January 12, 2018 - USDA World Supply and Demand Estimates Corn Market Reaction: March 2018 corn futures closed down 2 ½ cents at $3.46 ¼ with a trading range for the day of $3.45 ½ to $3.50. December 2018 corn futures closed down 2 ¼ cents at $3.80 ½ with a trading range for the day of $3.79 ¾ to $3.83 ½. Increased US yield was a bit of a surprise, however, the long term picture remains unchanged. For old crop, large global and US stocks will continue to suppress prices and maintain the existing trading range. For new crop, weather and continued decreases in estimated foreign carryover stocks will dictate if price improvements are in the cards for 2018/19. USDA Summary: This month s U.S. corn outlook is for larger production, increased food, seed, and industrial use (FSI), lower feed and residual use, and greater stocks. Corn production is estimated at 14.604 billion bushels, up 26 million from last month as an increase in yield to a record 176.6 bushels per acre is partially offset by a 0.4-million-acre reduction in harvested area. Among the major producing states, yields are estimated to be record high in Illinois, Minnesota, and Ohio. FSI is raised 10 million bushels, reflecting an estimated amount of corn used for glucose and dextrose during September-November that was above expectations. Feed and residual use is down 25 million bushels to 5,550 million based on indicated disappearance during September-November as reflected by the December 1 stocks. With supply rising and use falling, corn stocks are up 40 million bushels from last month. The seasonaverage corn price received by producers is projected at $3.25 per bushel, up 5 cents at the midpoint based on observed prices to date. Global coarse grain production for is forecast higher. This month s foreign coarse grain outlook is for lower production and consumption and greater trade relative to last month. Foreign corn production is forecast lower with reductions for Russia, Vietnam and the Philippines more than offsetting an increase for Pakistan. Russia s corn production is down based on harvest results to date. Vietnam corn production is reduced as the impact of heavy rain during the growing season in the northern production area was worse than previously expected. Major global trade changes for include lower corn exports for Russia, partially offset by an increase for Thailand. Brazil s 2016/17 corn exports are reduced based on observed shipments to date for the local marketing year that started in March 2017. Imports for are lowered for Iran but increased for Vietnam and the Philippines. Foreign corn ending stocks are higher than last month, mostly reflecting increases for Brazil and Pakistan. Global corn stocks, at 8.133 billion, are up 98 million from last month.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected December Projected January Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 95.4 90.6 88 94 90.4 90.2-0.2-3.8 87.5 83.1 80.8 86.7 83.1 82.7-0.4-4.0 158.1 171.0 168.4 174.6 175.4 176.6 1.2 2.0 Supply (Million Bushels) Beg. Stocks 821 1,232 1,731 1,737 2,295 2,293-2 556 Production 13,829 14,216 13,602 15,148 14,578 14,604 26-544 Imports 36 32 68 57 50 50 0-7 Total Supply 14,686 15,479 15,401 16,942 16,922 16,947 25 5 Use & Ending Stocks (Million Bushels) Feed and Residual 5,040 5,280 5,114 5,467 5,575 5,550-25 83 Ethanol 5,124 5,200 5,224 5,439 5,525 5,525 0 86 Food, Seed & Industrial 1,369 1,401 1,424 1,450 1,460 1,470 10 20 Exports 1,920 1,867 1,901 2,293 1,925 1,925 0-368 Total Use 13,454 13,748 13,664 14,649 14,485 14,470-15 -179 U.S. Ending Stocks 1,232 1,731 1,737 2,293 2,437 2,477 40 184 Foreign Stocks 5,653 6,529 6,726 6,712 5,597 5,655 58-1,057 U.S. Avg. Season Price ($/Bu) $4.46 $3.70 $3.61 $3.36 Price and Stocks to Use Ratio $2.85- $3.55 $2.95- $3.55 $0.05 -$0.10 U.S. Stocks/Use 9.16% 12.59% 12.71% 15.65% 16.82% 17.12% 0.3% 1.47% Source: USDA-WASDE January 12, 2018
