonesia 0.62 0 3.75 3.65 0.01 0 0.71 Thailand 0.18 0 1.13 1.1 0 0.03 0.18 Bangladesh 1.86 0.14 8.1 8 0 0.01 2.08 Vietnam 1.19 0 7.7 7.5 0 0 1.39 ROW 3.77 5.51 4.92 7.65 2.23 0.01 4.29 World Cotton Supply and Use (Million 480 lb Bales) September-August Country / Region Beginning Production Imports Use Exports Loss Ending World -0.72 1.44-0.01 0.32-0.02 0.05 0.36 US -0.1 0.44 - - 0.2 0.05 0.1 Foreign -0.62 1-0.32-0.22-0.26 Central Asia -0.06-0.05 - - - - -0.1 Afr. Fr. Zone 0.03 - - - - - 0.03 Australia 0.08-0.55 - - -0.4 - -0.06 Brazil 0.03 0.5 - - 0.2-0.32 India -0.85 - - 0.3-0.1 - -1.05 Mexico 0 - - - - - - China 0.23 1 - - - - 1.23 EU - - - - - - - Turkey 0.03 - - - 0.05 - -0.03 Pakistan -0.04 - - - - - -0.04 Indonesia - - - - - - -0.01 Thailand - - - - - - - Bangladesh - - - - - - - Vietnam - - - - - - - ROW -0.07 0.1-0.01 0.02 0.03 - -0.03 Source: USDA-WASDE September 12, 2018
Soybeans Futures Market Reaction: November 2018 soybean futures were up 8 ½ cents at $8.40 with a trading range for the day of $8.21 ¼ to $8.45. November 2019 soybean futures closed up 10 ½ cents at $8.96 ¼ with a trading range for the day of $8.79 ¾ to $8.97 ¾. Record yield of 52.8 was mitigated by lower beginning stocks due to higher crush and exports form the last marketing year (ended August 31). USDA Summary: U.S. oilseed production for is projected up from last month with higher soybean and cottonseed production forecasts partly offset by a lower peanut forecast. Soybean production is projected at a record 4,693 million bushels, up 107 million on a record yield forecast of 52.8 bushels per acre. Soybean supplies are raised with higher production only partly offset by lower beginning stocks. With soybean crush up 10 million bushels and exports unchanged, ending stocks are projected at 845 million bushels, up 60 million from last month. The U.S. season-average soybean price is forecast at $7.35 to $9.85 per bushel, down $0.30 at the midpoint. Soybean meal prices are lowered $5.00 at the midpoint to $290 to $330 per short ton. Soybean oil prices are unchanged at 28.0 to 32.0 cents per pound. Changes for 2017/18 include higher exports, higher crush, and lower ending stocks. Exports are increased 20 million bushels to 2,130 million based on official trade data through July and indications from August export inspections. With crush raised 15 million bushels, ending stocks are projected at 395 million bushels, down 35 million from last month. The global oilseed outlook includes higher production, reduced trade, and increased stocks compared to last month. Higher production of soybeans and cottonseed more than offsets lower forecasts for peanuts, rapeseed, and sunflowerseed. Soybean production is increased 81 million bushels, with larger crops for the United States and China that are partly offset by lower projections for Canada, India, and Uruguay. Global soybean exports for are reduced 40 million bushels to 5.765 billion, with lower shipments for Canada and Uruguay. China s soybean imports are reduced 37 million bushels to 3.454 billion as slower growth in protein meal demand and lower crush in 2017/18 continues into the next marketing year. Partly offsetting this change are higher imports for Egypt and Iran. Global soybean ending stocks are projected 85 million bushels higher, with increased stocks for the United States and Argentina that are partly offset by reduced stocks for Brazil.