June 12, 2018 - USDA World Supply and Demand Estimates Corn Market Reaction: July 2018 corn futures closed up 10 ¼ cents at $3.77 ½ with a trading range for the day of $3.67 ¼ to $3.79 ½. December 2018 corn futures closed up 10 cents at $3.98 ¼ with a trading range for the day of $3.88 ½ to $4.00. Corn fundamentals are supportive for higher prices than last year, however volatility will likely remain as trade and weather drive price changes on a week-to-week basis. USDA Summary: This month s U.S. corn outlook is for reduced beginning stocks, lower feed and residual use, greater corn used for ethanol production, and lower ending stocks. Beginning stocks are down largely reflecting a 75-million-bushel increase in projected exports for 2017/18 to 2.300 billion bushels, which if realized would be the highest since 2007/08. Exports during the month of April were record high, besting the prior monthly shipment record set in November 1989. Export inspection data for the month of May implies continued robust global demand for U.S. corn, while old crop outstanding sales at this point in the marketing year are record high. Projected corn used for ethanol is raised 50 million bushels. Corn feed and residual use is lowered 25 million bushels with increased ethanol by-product production and higher expected prices. With supply falling and use rising, ending stocks are lowered 105 million bushels to 1.577 billion bushels, which if realized, would be the lowest level since 2013/14. The season-average farm price is raised 10 cents at the midpoint with a range of $3.40 to $4.40 per bushel. This month s foreign coarse grain outlook is for lower production, reduced trade and lower stocks relative to last month. Russia corn production is down based on government data indicating lower-than-expected planted area. For 2017/18, Brazil corn production is lowered, as below-normal rainfall in the Center-West and South during May reduces yield prospects for second-crop corn. Area is also reduced based on the latest government statistics. Major global trade changes for include lower forecast corn exports for Russia, with reductions in corn imports for Vietnam, Iran, and Algeria. Foreign corn ending stocks are lowered from last month, mostly reflecting reductions for the EU, Brazil, and Vietnam that more than offset increases for Ukraine and South Africa.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected May Projected June Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 90.6 88 94 90.2 88 88 0.0-2.2 83.1 80.8 86.7 82.7 80.7 80.7 0.0-2.0 171.0 168.4 174.6 176.6 174 174 0.0-2.6 Supply (Million Bushels) Beg. 1,232 1,731 1,737 2,293 2,182 2,102-80 -191 Production 14,216 13,602 15,148 14,604 14,040 14,040 0-564 Imports 32 68 57 45 50 50 0 5 Total Supply 15,479 15,401 16,942 16,942 16,272 16,192-80 -750 Use & Ending (Million Bushels) Feed and Residual 5,280 5,114 5,472 5,500 5,375 5,350-25 -150 Ethanol 5,200 5,224 5,432 5,575 5,625 5,675 50 100 Food, Seed & Industrial 1,401 1,424 1,451 1,465 1,490 1,490 0 25 Exports 1,867 1,901 2,293 2,300 2,100 2,100 0-200 Total Use 13,748 13,664 14,649 14,840 14,590 14,615 25-225 U.S. Ending 1,731 1,737 2,293 2,102 1,682 1,577-105 -525 Foreign 6,529 6,685 6,664 5,484 4,583 4,512-71 -972 U.S. Avg. Season Price ($/Bu) $3.70 $3.61 $3.36 Price and to Use Ratio $3.25- $3.55 $3.30- $4.30 $3.40- $4.40 $0.00 $0.40 U.S. /Use 12.59% 12.71% 15.65% 14.78% 11.53% 10.79% -0.7% -3.99% Source: USDA-WASDE June 12, 2018