Country / Region World Corn Supply and Use (Million Bushels) (January) Beginning Stocks Production Imports Feed Total Exports Ending Stocks World 9,005 41,122 5,751 25,612 41,995 5,965 8,132 US 2,293 14,604 50 5,550 12,545 1,925 2,477 Foreign 6,712 26,518 5,701 20,062 29,450 4,040 5,655 Argentina 227 1,653 0 335 492 1,142 247 Brazil 416 3,740 12 2,047 2,421 1,339 408 South Africa 118 492 4 228 461 67 87 Egypt 74 236 394 528 626 0 78 EU 297 2,366 630 2,205 2,945 79 269 Japan 52 0 591 453 594 0 48 Mexico 213 1,031 650 957 1,665 51 178 Southeast Asia 125 1,157 579 1,421 1,720 32 108 South Korea 72 3 382 295 386 0 71 Canada 80 555 39 331 551 51 72 China 3,965 8,499 118 6,535 9,448 2 3,132 Ukraine 62 984 1 150 201 807 40 ROW 1,011 5,801 2,302 4,578 7,939 470 917 World Corn Supply and Use (Million Bushels) January-December Country / Region Beginning Stocks Production Imports Feed Total Exports Ending Stocks World 56-7 -16-72 -50-4 98 US -2 26 - -25-15 - 40 Foreign 57-34 -16-47 -35-4 59 Argentina - - - - - - - Brazil 39 - - - - - 39 South Africa - - - - - - - Egypt - - - - - - - EU - - - - - - - Japan - - - - - - - Mexico - - - - - - - Southeast Asia 2-22 24 - - 4-1 South Korea - - - - - - - Canada - - - - - - - China - - - - - - - Ukraine - - - - - - - ROW 17-11 -39-47 -35-8 20 Source: USDA-WASDE January 12, 2018
Cotton Market Reaction: March 2018 cotton futures closed down 0.97 cents at 81.68 with a trading range for the day of 80.3 to 84.65 cents. December 2018 cotton futures closed down 0.08 cents at 75.34 with a trading range for the day of 74 to 75.44 cents. Examining year-over-year changes to Chinese stocks-to-use ratio (182% in 2013 to 99% in 2017) and foreign cotton stocks (100.63 million bales in 2013 to 82.09 in 2017) provides a strong reason for improved prices. These reductions have largely been due to improved cotton demand and rising synthetic fiber prices. USDA Summary: This month s U.S. cotton forecasts include slightly lower production and ending stocks. Production is reduced 177,000 bales due to small declines in regions outside the Delta. Ending stocks are reduced 100,000 bales, while domestic mill use and exports are unchanged. The forecast for the marketing year average price received by producers is raised 3 cents per pound, to a midpoint of 69 cents. Offsetting changes in foreign production and consumption characterize the global cotton forecasts this month. Global production is raised 1.0 million bales as a 1.4-million-bale increase for China is only partly offset by small decreases in India, the United States, and Australia. Global consumption is raised 1.2 million bales largely due to a 1.0-million-bale increase for China. World consumption is forecast to grow at a 5.2 percent annual rate in, more than double its long-run level. Projected world ending stocks are changed slightly this month, down 200,000 bales from December, but at 87.8 million bales are still forecast marginally higher than the year before.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (lbs/acre) 2013/14 2014/15 2015/16 2016/17 Est Projected December Projected January Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 10.41 11.04 8.58 10.07 12.62 12.61-0.01 2.54 7.54 9.35 8.07 9.51 11.41 11.35-0.06 1.84 821 838 766 867 902 899-3 32 Supply (Million Bales) Beg. Stocks 3.8 2.35 3.65 3.8 2.75 2.75 0-1.05 Production 12.91 16.32 12.89 17.17 21.44 21.26-0.18 4.09 Imports 0.01 0.01 0.03 0.01 0.01 0.01 0 0 Total Supply 16.72 18.68 16.57 20.98 24.2 24.02-0.18 3.04 Use & Ending Stocks (Million Bales) 3.55 3.58 3.45 3.25 3.35 3.35 0 0.1 Exports 10.53 11.25 9.15 14.92 14.8 14.8 0-0.12 Total Use 14.08 14.82 12.6 18.17 18.15 18.15 0-0.02 U.S. Ending Stocks 2.35 3.65 3.8 2.75 5.8 5.7-0.1 2.95 Foreign Stocks 100.63 108.09 91.55 84.89 82.2 82.09-0.11-2.8 Chinese Stocks 62.71 66.92 58.2 48.42 39.67 39.77 0.1-8.65 U.S. Avg. Season Price ($/lb) $0.779 $0.613 $0.612 $0.68 Price and Stocks to Use Ratio $0.63- $0.69 $0.67- $0.71 $0.030 $0.010 U.S. Stocks/Use 17% 25% 30% 15% 32% 31% -0.55% 16.27% Chinese Stocks/Use 182% 197% 166% 129% 102% 99% -2.29% -29.70% Source: USDA-WASDE January 12, 2018
