August 10, 2017 - USDA World Supply and Demand Estimates Corn Market Reaction: September 2017 corn futures closed down 15 cents at $3.57 ¼ with a trading range for the day of $3.56 ½ to $3.75 ½. December 2017 corn futures closed down 15 ¼ cents at $3.71 with a trading range for the day of $3.70 ¼ to $3.89. Initial survey based yield estimates were higher than expectations at 169.5 bu/acre. Greater yield (production) provided the fuel for the market sell off. Decreased projected ending stocks year-over-year, both domestically and internationally, remain a positive for prices. USDA Summary: This month s U.S. corn outlook is for lower supplies, reduced feed and residual use and exports, and a decline in ending stocks. Corn production is forecast at 14.2 billion bushels, down 102 million from the July projection. The season s first survey-based corn yield forecast, at 169.5 bushels per acre, is 1.2 bushels lower than last month s trend-based projection. This month s Crop Production report indicates that South Dakota, Iowa, Minnesota, and Illinois are forecast to have yields below a year ago. The projected yield for Indiana is unchanged relative to last year, while Nebraska and Ohio are forecast higher. Projected feed and residual use for is lowered 25 million bushels on a smaller crop. Exports are forecast down 25 million bushels, reflecting the increased competitiveness of supplies in Argentina and Brazil and the low level of new-crop outstanding sales. With supplies falling faster than use, ending stocks are reduced 52 million bushels. The projected range for the season-average corn price received by producers is unchanged at $2.90 to $3.70 per bushel. This month s foreign coarse grain outlook is for virtually unchanged production, lower trade, and greater stocks relative to last month. EU corn and barley production are reduced. Canada corn production is down on lower projected harvested area. Corn and barley production forecasts are raised for Russia based on higher corn area and favorable growing conditions for barley. Ukraine corn production is unchanged as a reduction in projected yield is offset by increased area. For 2016/17, corn production is increased for Brazil based on second crop corn harvest results to date. Major global corn grain trade changes for include corn export reductions for the EU, Serbia, and Canada. More than offsetting are increases for Ukraine and Russia. Brazil s corn exports are raised for 2016/17 based on record-high shipments observed for the local marketing year beginning in March 2017. Corn imports for are raised, mostly reflecting increases for the EU and Iran. Foreign corn ending stocks are raised from last month. Historical revisions are made to corn stock estimates for Ukraine to better reflect statistics published by the government.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected July Projected August Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 95.4 90.6 88 94 90.9 90.9 0.0-3.1 87.5 83.1 80.8 86.7 83.5 83.5 0.0-3.2 158.1 171.0 168.4 174.6 170.7 169.5-1.2-5.1 Supply (Million Bushels) Beg. Stocks 821 1,232 1,731 1,737 2,370 2,370 0 633 Production 13,829 14,216 13,602 15,148 14,255 14,153-102 -995 Imports 36 32 68 55 50 50 0-5 Total Supply 14,686 15,479 15,401 16,940 16,675 16,573-102 -367 Use & Ending Stocks (Million Bushels) Feed and Residual 5,040 5,280 5,113 5,425 5,475 5,450-25 25 Ethanol 5,124 5,200 5,224 5,450 5,500 5,500 0 50 Food, Seed & Industrial 1,369 1,401 1,426 1,470 1,500 1,500 0 30 Exports 1,920 1,867 1,901 2,225 1,875 1,850-25 -375 Total Use 13,454 13,748 13,664 14,570 14,350 14,300-50 -270 U.S. Ending Stocks 1,232 1,731 1,737 2,370 2,325 2,273-52 -97 Foreign Stocks 5,653 6,529 6,668 6,630 5,580 5,635 55-995 U.S. Avg. Season Price ($/Bu) $4.46 $3.70 $3.61 Price and Stocks to Use Ratio $3.25- $3.45 $2.90- $3.70 $2.90- $3.70 $0.00 -$0.05 U.S. Stocks/Use 9.16% 12.59% 12.71% 16.27% 16.20% 15.90% -0.3% -0.37% Source: USDA-WASDE August 10, 2017