Country / Region World Corn Supply and Use (Million Bushels) (June) Beginning Production Imports Feed Total Exports Ending World 7,586 41,432 5,969 26,105 42,928 6,142 6,090 US 2,102 14,040 50 5,350 12,515 2,100 1,577 Foreign 5,484 27,392 5,919 20,755 30,413 4,042 4,512 Argentina 137 1,614 0 315 472 1,063 216 Brazil 335 3,779 28 2,165 2,579 1,220 343 South Africa 110 551 0 260 496 87 79 Egypt 70 252 382 535 634 0 70 EU 320 2,401 630 2,264 3,051 59 241 Japan 52 0 591 453 594 0 48 Mexico 190 1,024 657 984 1,701 59 111 Southeast Asia 98 1,155 630 1,457 1,768 30 85 South Korea 71 3 382 295 386 0 70 Canada 93 602 20 346 559 61 95 China 3,132 8,858 197 6,771 9,803 2 2,382 Ukraine 55 1,181 1 177 228 945 63 ROW 820 5,971 2,401 4,732 8,142 516 709 World Corn Supply and Use (Million Bushels) June-May Country / Region Beginning Production Imports Feed Total Exports Ending World -85-144 -55-97 -53-79 -176 US -80 - - -25 25 - -105 Foreign -5-143 -55-72 -78-79 -70 Argentina - - - - - - - Brazil -35 - - - - - -35 South Africa 14 - - - - - 14 Egypt - - - - - - - EU - - - 39 39 - -39 Japan 4 - - - - - 4 Mexico - - - - - - - Southeast Asia - - -39-20 -20 - -20 South Korea - - - - - - - Canada - - - - - - - China - - - - - - - Ukraine 20 - - - - - 20 ROW -7-144 -16-92 -98-79 -14 Source: USDA-WASDE June 12, 2018
Cotton Market Reaction: July 2018 cotton futures closed up 0.46 cents at 95.21 with a trading range for the day of 94.67 to 95.85 cents. December 2018 cotton futures closed up 1.22 cents at 92.90 with a trading range for the day of 91.2 to 93.19 cents. Harvest futures are up over 12 cents since the last WASDE report on May 10. This year has almost been a perfect storm for increased cotton prices demand is up, stocks are down, and there are production concerns due to drought in several regions. The main question on traders minds is will cotton take another leg up or have prices become over inflated creating a looming correction. USDA Summary: The most significant revision to this month s U.S. cotton supply and demand estimates is a 500,000-bale increase in 2017/18 exports, to 16.0 million bales, due to aboveaverage late-season shipments. U.S. ending stocks are now forecast at 4.2 million bales in 2017/18, and 4.7 million bales in, for a stocks-to-use ratio of 25 percent. The projected range of the marketing-year-average farm price is raised 5 cents at each end to 60-80 cents per pound. The world projections include lower production for China, Pakistan, and Australia offset in part for higher production for Brazil. World production is nearly 800,000 bales lower this month, while consumption is reduced only 85,000 bales, as a 225,000-bale reduction for South Korea is largely offset by increases for Uzbekistan and Vietnam. World beginning stocks for are unchanged from a month earlier, but ending stocks are 725,000 bales lower. At 83.0 million bales, world ending stocks are projected 5.2 million bales lower than a year earlier, but stocks outside of China are expected to rise for the third consecutive year.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (lbs/acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected May Projected June Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 11.04 8.58 10.07 12.61 13.47 13.47 0 0.86 9.35 8.07 9.51 11.1 11.13 11.13 0 0.03 838 766 867 905 841 841 0-64 Supply (Million Bales) Beg. 2.35 3.65 3.8 2.75 4.7 4.2-0.5 1.45 Production 16.32 12.89 17.17 20.92 19.5 19.5 0-1.42 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 24.21 23.71-0.5 0.03 Use & Ending (Million Bales) 3.58 3.45 3.25 3.35 3.4 3.4 0 0.05 Exports 11.25 9.15 14.92 16 15.5 15.5 0-0.5 Total Use 14.82 12.6 18.17 19.35 18.9 18.9 0-0.45 U.S. Ending 3.65 3.8 2.75 4.2 5.2 4.7-0.5 0.5 Foreign 108.09 91.11 84.17 84.01 83.75 78.32-5.43-5.69 Chinese 66.92 58.2 48.42 41.17 33.42 33.12-0.3-8.05 U.S. Avg. Season Price ($/lb) $0.613 $0.612 $0.68 Price and to Use Ratio $0.67- $0.69 $0.55- $0.75 $0.60- $0.80 $0.050 $0.020 U.S. /Use 25% 30% 15% 25% 28% 25% 2.58% -0.07% Chinese /Use 197% 166% 129% 102% 81% 80% -21.89% -22.62% Source: USDA-WASDE June 12, 2018