World Cotton Supply and Use (Million 480 lb Bales) (January) Beginning Ending Country / Region Stocks Production Imports Use Exports Loss Stocks World 87.64 120.97 38.37 120.83 38.38-0.02 87.79 US 2.75 21.26 0.01 3.35 14.8 0.17 5.7 Foreign 84.89 99.7 38.36 117.48 23.58-0.2 82.09 Central Asia 2.39 6.32 0 3.23 2.5 0 2.98 Afr. Fr. Zone 1.77 5.14 0 0.13 4.36 0 2.42 Australia 2.39 4.6 0 0.04 4.3-0.15 2.81 Brazil 7.61 7.8 0.13 3.4 4.1-0.15 8.18 India 11.13 29.3 1.6 24.75 4.3 0 12.98 Mexico 0.44 1.54 0.83 1.85 0.3 0.03 0.63 China 48.42 26.4 5 40 0.05 0 39.77 EU 0.27 1.52 0.71 0.74 1.41 0 0.36 Turkey 1.58 4 3.5 7 0.3 0 1.78 Pakistan 2.27 8.2 2.7 10.4 0.3 0.03 2.44 Indonesia 0.62 0 3.5 3.45 0.01 0 0.67 Thailand 0.2 0 1.25 1.2 0 0.03 0.23 Bangladesh 1.66 0.13 7.25 7.2 0 0.01 1.82 Vietnam 0.88 0 6.6 6.25 0 0 1.24 ROW 3.26 4.76 5.29 7.84 1.65 0.01 3.78 Country / Region World Cotton Supply and Use (Million 480 lb Bales) January-December Beginning Stocks Production Imports Use Exports Loss Ending Stocks World -0.01 1.01-0.11 1.24-0.08-0.08-0.21 US - -0.18 - - - -0.08-0.1 Foreign -0.01 1.18-0.11 1.24-0.08 - -0.11 Central Asia - 0.02-0.01 0.01 - - Afr. Fr. Zone -0.01 0.04 - - -0.1-0.12 Australia - -0.1 - - - - -0.1 Brazil - - - - 0.1 - -0.1 India - -0.2 - - - - -0.2 Mexico - 0.04 0.03 0.05 0.02 - -0.01 China - 1.4-0.3 1 - - 0.1 EU - - - - - - - Turkey - - - - - - - Pakistan - - - - - - - Indonesia - - 0.05 0.05 - - - Thailand - - - - - - - Bangladesh - - - - - - - Vietnam - - 0.1 0.15 - - -0.05 ROW 0-0.01 0.01-0.02-0.11 0 0.13 Source: USDA-WASDE January 12, 2018
Soybeans Futures Market Reaction: March 2018 soybean futures were up 10 ½ cents at $9.60 ½ with a trading range for the day of $9.44 ½ to $9.62 ¾. November 2018 soybean futures closed up 12 cents at $9.83 ½ with a trading range for the day of $9.67 ½ to $9.84 ¾. Reduced production in Argentina was more than offset by increased production in Brazil. Soybean markets will continue to focus on South American production estimates. US ending stocks were increased 25 million bushels. USDA Summary: U.S. oilseed production for is estimated down 0.9 million from last month. Smaller soybean, peanut, and cottonseed crops are partly offset by increases for canola and sunflowerseed. Soybean production is estimated at 4,392 million bushels, down 33 million on lower yields. Harvested area is estimated at 89.5 million acres, up fractionally from the previous forecast. Yield is estimated at 49.1 bushels per acre, down 0.4 bushels, led by reductions for Kansas, North Dakota, and South Dakota. The soybean crush forecast is raised 10 million bushels to 1,950 million. Soybean meal production is unchanged as the higher crush is offset by a lower extraction rate. Soybean exports are reduced 65 million bushels to 2,160 million, reflecting lagging sales commitments through December and increased competition with higher soybean production and export forecasts for Brazil. Ending stocks are projected at 470 million bushels, up 25 million from the previous forecast. The U.S. season-average farm price for soybeans is projected at $8.80 to $9.80 per bushel, unchanged at the midpoint. The soybean oil price forecast of 32 to 35 cents per pound is lowered 1 cent