Country / Region World Corn Supply and Use (Million Bushels) (August) Beginning Stocks Production Imports Feed Total Exports Ending Stocks World 9,000 40,686 5,795 25,641 41,778 5,985 7,908 US 2,370 14,153 50 5,450 12,450 1,850 2,273 Foreign 6,630 26,533 5,745 20,191 29,328 4,135 5,635 Argentina 141 1,575 0 315 465 1,122 129 Brazil 404 3,740 12 2,047 2,421 1,339 396 South Africa 116 492 4 228 461 67 85 Egypt 83 236 394 528 626 0 87 EU 249 2,362 630 2,212 2,949 59 234 Japan 49 0 591 453 594 0 45 Mexico 266 984 610 894 1,602 28 231 Southeast Asia 144 1,189 594 1,468 1,775 28 124 South Korea 75 3 402 315 405 0 74 Canada 95 547 31 323 543 51 80 China 3,987 8,464 118 6,535 9,370 1 3,199 Ukraine 45 1,122 1 217 272 846 50 ROW 975 5,817 2,358 4,656 7,845 594 902 World Corn Supply and Use (Million Bushels) August-July Country / Region Beginning Stocks Production Imports Feed Total Exports World 43-135 56-33 -94-17 2 Ending Stocks US - -102 - -25-25 -25-52 Foreign 43-33 56-8 -69 8 54 Argentina - - - - - - - Brazil 20 - - - - - 20 South Africa - - - - - - - Egypt - - - - - - - EU 13-63 39 8 8-31 14 Japan - - - - - - - Mexico - - - - - - - Southeast Asia -1 0 - -2-2 - 1 South Korea - - - - - - - Canada - -20 - -12-12 -8 - China -1 - - - - - -1 Ukraine 4 - - -39-39 39 4 ROW 8 49 16 37-24 8 17 Source: USDA-WASDE August 10, 2017
Cotton Market Reaction: December 2017 cotton futures closed down 3.00 cents at 68.11 with a trading range for the day of 68.11 to 71.19 cents. March 2018 cotton futures closed down 2.93 cents at 67.83 with a trading range for the day of 67.77 to 70.81 cents. Yield was projected at 892 lbs/acre which if realized would tie 2012 for the highest ever. USDA Summary: The first survey of U.S. 2017 crop production indicates a crop of 20.5 million bales, 1.5 million above last month and the largest production in 11 years. The larger crop is partially offset by lower beginning stocks which are reduced 400,000 bales to 2.8 million due to an increase in final 2016/17 exports. mill use for is lowered 50,000 bales, but exports are raised 700,000 based on the larger supply and strong early-season commitments. Ending stocks are now projected at 5.8 million bales which, if realized, would be the largest since 2008/09. The forecast range for the marketing year average price received by producers of 55 to 67 cents per pound is narrowed 1 cent on each end, with the midpoint unchanged at 61 cents. Sharply larger production is raising this month s global stock forecasts. World production is increased 1.9 million bales, as higher production in the United States, China, and Benin is partially offset by a reduction for Turkey. The forecast for China s crop is raised 500,000 bales mainly on higher area. World consumption for is forecast 375,000 bales higher this month, largely due to a 500,000-bale increase for China. At 3.3 percent, growth in world cotton consumption in is projected at its highest rate in 5 years. World ending stocks are now projected at 90.1 million bales, an increase of 1.4 million from the July forecast, and 100,000 above 2016/17.