World Cotton Supply and Use (Million 480 lb Bales) (June) Country / Region Beginning Production Imports Use Exports Loss Ending World 88.21 120.4 41.06 125.35 41.07 0.22 83.02 US 4.2 19.5 0.01 3.4 15.5 0.11 4.7 Foreign 84.01 100.9 41.05 121.95 25.57 0.11 78.32 Central Asia 2.73 6.5 0 3.72 2.58 0 2.94 Afr. Fr. Zone 2.65 5.28 0 0.14 4.74 0 3.05 Australia 3.16 3.8 0 0.04 4.4 0 2.52 Brazil 8.28 9 0.08 3.45 4.9 0 9 India 12.48 28.5 1.5 25.2 4.25 0 13.03 Mexico 0.8 1.6 0.93 1.85 0.55 0.03 0.9 China 41.17 26.5 7 41.5 0.05 0 33.12 EU 0.38 1.56 0.71 0.74 1.48 0 0.42 Turkey 2.03 4.3 3.6 7.4 0.35 0 2.18 Pakistan 2.78 8.5 2.2 10.5 0.2 0.03 2.76 Indonesia 0.62 0 3.5 3.5 0.01 0 0.62 Thailand 0.18 0 1.08 1.05 0 0.03 0.18 Bangladesh 1.86 0.14 7.9 7.8 0 0.01 2.08 Vietnam 1.19 0 7.7 7.5 0 0 1.39 ROW 3.7 5.22 4.85 7.56 2.06 0.01 4.13 Country / Region World Cotton Supply and Use (Million 480 lb Bales) June-May Beginning Production Imports Use Exports Loss Ending World 0-0.79-0.06-0.09-0.05 0-0.73 US -0.5 0 0 0 0 0-0.5 Foreign 0.5-0.79-0.07-0.09-0.05 0-0.23 Central Asia -0.04-0.02 0 0.06 0.01 0-0.12 Afr. Fr. Zone 0.08 0.07 0 0 0.01 0 0.14 Australia 0.1-0.2 0 0-0.1 0 0 Brazil 0.2 0.2 0 0 0.1 0 0.3 India -0.15 0 0 0 0 0-0.15 Mexico 0 0 0.03 0 0 0 0.02 China 0.2-0.5 0 0 0 0-0.3 EU 0 0 0 0 0 0 0 Turkey 0.05 0 0 0 0 0 0.05 Pakistan 0-0.3 0.1 0-0.05 0-0.15 Indonesia 0 0 0 0 0 0 0 Thailand 0 0 0 0 0 0 0 Bangladesh -0.02 0 0 0 0 0-0.03 Vietnam 0.1 0 0 0.1 0 0 0 ROW -0.02-0.04-0.19-0.25-0.02 0 0.01 Source: USDA-WASDE June 12, 2018
Soybeans Futures Market Reaction: July 2018 soybean futures were up ¼ cent at $9.54 with a trading range for the day of $9.52 to $9.63 ¼. November 2018 soybean futures closed up ¾ cents at $9.74 ½ with a trading range for the day of $9.72to $9.83 ½. The past two weeks have seen dramatic decreases in corn and soybean futures prices. The primary catalysts have been good growing conditions across the Corn Belt and an increase in trade concerns that could diminish US exports. USDA Summary: This month s U.S. soybean supply and use projections for include lower beginning stocks, slightly higher crush, and lower ending stocks. Lower beginning stocks reflect higher crush for 2017/18. Soybean crush for 2017/18 is raised 25 million bushels to 2,015 million reflecting an increase in projected soybean meal domestic disappearance and exports. Higher soybean meal domestic disappearance reflects stronger-than-expected use for the marketing year through April. Soybean meal exports are raised based in part on commitments through May. Soybean ending stocks for 2017/18 are projected at 505 million bushels, down 25 million from last month. Ending stocks for are projected at 385 million bushels, down 30 million from last month. Price forecasts for are unchanged this month. The season-average price for soybeans is forecast at $8.75 to $11.25 per bushel; soybean meal and oil prices are projected at $330 to $370 per short ton and 29.5 to 33.5 cents per pound, respectively. The global oilseed supply and demand forecasts include higher