July 11, 2019 - USDA World Supply and Demand Estimates...Ukraine corn production is raised, reflecting increased area. For 2018/19, Argentina corn production is higher based on harvest

July 11, 2019 - USDA World Supply and Demand Estimates Corn Market Reaction: September 2019 corn futures closed up 9 ¼ cents for the day at $4.44 ¼ with a trading range for the day of $4.26 ½ to $4.44 ¾. December 2019 corn futures closed up 8 ½ cents at $4.48 with a trading range for the day of $4.30 ¼ to $4.48 ½. Many of the numbers presented in this month’s WASDE are not reflective of where markets are currently trading. The current planted acre estimate of 91.7 million is from the June Acreage report and will be revised down when the USDA completes its resurvey and results are released on August 12. Markets will continue to trade on the magnitude of the acreage reduction, yield potential, and weather. USDA Summary: This month’s 2019/20 U.S. corn outlook is for larger production and beginning stocks, greater feed and residual use, lower food, seed, and industrial (FSI) use, and increased ending stocks. Corn beginning stocks are raised 145 million bushels, reflecting lower use forecasts for 2018/19. Exports are reduced based on current outstanding sales and shipments to date, with export inspection data for June the lowest for the month since 2013. Feed and residual use is down based on indicated disappearance during the first three quarters of the marketing year in the June 28 Grain Stocks. FSI is lowered with forecast declines in several categories of non-ethanol industrial use. For 2019/20, corn production is projected 195 million bushels higher based on increased planted and harvested areas from the June 28 Acreage report. Excessive rainfall prevented planting at the time of the Acreage survey, leaving a portion of acres still to be planted for corn in a number of major producing states. In July, USDA’s National Agricultural Statistics Service (NASS) will collect updated information on 2019 acres planted, and if the newly collected data justify any changes, NASS will publish updated acreage estimates in the August Crop Production report. The national average corn yield is unchanged at 166.0 bushels per acre. Silking as reported in the Crop Progress report is behind the recent historical average, thus for much of the crop the critical pollination period will be during late July into early August. Projected feed and residual use is raised 25 million bushels, reflecting a larger crop. FSI is lowered 20 million bushels, reflecting lower projections for non-ethanol industrial use. Small revisions are made to historical trade and utilization estimates based on the 13th month trade data revisions from the Census Bureau. With supply rising more than use, stocks are raised 335 million bushels to 2.0 billion. The season-average corn price received by producers is lowered 10 cents to $3.70 per bushel. This month’s 2019/20 foreign coarse grain outlook is for larger production and trade, and slightly lower stocks relative to last month. Ukraine corn production is raised, reflecting increased area. For 2018/19, Argentina corn production is higher based on harvest results to date. Major global trade changes for 2019/20 include higher corn exports for Ukraine, with increased imports for Zimbabwe. For 2018/19, corn exports are raised for Argentina and Brazil

reflecting higher-than-expected shipments during the month of June. Foreign corn ending stocks are virtually unchanged from last month.

2015/16 2016/17 2017/18 2018/19

Est

2019/20 Projected

June

2019/20 Projected

July

2019/20 Change From

Previous Month

Change 2018/19

to 2019/20

Planted and Harvested Acres & Yield

Planted (Million Acres) 88.0 94 90.2 89.1 89.8 91.7 1.9 2.6

Harvested (Million Acres) 80.8 86.7 82.7 81.7 82.4 83.6 1.2 1.9

U.S. Average Yield (Bu/Acre) 168.4 174.6 176.6 176.4 166 166 0.0 -10.4

Supply (Million Bushels)

Beg. Stocks 1,731 1,737 2,293 2,140 2,195 2,340 145 200 Production 13,602 15,148 14,609 14,420 13,680 13,875 195 -545 Imports 68 57 36 35 50 50 0 15 Total Supply 15,401 16,942 16,939 16,595 15,925 16,265 340 -330

Use & Ending Stocks (Million Bushels)

Feed and Residual 5,114 5,470 5,304 5,275 5,150 5,175 25 -100 Ethanol 5,224 5,432 5,605 5,450 5,500 5,500 0 50 Food, Seed & Industrial 1,424 1,453 1,452 1,430 1,450 1,430 -20 0