at the midpoint. The soybean meal price forecast is unchanged at $295 to $335 per short ton. Global oilseed production is projected up. Soybean production is raised 4 million bushels to 12.809 billion bushels on gains for Brazil and the EU that are partly offset by lower production for Argentina and the United States. The Brazil soybean crop is increased 73 million bushels to 4.042 billion reflecting higher yield estimates in recent government reports. Soybean production for Argentina is reduced 37 million bushels to 2.058 billion on lower area planted to date, particularly in northern Argentina. Global oilseed trade for is projected down from last month. Lower U.S. soybean and Australian rapeseed shipments are partly offset by increased soybean exports for Brazil and rapeseed for Ukraine. Global oilseed ending stocks are projected up mainly on higher soybean stocks for Brazil and the United States and higher rapeseed stocks for Australia. Partly offsetting are lower soybean stocks for Argentina and sunflowerseed stocks for the EU.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected December Projected January Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 76.8 83.3 82.7 83.4 90.2 90.1-0.1 6.7 76.3 82.6 81.7 82.7 89.5 89.5 0.0 6.8 44.0 47.5 48 52 49.5 49.1-0.4-2.9 Supply (Million Bushels) Beg. Stocks 141 92 191 197 301 302 1 105 Production 3,358 3,927 3,926 4,296 4,425 4,392-33 96 Imports 72 33 24 22 25 25 0 3 Total Supply 3,570 4,052 4,140 4,515 4,752 4,718-34 203 Use & Ending Stocks (Million Bushels) Crushing 1,734 1,873 1,886 1,899 1,940 1,950 10 51 Exports 1,638 1,842 1,942 2,174 2,225 2,160-65 -14 Seed and Residual 107 146 115 141 141 139-2 -2 Total Use 3,478 3,862 3,944 4,213 4,306 4,248-58 35 U.S. Ending Stocks 92 191 197 302 445 470 25 168 Foreign Stocks 2,211 2,658 2,670 3,244 3,167 3,152-15 -92 U.S. Average Season Price ($/Bu) $13.00 $10.10 $8.95 $9.47 Price and Stocks to Use Ratio $8.60- $10.00 $8.80-$9.80 $0.00 -$0.17 U.S. Stocks/Use 2.65% 4.95% 4.99% 7.17% 10.33% 11.06% 0.73% 3.90% Source: USDA-WASDE January 12, 2018
Country / Region World Soybean Supply and Use (Million Bushels) (January) Beginning Stocks Production Imports Crush Total Exports Ending Stocks World 3,545 12,808 5,518 11,076 12,657 5,592 3,622 US 302 4,392 25 1,950 2,088 2,160 470 Foreign 3,244 8,416 5,493 9,126 10,569 3,432 3,152 Argentina 1,338 2,058 62 1,648 1,817 312 1,329 Brazil 913 4,042 7 1,543 1,679 2,462 822 Paraguay 30 345 0 136 139 220 17 China 749 522 3,564 3,491 4,071 6 758 EU 39 92 514 533 593 7 44 Japan 8 10 121 86 129 0 10 Mexico 6 18 158 173 175 0 6 ROW 161 1,330 1,065 1,516 1,965 424 166 World Soybean Supply and Use (Million Bushels) January-December Country / Region Beginning Stocks Production Imports Crush Total Exports World -5 4-9 -4-9 -10 9 Ending Stocks US - -34-10 7-65 25 Foreign -5 37-9 -14-16 55-15 Argentina - -37 - - - - -37 Brazil - 73 - - - 55 18 Paraguay - - - - - - - China - - - - - - - EU - 1 - - - - 1 Japan - - - - - - - Mexico - - - - - - - ROW -5 0-9 -14-16 0 2 Source: USDA-WASDE January 12, 2018
Wheat Futures Market Reaction: March 2018 wheat futures closed down 12 ¾ cents at $4.20 ½ with a trading range for the day of $4.18 ¾ to $4.36. July 2018 wheat futures closed down 12 ¼ cents at $4.46 ½ with a trading range for the day of $4.45 to $4.60 ¾. ending stocks increased 29 million bushels due to reductions in feed and seed use. The global picture remains unchanged with flat demand and record large global stocks. Do not expect any significant price improvements without a production disruption. USDA Summary: Projected U.S. wheat ending stocks are raised 29 million bushels on increased supplies and decreased use. Seed use is lowered 4 million bushels on the winter wheat