production, exports, and stocks compared to last month. Higher global soybean production is partly offset by lower rapeseed and cottonseed. Soybean production is up 26 million bushels to 13.051 billion mainly on higher production for Brazil. A higher trend yield for the Brazil soybean crop reflects harvest and yield results for the 2017/18 crop, which is increased 73 million bushels to 4.373 billion. With higher production, soybean exports for Brazil are revised up for both the 2017/18 and marketing years. Ending stocks for Brazil are also increased with higher production and a lower crush estimate for 2016/17. Global soybean ending stocks are increased 11 million bushels to 3.197 billion with higher stocks for Brazil partly offset by lower stocks for the United States and Argentina. for Argentina are lowered mainly on a 73- million-bushel reduction to the 2017/18 crop to 1.36 billion.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected May Projected June Planted and Harvested Acres & Yield Change From Previous Month Change 2017/18 to 83.3 82.7 83.4 90.1 89 89 0.0-1.1 82.6 81.7 82.7 89.5 88.2 88.2 0.0-1.3 47.5 48 52 49.1 48.5 48.5 0.0-0.6 Supply (Million Bushels) Beg. 92 191 197 302 530 505-25 203 Production 3,927 3,926 4,296 4,392 4,280 4,280 0-112 Imports 33 24 22 25 25 25 0 0 Total Supply 4,052 4,140 4,515 4,718 4,835 4,810-25 92 Use & Ending (Million Bushels) Crushing 1,873 1,886 1,901 2,015 1,995 2,000 5-15 Exports 1,842 1,942 2,174 2,065 2,290 2,290 0 225 Seed and Residual 146 115 139 133 135 135 0 2 Total Use 3,862 3,944 4,213 4,213 4,420 4,425 5 212 U.S. Ending 191 197 302 505 415 385-30 -120 Foreign 2,658 2,687 3,240 2,893 2,771 2,813 42-80 U.S. Average Season Price ($/Bu) $10.10 $8.95 $9.47 $9.40 Price and to Use Ratio $8.75- $11.25 $8.75- $11.25 $0.00 $0.60 U.S. /Use 4.95% 4.99% 7.17% 12.66% 9.39% 8.70% -3.27% -3.95% Source: USDA-WASDE June 12, 2018
Country / Region World Soybean Supply and Use (Million Bushels) (June) Beginning Production Imports Crush Total Exports Ending World 3,398 13,053 5,856 11,518 13,143 5,966 3,197 US 505 4,280 25 2,000 2,135 2,290 385 Foreign 2,893 8,773 5,831 9,518 11,008 3,676 2,813 Argentina 1,034 2,058 68 1,617 1,798 294 1,068 Brazil 900 4,336 8 1,587 1,719 2,680 845 Paraguay 10 360 0 145 148 217 6 China 758 518 3,785 3,748 4,350 6 705 EU 39 101 522 547 608 11 43 Japan 8 10 119 85 128 0 10 Mexico 3 18 171 186 187 0 5 ROW 140 1,373 1,157 1,603 2,070 468 131 World Soybean Supply and Use (Million Bushels) June-May Country / Region Beginning Production Imports Crush Total Exports Ending World 12 26-6 5-1 20 12 US -25 - - 5 5 - -30 Foreign 37 26-6 - -6 20 42 Argentina -23 - - - - - -23 Brazil 60 37-6 - - 24 66 Paraguay - - - - - - - China - - - - - - - EU - - - - - - - Japan - - - - - - - Mexico - - - - - - - ROW - -11 - - -6-4 -1 Source: USDA-WASDE June 12, 2018
Wheat Futures Market Reaction: July 2018 wheat futures closed up 20 cents at $5.34 ½ with a trading range for the day of $5.10 ¼ to $5.38 ¼. July 2019 wheat futures closed up 17 ¾ cents at $6.04 with a trading range for the day of $5.82 ¼ to $6.06 ¾. Although wheat stocks are projected to decline from the previous marketing year, it will still be the second highest ending stocks on record. Demand could provide further reductions (and further reduce stocks-to-use) however that will be linked to production of corn and other feed grains this year. USDA Summary: U.S. wheat supplies are increased slightly this month on higher beginning stocks and production. Winter wheat is forecast up 6 million bushels