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (lbs/acre) 2013/14 2014/15 2015/16 2016/17 Est Projected July Projected August Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 10.41 11.04 8.58 10.07 12.06 12.06 0 1.99 7.54 9.35 8.07 9.51 11.18 11.05-0.13 1.54 821 838 766 867 816 892 76 25 Supply (Million Bales) Beg. Stocks 3.8 2.35 3.65 3.8 3.2 2.8-0.4-1 Production 12.91 16.32 12.89 17.17 19 20.55 1.55 3.38 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 22.21 23.36 1.15 2.38 Use & Ending Stocks (Million Bales) 3.55 3.58 3.45 3.25 3.4 3.35-0.05 0.1 Exports 10.53 11.25 9.15 14.92 13.5 14.2 0.7-0.72 Total Use 14.08 14.82 12.6 18.17 16.9 17.55 0.65-0.62 U.S. Ending Stocks 2.35 3.65 3.8 2.8 5.3 5.8 0.5 3 Foreign Stocks 100.63 108.09 93.42 87.19 83.43 84.29 0.86-2.9 Chinese Stocks 62.71 66.92 58.2 48.4 39.35 39.35 0-9.05 U.S. Avg. Season Price ($/lb) $0.779 $0.613 $0.612 $0.68 Price and Stocks to Use Ratio $0.54- $0.68 $0.55- $0.67 $0.000 -$0.070 U.S. Stocks/Use 17% 25% 30% 15% 31% 33% 1.69% 17.64% Chinese Stocks/Use 182% 197% 166% 129% 104% 102% -1.34% -26.86% Source: USDA-WASDE August 10, 2017
World Cotton Supply and Use (Million 480 lb Bales) (August) Beginning Ending Country / Region Stocks Production Imports Use Exports Loss Stocks World 89.99 117.31 37.19 117.4 37.17-0.19 90.09 US 2.8 20.55 0.01 3.35 14.2 0.01 5.8 Foreign 87.19 96.76 37.18 114.05 22.97-0.2 84.29 Central Asia 2.47 6.2 0 2.65 3.01 0 3.01 Afr. Fr. Zone 1.78 5.24 0 0.12 4.56 0 2.35 Australia 2.65 4.8 0 0.04 3.9-0.15 3.66 Brazil 7.41 7 0.1 3.3 3.2-0.15 8.16 India 12.59 29 1.3 24.5 4.3 0 14.09 Mexico 0.44 1.15 1.03 1.8 0.15 0.03 0.64 China 48.4 24.5 5 38.5 0.05 0 39.35 EU 0.23 1.36 0.72 0.74 1.21 0 0.35 Turkey 1.65 3.6 3.45 6.6 0.33 0 1.77 Pakistan 2.27 9.15 2.2 10.6 0.35 0.03 2.64 Indonesia 0.63 0 3.35 3.3 0.01 0 0.68 Thailand 0.2 0 1.3 1.25 0 0.03 0.23 Bangladesh 1.41 0.13 7.2 6.9 0 0.01 1.82 Vietnam 0.88 0 6.2 5.9 0 0 1.19 ROW 4.18 4.63 5.33 7.85 1.9 0.00 4.35 Country / Region World Cotton Supply and Use (Million 480 lb Bales) August-July Beginning Stocks Production Imports Use Exports Loss Ending Stocks World -0.28 1.95 0.42 0.37 0.36-0.03 1.36 US -0.4 1.55 - -0.05 0.7-0.5 Foreign 0.12 0.4 0.42 0.42-0.34-0.03 0.86 Central Asia - 0.01 - - -0.04-0.05 Afr. Fr. Zone 0.08 0.08 - - -0.07-0.24 Australia -0.4 - - - -0.35 - -0.05 Brazil 0.01 - - - 0.1 - -0.09 India 0.35 - -0.1-0.25 0.1-0.4 Mexico - - 0.1 - - - 0.1 China - 0.5-0.5 - - - EU 0.03 - - - -0.03-0.03 0.08 Turkey 0.2-0.2 0.05 0.05-0.02-0.02 Pakistan -0.12 - - - -0.05 - -0.08 Indonesia - - 0.15 0.1 - - 0.05 Thailand - - - - - - - Bangladesh - - 0.1 - - - 0.1 Vietnam -0.1-0.1 - - - - ROW 0.07 0.01 0.02 0.02 0.02-0.04 Source: USDA-WASDE August 10, 2017
Soybeans Futures Market Reaction: September 2017 soybean futures were down 32 cents at $9.34 with a trading range for the day of $9.32 to $9.81. November 2017 soybean futures closed down 33 cents at $9.40 ¼ with a trading range for the day of $9.38 ½ to $9.88 ½. Like corn, soybean future price declines were fueled by higher than expected yields. However, unlike corn global year-over-year stocks are projected to increase. More production risk in the US crop exists with soybeans than corn, however if yield projections are accurate a future decrease in soybean prices is likely. USDA Summary: U.S. oilseed production for is