planted area released today in the NASS Winter Wheat and Canola Seedings report. Wheat feed and residual use for is lowered 20 million bushels and reflects disappearance for June - November as indicated by the December 1 and revised September 1 stocks released in the NASS Grain Stocks report. All wheat exports are unchanged at 975 million bushels; however, a 10 million bushel decrease in Hard Red Spring exports is offset by 5-million-bushel increases each for Soft Red Winter and White wheat. Total supplies are raised 5 million bushels on higher imports while production and the season-average farm price are unchanged. Global wheat supplies for are lowered 29 million bushels on reduced beginning stocks, more than offsetting increased production. World beginning stocks are lowered 96 million bushels mostly on a large 2016/17 production cut for Australia, reflecting updated Australia Bureau of Statistics data. World production for is raised 66 million bushels led by a 73- million-bushel increase for Russia and a 29-million-bushel increase for Pakistan. Partially offsetting is a 33-million-bushel reduction for the EU. All these production changes reflect updated government data. Global exports are lowered 48 million bushels led by reductions for Australia and the EU that reflect decreased supplies and increase market competition. Russian exports, in contrast, are raised 55 million bushels to a record 1.286 billion on increased supplies and competitive prices. Global use for is lowered fractionally and ending stocks are lowered 15 million bushels to 9.847 billion, which remain record large.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected December Projected January Planted and Harvested Acres & Yield 56.2 56.8 55 50.1 46 46 45.3 46.4 47.3 43.9 37.6 37.6 47.1 43.7 43.6 52.7 46.3 46.3 Supply (Million Bushels) Change From Previous Month Change 2016/17 to 0-4.1 0-6.3 0-6.4 Beg. Stocks 718 590 752 976 1,181 1,181 0 205 Production 2,135 2,026 2,062 2,309 1,741 1,741 0-568 Imports 173 151 113 118 150 155 5 37 Total Supply 3,026 2,768 2,927 3,402 3,071 3,076 5-326 Use & Ending Stocks (Million Bushels) Food 955 958 957 949 950 950 0 1 Seed 77 79 67 61 66 62-4 1 Feed 228 114 149 156 120 100-20 -56 Exports 1,176 864 778 1,167 975 975 0-192 Total Use 2,436 2,015 1,951 2,222 2,111 2,087-24 -135 U.S. Ending Stocks 590 752 976 1,181 960 989 29-192 Foreign Stocks 6,524 7,243 7,904 8,105 8,902 8,902 0 797 U.S. Avg. Season Price ($/Bu) $6.87 $5.99 $4.89 $3.89 Price and Stocks to Use Ratio $4.50- $4.70 $4.50- $4.70 $0.00 $0.75 U.S. Stocks/Use 24.22% 37.32% 50.03% 53.15% 45.48% 47.39% 1.91% -5.76% Source: USDA-WASDE January 12, 2018
Country / Region World Wheat Supply and Use (Million Bushels) (January) Beginning Stocks Production Imports Feed Total Exports Ending Stocks World 9,286 27,815 6,621 5,266 27,253 6,645 9,848 US 1,181 1,741 155 100 1,112 975 989 Foreign 8,105 26,075 6,466 5,166 26,141 5,670 8,859 Argentina 8 643 0 4 202 437 12 Australia 161 790 6 125 250 588 118 Canada 251 1,102 18 129 320 808 244 EU 396 5,570 220 2,094 4,731 992 464 Brazil 80 156 294 18 445 29 56 China 4,080 4,777 147 478 4,262 29 4,712 Sel. Mideast 479 714 676 195 1,488 31 349 N. Africa 511 667 1,023 80 1,656 25 520 Pakistan 159 974 1 37 919 22 193 Southeast Asia 206 0 955 286 894 39 228 India 360 3,615 92 184 3,674 18 374 Russia 398 3,123 18 790 1,653 1,286 600 Kazakhstan 123 514 2 77 254 276 111 Ukraine 65 974 1 125 360 625 55 ROW 827 2,456 3,011 545 5,033 463 821 Country / Region World Wheat Supply and Use (Million Bushels) January-December Beginning Stocks Production Imports Feed Total Exports World -96 66-15 24-15 -48-15 US - - 5-20 -24-29 Foreign -96 66-20 44 9-48 -43 Argentina -4 - - - -4 7-7 Australia -100 - - -4-7 -55-38 Canada - - - - - - - EU - -33 - - - -55 22 Brazil - - - - - - - China - - 18 - - - 18 Sel. Mideast - - -11 3 1 - -12 N. Africa - - -18 - - - -18 Pakistan - 29-7 7-22 Southeast Asia - - - - - - - India - - -18 - - - -18 Russia - 73-37 37 55-18 Kazakhstan - - - - - - - Ukraine - - - - - - - ROW 8-4 9 0-25 0 6 Source: USDA-WASDE January 12, 2018 Ending Stocks