to 1,198 million with modest increases in all winter wheat classes and total wheat production is now at 1,827 million. U.S. exports are raised 25 million bushels to 950 million on tightening Russian exportable supplies. Projected ending stocks are lowered 9 million bushels to 946 million, down 12 percent from last year. The projected season-average farm price is up $0.10 per bushel with the midpoint at $5.10, compared to the revised 2017/18 price of $4.75. World wheat supplies decreased this month by 44 million bushels on production declines in Russia, the EU, and Mexico not completely offset by higher projected production from India and the United States. Russia s production is lowered by 129 million bushels to 2.517 billion on drier-than-normal conditions this spring in winter wheat areas and excessive wetness in spring wheat regions lowering plantings. Russia s wheat production is projected down 19 percent from last year s record 3.123 million bushels. EU wheat production is reduced 37 million bushels to 5.49 billion on dry conditions this spring for winter wheat in Germany and Poland. India s wheat production is raised 73 million bushels to 3.564 billion, based on record yields and supported by reports of higher procurement for the crop compared to last year. Projected global trade is lower, mainly on reduced Russian exportable supplies with a smaller crop. Russia s exports are reduced 55 million bushels to 1.286 billion, but Russia still remains the world s leading wheat exporter. Global imports are lowered, mainly on reduced imports for India as the government recently raised its wheat import tariff. Projected world consumption is 110 million bushels lower, primarily on reduced feed usage for Russia and the EU. Global ending stocks are raised 66 million bushels this month to 9.781 billion but are still below last year s record 10.009 billion.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2014/15 2015/16 2016/17 2017/18 Est. Projected May Projected June Planted and Harvested Acres & Yield 56.8 55 50.1 46 47.3 47.3 46.4 47.3 43.9 37.6 38.9 38.9 43.7 43.6 52.7 46.3 46.8 46.9 Supply (Million Bushels) Change From Previous Month Change 2017/18 to 0 1.3 0 1.3 0.1 0.6 Beg. 590 752 976 1,181 1,070 1,080 10-101 Production 2,026 2,062 2,309 1,741 1,821 1,827 6 86 Imports 151 113 118 155 135 135 0-20 Total Supply 2,768 2,927 3,402 3,076 3,027 3,043 16-33 Use & Ending (Million Bushels) Food 958 957 949 955 965 965 0 10 Seed 79 67 61 62 62 62 0 0 Feed 114 149 156 70 120 120 0 50 Exports 864 778 1,167 925 925 950 25 25 Total Use 2,015 1,951 2,222 2,012 2,072 2,097 25 85 U.S. Ending 752 976 1,181 1,064 955 946-9 -118 Foreign 7,243 7,944 8,222 8,928 8,758 8,834 76-94 U.S. Avg. Season Price ($/Bu) $5.99 $4.89 $3.89 Price and to Use Ratio $4.60- $4.70 $4.50- $5.50 $4.60- $5.60 $0.10 $0.45 U.S. /Use 37.32% 50.03% 53.15% 52.88% 46.09% 45.11% -0.98% -7.77% Source: USDA-WASDE June 12, 2018
Country / Region World Wheat Supply and Use (Million Bushels) (June) Beginning Production Imports Feed Total Exports Ending World 10,008 27,363 6,749 5,242 27,591 6,883 9,780 US 1,080 1,828 135 120 1,147 950 946 Foreign 8,928 25,535 6,614 5,122 26,444 5,933 8,834 Argentina 9 717 0 4 195 522 10 Australia 187 882 6 147 276 625 175 Canada 199 1,194 18 165 353 863 195 EU 480 5,490 202 2,058 4,722 1,066 385 Brazil 49 180 276 22 448 11 45 China 4,660 4,740 147 551 4,409 44 5,093 Sel. Mideast 461 693 689 176 1,440 42 360 N. Africa 520 775 966 83 1,682 25 554 Pakistan 177 937 0 44 930 37 148 Southeast Asia 215 0 1,025 