Exports 1,901 2,294 2,438 2,100 2,150 2,150 0 50 Total Use 13,664 14,649 14,798 14,255 14,250 14,225 -25 -30 U.S. Ending Stocks 1,737 2,293 2,140 2,340 1,675 2,010 335 -330 Foreign Stocks 10,523 11,515 11,218 10,602 9,762 9,757 -5 -845

Price and Stocks to Use Ratio

U.S. Avg. Season Price ($/Bu) $3.61 $3.36 $3.36 $3.60 $3.80 $3.70 -$0.10 $0.10

U.S. Stocks/Use 12.71% 15.65% 14.46% 16.42% 11.75% 14.13% 2.38% -2.29%

Source: USDA-WASDE July 11, 2019

World Corn Supply and Use (Million Bushels) 2019/20 Current Month

Country / Region Beginning

Stocks Production Imports Domestic

Feed Domestic

Total Exports Ending Stocks

World 12,942 43,507 6,607 27,419 44,681 6,726 11,768 United States 2,340 13,875 50 5,175 12,105 2,150 2,011 Total Foreign 10,602 29,632 6,557 22,244 32,577 4,576 9,757 Argentina 180 1,968 0 405 591 1,319 240 Brazil 307 3,976 39 2,283 2,736 1,339 248 Russia 10 531 2 299 335 197 12 South Africa 78 551 4 260 484 59 89 Ukraine 63 1,339 1 197 252 1,102 48 Egypt 84 283 394 567 665 0 95 E.U. 285 2,527 787 2,401 3,208 79 313 Japan 55 0 614 468 614 0 55 Mexico 183 1,063 728 1,063 1,791 59 124 S.E. Asia 113 1,248 646 1,527 1,835 39 133 South Korea 73 3 413 323 417 0 72 Canada 80 551 39 335 539 59 72 China 8,261 9,999 276 7,480 10,984 1 7,552 ROW 829 5,591 2,614 4,635 8,125 324 704 World Corn Supply and Use (Million Bushels) 2019/20: Current-Previous Month



Feed Domestic


World 133 234 16 9 36 39 331 United States 145 195 - 25 5 - 335 Total Foreign -12 39 16 -16 31 39 -4 Argentina 39 - - - - - 39 Brazil -39 - - - - - -39 Russia - - - - - - - South Africa - - - - - - - Ukraine - 39 - - - 39 - Egypt - - - - - - - E.U. - - - - - - - Japan - - - - - - - Mexico -20 - - - - - -20 S.E. Asia - - - - - - - South Korea - - - - - - - Canada - - - - - - - China - - - - - - - ROW 7 - 16 -15 31 - 15


Cotton Market Reaction: December 2019 cotton futures closed down 0.74 cents at 63.08 with a trading range for the day of 62.84 to 64.1 cents. March 2020 cotton futures closed down 0.86 cents at 64.2 with a trading range for the day of 64.04 to 65.29 cents. With global production projected to exceed consumption and no major weather concerns (currently) in Texas further short term price weakness should be expected. USDA Summary: The U.S. 2019/20 cotton projections show higher beginning and ending stocks compared with last month. Beginning stocks are 350,000 bales higher due to decreases in 2018/19 domestic consumption and exports. A reported slowdown in domestic spinning results in a 100,000-bale decline in consumption, and exports are reduced 250,000 bales based on the pace of recent shipments. Ending stocks in 2018/19 are raised 300,000 bales to 6.7 million, or 33 percent of use. The forecast for the marketing-year average price received by producers is reduced 1 cent to 63 cents per pound, a 4-year low. Changes to this month’s 2019/20 world cotton supply and demand estimates are primarily driven by higher beginning stocks (up 1.7 million bales) and lower consumption (down 1.0 million bales), resulting in higher ending stocks (up 3.2 million bales). Higher beginning stocks stem largely from reduced 2018/19 consumption estimates for Bangladesh and China. Similarly, 2019/20 world consumption is projected lower as reductions for Bangladesh and China more than offset mill-use gains for India, Turkmenistan, and Vietnam. World production is nearly 500,000 bales higher this month in both 2018/19 and 2019/20, largely due to increases in India’s crop.