2018 Estimated Returns Non-Irrigated The profitability outlook has been updated after the release of the January 12, 2018 USDA WASDE reports. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2017 state average projection of 171 bushels per acre for corn, 51 bushels per acre for soybeans, 1031 pounds per acre cotton, and 71 bushels per acre wheat. Prices used for 2018 are current forward prices for 2018 harvest. Based on these yields and prices, soybeans and corn are projected to have positive net returns over variable, land, and fixed costs. Cotton and wheat/soybeans are projected to have positive returns over variable and land costs but not able to cover the estimated fixed costs. An individual producer s machinery and equipment costs will have a strong influence on profitability. 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 2018 UT Extension Row Crop budgets with adjustments made where warranted. Milo prices are an estimate as very few quotes are available. It depends on a producer s situation on what is showing to be the most profitable crop. Producers with cash rent or owned ground will want to look at Returns Over Variable Expenses as their land cost will be fixed and if their machinery cost are truly fixed and no equipment changes will be made. Producers with share rent will want to plug in their appropriate share rent if their equipment cost are fixed. Producers who may be making some equipment changes may want to look at Net Returns. Visit with your supplier on input cost expectations. Please contact your local County Extension office or Area Specialist Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. I would like to point out the cotton price of 74 cents that is being used in the profitability outlook. The price of 74 cents is made up of a cash price of 69 cents and gin rebates (seed & hauling) of 5 cents. Producers should look at these returns as what could be if no adjustments are made in their operation and consider it a warning sign that adjustments will need to be made in 2018 to be sustainable. These estimates do not consider any USDA or crop insurance payments from the new farm bill. Please contact your local County Extension office or Area Specialist Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. Cotton prices include revenue for cottonseed and hauling. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $ 94, Soybeans - $35, Corn - $128 (includes 170 units of N), Milo - $86, and Wheat/Soybeans - $94. Cost of production will continue to be adjusted as information becomes available. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields. Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable as a guide in decision making. Producers with share rent ground should
use Returns Over Variable and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid. 2018 Estimated Returns Non-Irrigated Cotton Soybeans Corn Milo Wheat/Soybeans Yield 982 lbs. 47 bu. 161 bu. 90 bu. 70 bu./35 bu. Price (as of 1/12/18) $0.74 lb. $9.70 bu. $3.60 bu. $3.30 bu. $4.51 bu./$9.70 bu. Revenue $727 $456 $580 $297 $655 Variable Expenses $428 $224 $347 $239 $417 Returns Over Variable $298 $232 $233 $58 $239 Land Costs (25% of Revenue-25% crop insurance) Returns Over Variable and Land Costs Fixed Costs Depreciation & interest on machinery $179 $112 $142 $73 $160 $119 $120 $91 -$15 $79 $134 $64 $57 $64 $111 Returns Over Specified Costs -$15 $57 $34 -$79 -$32 Breakeven Price at Average Yield and Specified Cost $0.75 $8.49 $3.39 $4.18 $5.19/$9.32