347 1,001 40 199 India 485 3,564 18 184 3,601 15 452 Russia 394 2,517 18 625 1,451 1,286 192 Kazakhstan 104 514 2 70 246 294 80 Ukraine 62 974 1 125 353 625 60 ROW 925 2,359 3,246 523 5,337 439 886 Country / Region World Wheat Supply and Use (Million Bushels) June-May Beginning Production Imports Feed Total Exports World 70-113 -43-107 -110-41 67 US 10 6 - - - 25-9 Foreign 60-119 -43-107 -110-66 76 Argentina - - - - - - - Australia 32 - - 7 11-21 Canada 3 - - - - - 3 EU 0-37 - -37-37 - - Brazil - - - - - - - China - - - - - - - Sel. Mideast 3 - - - 4 - -1 N. Africa - - - - - - - Pakistan -1 - -1 - - - -2 Southeast Asia - - - - - - - India 53 73-55 - - - 72 Russia -37-129 - -73-92 -55-18 Kazakhstan - - - - - - - Ukraine - - - - - - - ROW 7-27 12-4 4-11 1 Source: USDA-WASDE June 12, 2018 Ending
2018 Estimated Returns Non-Irrigated The profitability outlook has been updated after the release of the June 12, 2018 World Agricultural Supply & Demand Estimates reports. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2017 state average yield of 171 bushels per acre for corn, 51 bushels per acre for soybeans, and 1031 pounds per acre cotton. Wheat yields for 2018 in Tennessee are projected at 75 bushels per acre based on producer surveys. Prices used for 2018 are current forward prices for 2018 harvest. Since the May 10 th report cotton profitability is up $77 per acre, corn down $28 per acre, soybeans profitability is down $22 per acre, while wheat/soybeans increased $2 per acre. 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 88.50 cents that is being used in the profitability outlook. The price of 88.50 cents is made up of a cash price of 86.50 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), 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. 75 bu./35 bu. Price (as of 6/12/18) $0.865 lb. $9.62 bu. $3.81 bu. $3.51 bu. $5.50 bu./$9.62 bu. Revenue $869 $452 $613 $316 $733 Variable Expenses $428 $224 $347 $239 $417 Returns Over Variable $441 $228 $267 $77 $316 Land Costs (25% of Revenue-25% crop insurance) Returns Over Variable and Land Costs Fixed Costs Depreciation & interest on machinery $215 $111 $150 $78 $179 $226 $118 $116 -$1 $137 $134 $64 $57 $64 $111 Returns Over Specified Costs $92 $54 $59 -$55 $26 Breakeven Price at Average Yield and Specified Cost $0.79 $8.47 $3.44 $4.23 $5.32/$9.25
2018 Estimated Returns Irrigated Considering irrigation, profitability is positive for cotton, corn and soybeans over variable, land and fixed cost. Returns Over Variable and Land Costs are positive for wheat/soybeans, but not enough to cover fixed costs. An individual producer s machinery and equipment costs will have a strong influence on profitability. Since the May 10 th report cotton profitability is up $95 per acre, corn down $36 per acre, soybeans profitability is down $28 per acre, while wheat/soybeans decreased $3 per acre 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. 75 bu./45 bu. Price (as of 6/12/18) $0.885 lb. $9.62 bu. $3.81 bu. $3.51 bu. $5.50 bu./$9.62 bu. Revenue $1062 $577 $800 $456 $829 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 Land Costs (25% of Revenue-25% crop insurance-25% fixed irrigation costs) Returns Over Variable, IR Fixed Cost and Land Costs Fixed Costs- management labor, depreciation & interest on machinery $499 $236 $269 $72 $295 $241 $120 $175 $91 $182 $257 $116 $93 -$19 $114 $149 $79 $72 $79 $126 Returns Over Specified Costs $109 $37 $21 -$98 -$12 Breakeven Price at Average Yield and Specified Cost $0.79 $9.15 $3.71 $4.26 $5.32/$10.18