2015/16 2016/17 2017/18 2018/19

Est

2019/20 Projected

June

2019/20 Projected

July

2019/20 Change From

Previous Month

Change 2018/19

to 2019/20


Acres Planted (Million Acres) 8.58 10.07 12.72 14.1 13.78 13.72 -0.06 -0.38

Acres Harvested (Million Acres) 8.07 9.51 11.1 10.21 12.54 12.49 -0.05 2.28

U.S. Average Yield (lbs/acre) 766 867 905 864 842 845 3 -19

Supply (Million Bales)

Beg. Stocks 3.65 3.8 2.75 4.3 4.65 5 0.35 0.7 Production 12.89 17.17 20.92 18.37 22 22 0 3.63 Imports 0.03 0.01 0 0.01 0.01 0.01 0 0 Total Supply 16.57 20.98 23.68 22.67 26.66 27.01 0.35 4.34

Use & Ending Stocks (Million Bales)

Domestic 3.45 3.25 3.23 3 3.1 3.1 0 0.1 Exports 9.15 14.92 15.85 14.5 17 17 0 2.5 Total Use 12.6 18.17 19.07 17.5 20.1 20.1 0 2.6 U.S. Ending Stocks 3.8 2.75 4.3 5 6.4 6.7 0.3 1.7

Foreign Stocks 91.11 77.65 76.67 74.27 70.86 73.72 2.86 -0.55 Chinese Stocks 58.2 45.92 38.02 35.37 31.49 32.99 1.5 -2.38


U.S. Avg. Season Price ($/lb) $0.61 $0.68 $0.69 $0.70 $0.64 $0.63 -$0.01 -$0.07

U.S. Stocks/Use 30% 15% 23% 29% 32% 33% 1% 5% Chinese Stocks/Use 166% 119% 93% 90% 77% 81% 5% -8%


World Cotton Supply and Use (Million 480 lb Bales) 2019/20 Current Month



Use Exports Loss Ending Stocks

World 79.27 125.79 44.12 124.27 44.15 0.34 80.42

United States 5 22 0.01 3.1 17 0.21 6.7

Total Foreign 74.27 103.79 44.11 121.17 27.15 0.13 73.72

Central Asia 2.49 5.76 0 4.09 1.79 0 2.37

Afr. Fr. Zone 1.59 6.01 0 0.14 5.61 0 1.85

Australia 1.8 1.9 0 0.04 1.8 0 1.87

Brazil 11.81 12 0.08 3.6 8 0 12.28

India 8.43 29 1.4 25.5 4.4 0 8.93

Mexico 0.72 1.75 0.85 2 0.55 0.03 0.75

China 35.37 27.75 10.5 40.5 0.13 0 32.99

E.U. 0.26 1.78 0.67 0.73 1.69 0.03 0.26

Turkey 1.58 4.1 3 6.7 0.38 0 1.6

Pakistan 2.73 8 3 10.7 0.15 0.03 2.86

Indonesia 0.51 0 3.3 3.2 0.01 0 0.61

Thailand 0.2 0 1.18 1.15 0 0.03 0.21

Bangladesh 1.78 0.14 7.3 7.4 0 0.01 1.81

Vietnam 1.14 0 7.8 7.6 0 0 1.34

ROW 3.86 5.6 5.03 7.82 2.64 0.00 3.99 World Cotton Supply and Use (Million 480 lb Bales) 2019/20: Current-Previous Month



Use Exports Loss Ending Stocks

World 1.74 0.47 -0.62 -1 -0.6 0.03 3.16 United States 0.35 - - - - 0.05 0.3 Total Foreign 1.39 0.47 -0.63 -1 -0.6 -0.03 2.86 Central Asia 0.2 -0.06 - 0.1 - - 0.04 Afr. Fr. Zone - - - - - - - Australia 0.6 - - - - - 0.6 Brazil -0.4 - - - -0.2 - -0.2 India 0.65 0.5 - 0.2 -0.4 - 1.35 Mexico - - - - - - - China 1 - - -0.5 - - 1.5 E.U. - - - - 0.02 -0.02 - Turkey -0.05 - - - - - -0.05 Pakistan -0.1 - 0.1 - - - - Indonesia -0.1 - 0.1 - - - - Thailand - - - - - - - Bangladesh -0.2 - -1 -0.9 - - -0.3 Vietnam -0.1 - 0.2 0.1 - - - ROW -0.11 0.03 -0.02 0.0 -0.02 - -0.08