2018 Estimated Returns Irrigation Considering irrigation, profitability is positive for soybeans over variable, land and fixed cost. Returns Over Variable and Land Costs are positive for cotton, corn and wheat/soybeans, but not enough to cover fixed costs. An individual producer s machinery and equipment costs will have a strong influence on profitability. Producers should look at these returns as what could be if no adjustments are made in their operation and consider that adjustments may need to be made in 2018 to be sustainable. The table below is an estimate of returns for crops under irrigation. Since irrigated yields are not as of yet kept separate in Tennessee, yields below are an estimate of irrigated yields. Note that due to an increase in dryland cotton and corn 5 year state average yields, irrigated yields have been increased in this projection. Irrigation fixed costs and energy costs will vary greatly among producers and systems. These projections include in variable expenses energy costs for irrigation of $30 per acre for corn, $26 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $14 per acre for cotton and milo, and $10 per acre for soybeans. Fixed costs of $86 per acre for irrigation equipment are used. Please contact your local County Extension office or Area Specialist Farm Management for assistance in developing your own budget or farm financial plan. This table below should be used as a guide as yields, prices, and expenses will vary among producers and locations. Expenses will vary among producers and production systems. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $101, Soybeans - $37, Corn - $159 (includes 240 units of N), Milo - $103, and Wheat/Soybeans - $93. Cost of production will continue to be adjusted as information becomes available. Hopefully, we will see costs reduced or possibly suitable generic products available. Weed control costs with resistant weeds have also been difficult to estimate. These costs will vary greatly among producers and individual fields. Production costs are estimates based on the 2018 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated cost in your area. Producers with owned land and or cash rent can use Returns Over Variable and Fixed IR Costs as a guide in decision making. Producers with share rent ground should use Returns Over Variable, Fixed IR Costs and Land Costs as a guide with their appropriate share rent calculated. A land cost of 25% of revenue minus 25% of crop insurance cost minus 25% of the irrigation equipment fixed cost is used in the table as a guide or method of comparison and should not be construed as the appropriate rent for a particular area. A management cost of $30 per acre is included in Fixed Costs management labor, depreciation & interest on machinery. This is an additional $15 above the dryland crop management labor. Producers who are not making major equipment changes can use UT budgets and this table as a guide in developing their own cropping decision budgets. If equipment changes are being made, then a whole farm financial plan would be better suited as a decision aid.
2018 Estimated Returns Irrigation Cotton Soybeans Corn Milo Wheat/Soybeans Yield 1200 lbs. 60 bu. 210 bu. 130 bu. 70 bu./45 bu. Price (as of 1/12/18) $0.74 lb. $9.70 bu. $3.60 bu. $3.30 bu. $4.51 bu./$9.70 bu. Revenue $888 $582 $756 $429 $752 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 $325 $241 $224 $45 $219 $198 $122 $164 $85 $163 $127 $120 $60 -$39 $56 $149 $79 $72 $79 $126 Returns Over Specified Costs -$22 $41 -$12 -$118 -$70 Breakeven Price at Average Yield and Specified Cost $0.76 $9.02 $3.66 $4.21 $5.19/$10.41