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected July Projected August Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 83.3 82.7 83.4 90.1 89.6 89.6 0.0-0.5 82.6 81.7 82.7 89.5 88.9 88.9 0.0-0.6 47.5 48 52 49.1 48.5 51.6 3.1 2.5 Supply (Million Bushels) Beg. 92 191 197 302 465 430-35 128 Production 3,927 3,926 4,296 4,392 4,310 4,586 276 194 Imports 33 24 22 22 25 25 0 3 Total Supply 4,052 4,140 4,515 4,715 4,800 5,040 240 325 Use & Ending (Million Bushels) Crushing 1,873 1,886 1,901 2,040 2,045 2,060 15 20 Exports 1,842 1,942 2,166 2,110 2,040 2,060 20-50 Seed and Residual 146 115 146 136 135 136 1 0 Total Use 3,862 3,944 4,214 4,286 4,220 4,256 36-30 U.S. Ending 191 197 302 430 580 785 205 355 Foreign 2,658 2,687 3,250 3,084 3,031 3,108 77 24 U.S. Average Season Price ($/Bu) $10.10 $8.95 $9.47 $9.35 Price and to Use Ratio $8.00- $10.50 $7.65- $10.15 -$0.35 -$0.45 U.S. /Use 4.95% 4.99% 7.17% 12.66% 13.74% 18.44% 4.70% 5.79% Source: USDA-WASDE August 10, 2018
Country / Region World Soybean Supply and Use (Million Bushels) (August) Beginning Production Imports Crush Total Exports Ending World 3,513 13,489 5,689 11,342 12,994 5,804 3,893 US 430 4,586 25 2,060 2,196 2,060 784 Foreign 3,084 8,903 5,664 9,281 10,798 3,744 3,108 Argentina 1,132 2,094 82 1,580 1,761 294 1,253 Brazil 887 4,428 16 1,569 1,700 2,756 875 Paraguay 10 360 0 145 148 217 6 China 863 533 3,491 3,491 4,119 4 764 EU 39 102 581 599 660 11 51 Japan 8 10 121 86 129 0 10 Mexico 6 18 175 191 193 0 6 ROW 139 1,358 1,199 1,621 2,089 463 145 World Soybean Supply and Use (Million Bushels) August-July Country / Region Beginning Production Imports Crush Total Exports Ending World -15 280 17-24 -24 24 282 US -35 276-15 16 20 205 Foreign 20 4 17-39 -40 4 77 Argentina 53 - -1 - -1-53 Brazil -31 - - - - - -31 Paraguay - - - - - - - China 1 - - -55-55 -2 58 EU - 1 18 18 18-1 Japan - - - - - - - Mexico - - - - - - - ROW -4 3 - -1-2 6-5 Source: USDA-WASDE August 10, 2018
Wheat Futures Market Reaction: December 2018 wheat futures closed down 12 cents at $5.06 ¾ with a trading range for the day of $5.00 ¼ to $5.29 ¼. July 2019 wheat futures closed down 7 ½ cents at $5.45 with a trading range for the day of $5.36 ¾ to $5.58 ½. Increased foreign wheat stocks and record U.S. corn yields drove price declines for wheat. USDA Summary: The U.S. wheat supply and demand estimates are unchanged from last month. There are offsetting by-class changes for both exports and imports. The seasonaverage farm price range is unchanged at the midpoint of $5.10 per bushel and the range is narrowed $0.20 per bushel to $4.70 to $5.50. Global wheat supplies for are raised 173 million bushels on a 125-million-bushel production increase and higher beginning stocks. The Russian crop is raised 110 million bushels on harvest results to date in the winter wheat region and continued excellent weather in the spring wheat belt. Kazakhstan is raised 18 million bushels also on excellent spring wheat conditions. Production is increased 99 million bushels in India to a record 3.663 billion on updated government data. These increases are partially offset by a 73-million-bushel decrease in Australia and a 37-million-bushel decrease in Canada, both reflecting continued dry conditions during the growing season. Global exports are lowered 92 million bushels with a 73-millionbushel reduction for Australia and an 18-million-bushel reduction for Canada, both on smaller crops. Indonesia and Iran imports are down 37 million bushels and 18 million bushels, respectively. Global use is raised 85 million bushels primarily on a 73-million-bushel increase for Russia feed and residual use and a 37-million-bushel increase for EU feed and residual use. With total supplies rising faster than use, global ending stocks are raised 92 million bushels to 9.601 billion but are 5 percent below last year s record.