Soybeans Futures Market Reaction: August 2019 soybean futures were up 4 ½ cent for the day closing at $8.99 with a trading range for the day of $8.87 ¼ to $8.99 ½. November 2019 soybean futures closed up 4 ½ cents at $9.17 ¼ with a trading range for the day of $9.05 ½ to $9.17 ¾. Similar to corn, the estimated planted acreage in this report needs to be discounted heavily. It is very likely that some acres were switched from corn to soybeans and intended soybean acres got planted late – thus, the current acreage estimate is lower than what we would anticipate seeing in the August Crop Production report. USDA Summary: This month’s U.S. soybean supply and use projections for 2019/20 include lower beginning stocks, production, exports, and ending stocks. Beginning stocks are reduced with higher 2018/19 residual use more than offsetting lower crush and seed use. Residual use for 2018/19 is raised based on indications in the June 28 Grain Stocks report combined with crush and export data through May. Soybean production for 2019/20 is projected at 3.845 billion bushels, down 305 million based on lower planted and harvested area in the June 28 Acreage report and on lower projected yields. Harvested area, forecast at 79.3 million acres, is down 4.5 million from last month. With planting progress significantly behind in many states, USDA’s National Agricultural Statistics Service (NASS) will collect updated information on 2019 area planted, and if the newly collected information justifies changes, updated acreage estimates will be published by NASS in the August Crop Production report. The soybean yield is forecast at 48.5 bushels per acre, down 1 bushel based on delayed planting progress throughout the major producing states. Soybean exports are reduced 75 million bushels to 1.875 billion reflecting reduced supplies and increased competition from South American exporters. With crush unchanged, soybean ending stocks for 2019/20 are projected at 795 million bushels compared with 1.045 billion last month. The 2019/20 season-average price for soybeans is forecast at $8.40 per bushel, up 15 cents from last month. The soybean meal prices are forecast at $300 per short ton, up 5 dollars. The soybean oil price forecast is unchanged at 29.5 cents per pound. The 2019/20 global oilseed supply and demand forecasts include lower production and stocks compared to last month. Global oilseed production is projected down mostly on lower soybean production for the United States. Soybean production is also reduced for Canada and Ukraine. Global oilseed exports for 2019/20 are projected down slightly from last month. Lower soybean exports for the United States are offset with increases for Brazil, Argentina, and Uruguay. Global oilseed ending stocks for 2019/20 are reduced, mainly on lower soybean stocks for the United States, Argentina, and Brazil.

2015/16 2016/17 2017/18 2018/19

Est

2019/20 Projected

June

2019/20 Projected

July

2019/20 Change From

Previous Month

Change 2018/19

to 2019/20


Acres Planted (Million Acres) 82.7 83.5 90.2 89.2 84.6 80 -4.6 -9.2

Acres Harvested (Million Acres) 81.7 82.7 89.5 88.1 83.8 79.3 -4.5 -8.8

U.S. Average Yield (Bu/Acre) 48 51.9 49.3 51.6 49.5 48.5 -1.0 -3.1


Beg. Stocks 191 197 302 438 1,070 1,050 -20 612 Production 3,926 4,296 4,412 4,544 4,150 3,845 -305 -699 Imports 24 22 22 17 20 20 0 3 Total Supply 4,140 4,516 4,735 4,999 5,240 4,915 -325 -84


Crushing 1,886 1,901 2,055 2,085 2,115 2,115 0 30 Exports 1,942 2,166 2,134 1,700 1,950 1,875 -75 175 Seed and Residual 115 147 109 165 130 130 0 -35 Total Use 3,944 4,214 4,297 3,949 4,195 4,120 -75 171 U.S. Ending Stocks 197 302 438 1,050 1,045 795 -250 -255 Foreign Stocks 2,687 3,213 3,203 3,102 3,094 3,046 -48 -56


U.S. Average Season Price ($/Bu) $8.95 $9.47 $9.33 $8.50 $8.25 $8.40 $0.15 -$0.10

U.S. Stocks/Use 4.99% 7.17% 10.19% 26.59% 24.91% 19.30% -5.61% -7.29% Source: USDA-WASDE July 11, 2019

World Soybean Supply and Use (Million Bushels) 2019/2020 Current Month Country / Region

Beginning Stocks Production Imports

Domestic Crush

Domestic Total Exports

Ending Stocks

World 4,151 12,752 5,542 11,312 13,046 5,558 3,841 United States 1,049 3,845 20 2,115 2,245 1,875 795 Total Foreign 3,102 8,907 5,521 9,197 10,801 3,683 3,046 Argentina 1,082 1,947 143 1,653 1,916 294 963 Brazil 983 4,519 7 1,608 1,709 2,793 1,009 Paraguay 7 375 0 145 148 228 7 China 779 625 3,197 3,160 3,810 5 785 E.U. 53 102 555 588 649 8 53 S.E. Asia 38 24 367 170 376 1 50 Mexico 7 15 213 219 220 0 15 ROW 152 1,300 1,039 1,654 1,973 354 165