projected up from last month mainly due to higher soybean production. Soybean production is forecast at 4,381 million bushels, up 121 million on higher yields. Harvested area is forecast at 88.7 million acres, unchanged from July. The first survey-based soybean yield forecast of 49.4 bushels per acre is 1.4 bushels above last month but 2.7 below last year s record. With higher production and lower beginning stocks, soybean supplies for are projected at 4,777 million bushels, up 2 percent from last month. U.S. soybean exports are raised 75 million bushels to 2,225 million on increased supplies and lower prices. Crush is reduced on lower global soybean meal import demand. Soybean ending stocks are projected at 475 million bushels, up 15 million from last month. The U.S. season-average soybean price for is forecast at $8.45 to $10.15 per bushel, down 10 cents at the midpoint. The soybean meal price forecast of $295 to $335 per short ton is down $5.00 at the midpoint. The soybean oil price is forecast at 31 to 35 cents per pound, up 1 cent on both ends of the range. U.S. changes for 2016/17 include higher exports, lower crush, and lower ending stocks. Soybean exports are raised 50 million bushels to 2,150 million on outstanding export sales and shipments through July. With lower crush only partly offsetting higher exports, ending stocks are projected at 370 million bushels, down 40 million from last month. Global oilseed production for is projected up mainly on an 85-million-bushel increase for soybean production. The higher U.S. forecast was partly offset with a 55-million-bushel reduction for India based on the latest government planting data indicating lower harvested area. Soybean and canola production is projected down for Canada, where hot and dry weather conditions in the Canadian Prairies lowered yield prospects for both crops, and excessive rainfall in eastern Canada led to a lower soybean harvested area estimate. Global soybean exports for are up 55 million bushels as higher U.S. exports are partly offset by lower Argentina shipments. Beginning stocks for are raised based on lower crush and exports for Argentina for 2016/17. Coupled with higher production, soybean ending stocks are increased 158 million bushels to 3.594 billion.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected July Projected August Planted and Harvested Acres & Yield Change From Previous Month Change 2016/17 to 76.8 83.3 82.7 83.4 89.5 89.5 0.0 6.1 76.3 82.6 81.7 82.7 88.7 88.7 0.0 6.0 44.0 47.5 48 52.1 48 49.4 1.4-2.7 Supply (Million Bushels) Beg. Stocks 141 92 191 197 410 370-40 173 Production 3,358 3,927 3,926 4,307 4,260 4,381 121 74 Imports 72 33 24 25 25 25 0 0 Total Supply 3,570 4,052 4,140 4,528 4,695 4,777 82 249 Use & Ending Stocks (Million Bushels) Crushing 1,734 1,873 1,886 1,890 1,950 1,940-10 50 Exports 1,638 1,842 1,942 2,150 2,150 2,225 75 75 Seed and Residual 107 146 115 118 135 136 1 18 Total Use 3,478 3,862 3,944 4,158 4,235 4,301 66 143 U.S. Ending Stocks 92 191 197 370 460 475 15 105 Foreign Stocks 2,211 2,658 2,635 3,193 2,976 3,117 141-76 U.S. Average Season Price ($/Bu) $13.00 $10.10 $8.95 $9.50 Price and Stocks to Use Ratio $8.40- $10.40 $8.45- $10.15 -$0.10 -$0.20 U.S. Stocks/Use 2.65% 4.95% 4.99% 8.90% 10.86% 11.04% 0.18% 2.15% Source: USDA-WASDE August 10, 2017