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected August Projected September Planted and Harvested Acres & Yield 56.8 55 50.1 46 47.8 47.8 46.4 47.3 43.9 37.6 39.6 39.6 43.7 43.6 52.7 46.3 47.4 47.4 Supply (Million Bushels) Change From Previous Month Change 2017/18 to 0 1.8 0 2 0 1.1 Beg. 590 752 976 1,181 1,100 1,100 0-81 Production 2,026 2,062 2,309 1,741 1,877 1,877 0 136 Imports 151 113 118 157 135 135 0-22 Total Supply 2,768 2,927 3,402 3,079 3,112 3,112 0 33 Use & Ending (Million Bushels) Food 958 957 949 964 970 970 0 6 Seed 79 67 61 64 62 62 0-2 Feed 114 149 161 48 120 120 0 72 Exports 864 778 1,051 901 1,025 1,025 0 124 Total Use 2,015 1,951 2,222 1,978 2,177 2,177 0 199 U.S. Ending 752 976 1,181 1,100 935 935 0-165 Foreign 7,243 7,944 8,266 8,981 8,580 8,666 86-315 U.S. Avg. Season Price ($/Bu) $5.99 $4.89 $3.89 $4.72 Price and to Use Ratio $4.60- $5.60 $4.70- $5.50 $0.00 $0.37 U.S. /Use 37.32% 50.03% 53.15% 55.61% 42.95% 42.95% 0.00% -12.66% Source: USDA-WASDE September 12, 2018
Country / Region World Wheat Supply and Use (Million Bushels) (September) Beginning Production Imports Feed Total Exports Ending World 10,081 26,933 6,582 5,171 27,413 6,665 9,601 US 1,100 1,877 135 120 1,152 1,025 935 Foreign 8,981 25,056 6,446 5,052 26,261 5,640 8,666 Argentina 26 717 0 4 209 522 11 Australia 198 735 6 151 279 514 145 Canada 227 1,157 17 147 331 882 188 EU 535 5,052 220 1,947 4,593 845 370 Brazil 47 173 276 18 445 11 39 China 4,660 4,703 165 625 4,483 44 5,002 Sel. Mideast 464 693 654 177 1,436 38 336 N. Africa 538 775 952 83 1,687 25 553 Pakistan 177 966 0 44 930 44 170 Southeast Asia 191 0 963 314 959 39 155 India 485 3,663 7 184 3,601 18 536 Russia 399 2,609 18 661 1,488 1,286 252 Kazakhstan 104 551 2 81 257 312 88 Ukraine 46 937 1 110 338 606 39 ROW 884 2,324 3,165 506 5,226 452 779 Country / Region World Wheat Supply and Use (Million Bushels) September-August Beginning Production Imports Feed Total Exports World 47 124-94 84 85-91 86 US - - - - - - - Foreign 47 124-94 84 85-91 86 Argentina - - - - - - - Australia 18-73 - -18-18 -73 37 Canada 8-37 - -15-15 -18 4 EU 16-18 37 37 - -2 Brazil - - - - - - - China - - - - - - - Sel. Mideast - - -24 - - -4-21 N. Africa 2 - -2 - -2-2 Pakistan - - - - - - - Southeast Asia -10 - -44 - -7 - -47 India - 99-11 - - 4 85 Russia 61 110-4 73 92-75 Kazakhstan - 18-7 7-11 Ukraine -6 - - - - - -7 ROW -41 6-28 - -9 1-51 Source: USDA-WASDE September 12, 2018 Ending
2018 Estimated Returns Non-Irrigated The profitability outlook has been updated after the release of the September 12, 2018 USDA WASDE reports. This month s profitability update starts the transition to 2019 as producers have made or will soon be making decisions on 2019 crop selection starting with wheat. The planning process is on-going and if you are considering wheat, you have to consider how it looks compared to other crops in 2019. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2018 state average projection of 174 bushels per acre for corn, 51 bushels per acre for soybeans, 1082 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, cotton, soybeans, and corn are projected to have positive net returns over variable, land, and fixed costs. Wheat/soybeans are projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. Producers with own or cash rent ground may want to consider wheat and double crop soybeans in their rotation. It may also be viable in a share rent situation but will need to be looked at closely. Wheat by itself at average yields is right around break-even. Producers planting wheat will want to watch the market closely and take advantage of any market rallies. Based on yield trends of the last 5 years, cotton average yields in this projection are 47 pounds higher than projections used for 2018. Corn yields are 4 bushels per acre higher, soybeans 1 bushel/acre higher and wheat 2 bushels /acre lower. 