Country / Region World Soybean Supply and Use (Million Bushels) (August) Beginning Stocks Production Imports Crush Total Exports Ending Stocks World 3,563 12,763 5,437 11,040 12,615 5,555 3,593 US 370 4,381 25 1,940 2,076 2,225 475 Foreign 3,193 8,382 5,412 9,100 10,539 3,330 3,117 Argentina 1,306 2,094 55 1,648 1,813 294 1,349 Brazil 974 3,932 7 1,543 1,679 2,352 883 Paraguay 14 345 0 145 147 202 10 China 705 514 3,454 3,399 3,972 6 696 EU 29 93 536 559 619 7 32 Japan 9 10 121 86 129 0 11 Mexico 4 15 158 173 175 0 3 ROW 152 1,379 1,079 1,547 2,005 470 134 World Soybean Supply and Use (Million Bushels) August-July Country / Region Beginning Stocks Production Imports Crush Total Exports Ending Stocks World 81 83-24 -65-72 56 156 US -40 121 - -10-9 75 15 Foreign 121-37 -24-55 -63-19 141 Argentina 90 - - -24-24 -18 133 Brazil 26 - - - - - 26 Paraguay - - - - - - - China 1 - - - - - 1 EU -1 3-7 -7-7 - 2 Japan - - - - - - - Mexico - - - - - - - ROW 5-40 -16-24 -31-1 -20 Source: USDA-WASDE August 10, 2017
Wheat Futures Market Reaction: September 2018 wheat futures closed down 19 cents at $4.40 ½ with a trading range for the day of $4.39 ¼ to $4.62. July 2018 wheat futures closed down 16 ½ cents at $5.14 ¼ with a trading range for the day of $5.13 ½ to $5.33 ¼. Decreased domestic production due to drought in the Northern Plains was more than offset by increased foreign production. Projected global stocks are an all-time record of 9.726 billion bushels. USDA Summary: Projected U.S. wheat supplies are decreased this month on lower production, down 21 million bushels to 1,739 million. The August NASS production forecasts for durum and other spring wheat indicated a significant decline compared to last year, primarily due to continued severe drought conditions affecting the Northern Plains. Partially offsetting this decrease is higher winter wheat production, on increased yields, with most of the production increase for white wheat. Food use estimates for both 2016/17 and are reduced, based primarily on the August 1, NASS Flour Milling Products report. The other wheat usage categories for are unchanged this month. Projected ending stocks are decreased 5 million bushels to 933 million. The season-average farm price is unchanged at the midpoint of $4.80 per bushel and the projected range remains at $4.40 to $5.20. Global wheat supplies increased significantly, primarily on a 316-million-bushel production increase in the Former Soviet Union (FSU). Russian production is a record 2.848 billion bushels, surpassing last year s record by 184 million. Winter wheat yields are forecast higher for both Russia and Ukraine, based mainly on harvest results to date. Additionally, spring wheat conditions have remained very favorable for both Russia and Kazakhstan, resulting in higher production forecasts. Canadian wheat production is reduced 70 million bushels to 974 million on the increasing intensification of drought conditions in major production areas of the Prairie Provinces. The increased FSU production more than offsets reduced production forecasts in Canada, EU, and U.S., raising global production by more than 184 million bushels to 27.308 billion. Foreign trade is increased on higher exports for Russia, Ukraine, and Kazakhstan more than offsetting reductions in Canada and EU. Projected imports are raised for several countries, led by Indonesia and Nigeria. Total world consumption is projected higher, primarily on greater usage by Russia, Indonesia, and Nigeria. Projected global ending stocks are 151 million bushels higher this month at 9.726 billion, which is a new record.
Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) 2013/14 2014/15 2015/16 2016/17 Est. Projected July Projected August Planted and Harvested Acres & Yield 56.2 56.8 55 50.2 45.7 45.7 45.3 46.4 47.3 43.9 38.1 38.1 47.1 43.7 43.6 52.6 46.2 45.6 Supply (Million Bushels) Change From Previous Month Change 2016/17 to 0-4.5 0-5.8-0.6-7 Beg. Stocks 718 590 752 976 1,184 1,184 0 208 Production 2,135 2,026 2,062 2,310 1,760 1,739-21 -571 Imports 173 151 113 118 140 150 10 32 Total Supply 3,026 2,768 2,927 3,403 3,084 3,074-10 -329 Use & Ending Stocks (Million Bushels) Food 955 958 957 949 955 955 0 6 Seed 77 79 67 61 66 66 0 5 Feed 228 114 149 154 150 150 0-4 Exports 1,176 864 778 1,055 975 975 0-80 Total Use 2,436 2,015 1,951 2,219 2,146 2,141-5 -78 U.S. Ending Stocks 590 752 976 1,184 938 933-5 -251 Foreign Stocks 6,524 7,243 7,948 8,316 8,637 8,793 156 477 U.S. Avg. Season Price ($/Bu) $6.87 $5.99 $4.89 $3.89 Price and Stocks to Use Ratio $4.40- $5.20 $4.40- $5.20 $0.00 $0.95 U.S. Stocks/Use 24.22% 37.32% 50.03% 53.36% 43.71% 43.58% -0.13% -9.78% Source: USDA-WASDE August 10, 2017
Country / Region World Wheat Supply and Use (Million Bushels) (August) Beginning Stocks Production Imports Feed Total Exports Ending Stocks World 9,500 27,307 6,590 5,167 27,082 6,611 9,726 US 1,184 1,739 150 150 1,166 975 933 Foreign 8,316 25,568 6,440 5,017 25,916 5,636 8,793 Argentina 19 643 0 4 220 423 19 Australia 328 863 6 165 294 698 205 Canada 254 974 17 118 309 753 182 EU 406 5,495 239 2,039 4,676 1,084 381 Brazil 82 191 265 18 430 37 71 China 4,093 4,777 110 478 4,262 29 4,688 Sel. Mideast 475 716 676 181 1,465 27 375 N. Africa 507 654 1,034 80 1,664 25 507 Pakistan 160 963 1 33 933 22 168 Southeast Asia 201 0 928 275 876 38 215 India 351 3,527 147 184 3,638 18 369 Russia 398 2,848 18 698 1,543 1,157 564 Kazakhstan 146 514 2 77 254 276 133 Ukraine 69 974 1 132 375 588 81 ROW 826 2,429 2,996 535 4,978 460 834 Country / Region World Wheat Supply and Use (Million Bushels) August-July Beginning Stocks Production Imports Feed Total Exports World 19 197 49 49 65 55 150 US - -21 10 - -5 0-6 Foreign 18 217 39 49 70 55 156 Argentina - - - - - - - Australia - - - - - - - Canada -9-68 - -11-15 -55-7 EU 8-16 - - - -18 11 Brazil - -15 7 - - - -7 China 15 - - - - - 15 Sel. Mideast 6 - - - 1-5 N. Africa 6 - - - - - 6 Pakistan - - - - - - - Southeast Asia 6-18 15 22-2 India - - - - - - - Russia - 202-37 37 37 129 Kazakhstan - 37 - - - 18 18 Ukraine - 92 - - - 73 18 ROW -12-15 13 8 25 - -33 Source: USDA-WASDE August 10, 2017 Ending Stocks
2017 Estimated Returns Non-Irrigated The projected profitability outlook for the 2017 crop has been updated after the release of the August 12, USDA Supply & Demand reports. This report incorporates the projected production for this crop year and includes survey based yield estimates. The Tennessee estimates for 2017 are used in this profitability update. For 2017, Tennessee state average yields are currently estimated by the National Agricultural Statistics Service (NASS) to be corn 166 bu./acre, cotton 1036 lbs./acre, soybeans 45 bu./acre and wheat 72 bu./acre. Since milo and double crop soybeans are not projected, 90 bu./acre and 30 bu./acre respectively are still being used. Costs are based on the 2017 UT Extension Row Crop budgets with adjustments made based on current input prices. Prices used for 2017 are incorporating forward 2017 harvest prices. Milo prices