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 73 cents that is being used in the profitability outlook. The price of 73 cents is made up of a cash price of 71 cents and gin rebates (seed & hauling) of 2 cents. Gin rebates for seed and hauling are an estimate as those are generally not known until harvest time and could be in the range 0f 0-5 cents. Producers should look at these returns as what could be if no adjustments are made in their operation and consider it a warning sign that adjustments will need to be made in 2018 to be sustainable. These estimates do not consider any USDA or crop insurance payments from the new farm bill. Please contact your local County Extension office or Area Specialist Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. Cotton prices include revenue for cottonseed and
hauling. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $ 94, Soybeans - $35, Corn - $128 (includes 170 units of N), 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 Wheat/Soybeans Yield 1029 lbs. 48 bu. 165 bu. 68 bu./35 bu. Price (as of 9/12/18) $0.73 lb. $8.76 bu. $3.63 bu. $5.50 bu./$8.76 bu. Revenue $751 $420 $599 $681 Variable Expenses $429 $224 $347 $417 Returns Over Variable $322 $197 $252 $264 Land Costs (25% of Revenue-25% crop insurance) Returns Over Variable and Land Costs Fixed Costs Depreciation & interest on machinery $185 $103 $147 $166 $137 $94 $106 $98 $134 $64 $57 $111 Returns Over Specified Costs $3 $30 $48 -$13 Breakeven Price at Average Yield and Specified Cost $0.73 $8.13 $3.34 $5.55/$9.03
2018 Estimated Returns Irrigated Considering irrigation, Returns Over Variable and Land Costs are positive for cotton, corn, soybeans, and wheat/soybeans, but not enough to cover fixed costs. Soybeans and corn are close to the breakeven point. An individual producer s machinery and equipment costs will have a strong influence on profitability. Producers should look at these returns as what could be if no adjustments are made in their operation and consider that adjustments may need to be made in 2018 to be sustainable. The table below is an estimate of returns for crops under irrigation. Since irrigated yields are not as of yet kept separate in Tennessee, yields below are an estimate of irrigated yields. Note that due to an increase in dryland cotton and corn 5-year state average yields, irrigated yields have been increased in this projection over the previous year. Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $30 per acre for corn, $26 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $14 per acre for cotton, and $10 per acre for soybeans. Fixed costs of $86 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $101, Soybeans - $37, Corn - $159 (includes 240 units of N), 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 Irrigated Cotton Soybeans Corn Wheat/Soybeans Yield 1200 lbs. 60 bu. 210 bu. 68 bu./45 bu. Price (as of 9/12/18) $0.73 lb. $8.76 bu. $3.63 bu. $5.50 bu./$8.76 bu. $768 Revenue $876 $526 $762 Variable Expenses( include energy cost) $477 $255 $445 $447 Fixed Irrigation Costs per Acre $86 $86 $86 $86 Returns Over Variable & Fixed IR Costs $313 $185 $231 $235 Land Costs (25% of Revenue-25% crop insurance-25% fixed irrigation costs) $195 $108 $166 $167 Returns Over Variable, IR Fixed Cost and Land Costs Fixed Costs- management labor, depreciation & interest on machinery $118 $77 $65 $68 $149 $79 $72 $126 Returns Over Specified Costs -$31 -$2 -$7 -$58 Breakeven Price at Average Yield and Specified Cost $0.76 $8.78 $3.67 $5.55/$9.97