are an estimate as very few quotes are available. Prices for corn and soybeans have worked their way lower since the last USDA report Corn is 24 cents lower with soybeans 80 cents lower. Cotton prices have been variable but currently is 1.38 cents higher since the July report. Since wheat has been harvested and probably priced, I am using $4.70 bushel as more of an average price. Soybeans, corn, and wheat-soybeans are showing a profitable Net Return, with cotton based on an above average yield having narrowed the loss after all expenses to $11 per acre. 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. This may be an opportunity to review marketing plans and decide whether to lock in a percentage of forward harvest prices. 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 67.09 cents that is being used in the profitability outlook. The price of 67.09 cents is made up of a cash price of 62.09 cents and gin rebates (seed & hauling) of 5 cents. The cash price of 62.09 cents is composed of a loan rate of 49.49 cents and a 12.60 cent equity from the buyer. Note - When prices are low, cotton is redeemed out of the marketing loan program at the Adjusted World Price (AWP). This is effect helps create the loan option or equity price that producers receive. Currently, this price is in 12-13 cent range. Basically, this is a result of the way the cotton marketing loan program works. My observations and discussions with cotton buyers would indicate that when futures move above 70-73 cents, then the prices to the producers would start to move up penny for penny. 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 2017 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. 2017 Estimated Returns Non-Irrigated Cotton Soybeans Corn Milo Wheat/Soybeans Yield 1036 lbs. 45 bu. 166 bu. 90 bu. 72 bu./32 bu. Price (as of 8/10/17) $0.6709 lb. $9.45 bu. $3.45 bu. $3.15 bu. $4.70 bu./$9.45 bu. Revenue $695 $425 $573 $284 $641 Variable Expenses $404 $216 $308 $229 $374 Returns Over Variable $291 $209 $265 $55 $266 Land Costs (25% of Revenue-25% crop insurance) Returns Over Variable and Land Costs Fixed Costs Depreciation & interest on machinery $172 $104 $140 $68 $157 $119 $105 $125 -$13 $110 $130 $62 $56 $62 $99 Returns Over Specified Costs -$11 $42 $69 -$76 $11 Breakeven Price at Average Yield and Specified Cost $0.68 $ 8.51 $3.04 $3.99 $4.88/8.74
2017 Estimated Returns Irrigation Considering irrigation, profitability is positive for soybeans considering variable, land and fixed cost. Returns Over Variable and Land Costs are positive for corn, cotton, and wheat-soybeans. 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 2017 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. 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. 2017 Estimated Returns Irrigation Cotton Soybean s Corn Milo Wheat/Soybeans Yield 1100 lbs. 60 bu. 190 bu. 130 bu. 72 bu./45 bu. Price (as of 8/10/17) $0.6709 lb. $9.45 bu. $3.45 bu. Revenue $738 $567 $656 $410 $3.15 bu. $4.70 bu./$9.45 bu. $764
Variable Expenses( include energy cost) $450 $250 $402 $291 $409 Fixed Irrigation Costs per Acre $85 $85 $85 $85 $85 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 $203 $232 $168 $34 $270 $161 $118 $139 $78 $166 $42 $113 $29 -$45 $104 $145 $77 $71 $77 $114 Returns Over Specified Costs -$103 $36 -$42 -$122 -$10 Breakeven Price at Average Yield and Specified Cost $0.76 $8.85 $3.67 $4.09 $4.88/$9.58