World Soybean Supply and Use (Million Bushels) 2019/20: Current-Previous Month

Country / Region

Beginning Stocks Production Imports

Domestic Crush

Domestic Total Exports

Ending Stocks

World 7 -307 0 -9 -9 8 -299 United States -21 -305 - - - -75 -251 Total Foreign 28 -2 - -9 -9 83 -48 Argentina - - - - - 37 -37 Brazil 28 - - - - 37 -9 Paraguay - - - - - - - China - - - - - - - E.U. - - - - - - - S.E. Asia - - - - - - - Mexico - - - - - - - ROW - -1 - -9 -9 9 -2


Wheat Futures Market Reaction: September 2019 wheat futures closed up 16 ¾ cents at $5.21 ½ with a trading range for the day of $5.00 ¼ to $5.23. July 2020 wheat futures closed up 15 cents at $5.51 ¾ with a trading range for the day of $5.33 to 5.52 ¾. Wheat received a shot in the arm with this WASDE report as global and domestic ending stocks were estimated down. For the short run, in the US, wheat price direction will be strongly influenced by the corn market. Internationally, production concerns have crept into some key producing regions which may assist in holding international prices up in spite of large global stocks. USDA Summary: The outlook for 2019/20 U.S. wheat this month is for lower supplies, higher domestic use, larger exports, and reduced stocks. Supplies are reduced as a smaller carry-in is not completely offset by higher production. Forecast 2019/20 U.S. wheat production is raised 18 million bushels to 1,921 million. The all wheat yield is forecast 1.3 bushels per acre higher at 50.0 bushels. Winter wheat production is raised to 1,291 million bushels with increases in all winter wheat classes this month. The first 2019/20 survey-based production forecasts for other spring wheat and Durum are both lower than last year, mainly on reduced harvested area at 572 and 58 million bushels, respectively. Domestic use is higher this month on increased feed and residual use as wheat is expected to be more competitively priced with feed grains in 2019/20. Exports are projected at 950 million bushels, up 14 million from the revised 2018/19 exports. Exportable supplies for several major exporters are significantly reduced on lower 2019/20 production forecasts. As a result, the United States is expected to improve its export competitiveness, especially in the latter stages of the 2019/20 marketing year. Ending stocks for 2019/20 are projected 72 million bushels lower than last month at 1,000 million. The projected season-average farm price is $5.20 per bushel, up $0.10 from last month on reduced stocks. Foreign 2019/20 wheat supplies are decreased 386 million bushels primarily on lower production in several major exporting countries. The production declines are led by a 140-million-bushel reduction for Russia due to extremely high temperatures and below-average precipitation in June during winter wheat grain fill. Russia’s production of 2.726 billion bushels is still the second largest on record. Both the EU and Ukraine are also lowered on hot and dry conditions during June, which are expected to reduce yields although production in both countries remains well above last year. Australia and Canada are lowered as well, mainly on reduced area, based on recent government reports. Global 2019/20 exports are lowered 85 million bushels on decreased supplies. Russia’s exports are reduced 92 million bushels and Australia and Ukraine are lowered 37 million and 18 million, respectively. These export reductions are partially offset by an 18 million bushels increase for the EU and a 51 million increase for the United States. World consumption is lowered 107 million bushels, primarily on reduced feed and residual use. With global supplies declining more than projected use, world ending stocks are reduced 290 million bushels to 10.527 billion but remain record large.

2015/16 2016/17 2017/18 2018/19

Est.

2019/20 Projected

June

2019/20 Projected

July

2019/20 Change From

Previous Month

Change 2018/19

to 2019/20

Planted and Harvested Acres & Yield Planted (Million Acres) 55 50.1 46.1 47.8 45.8 45.6 -0.2 -2.2

Harvested (Million Acres) 47.3 43.8 37.6 39.6 39 38.4 -0.6 -1.2

U.S. Average Yield (Bu/Acre) 43.6 52.7 46.4 47.6 48.7 50 1.3 2.4


Beg. Stocks 752 976 1,181 1,099 1,102 1,072 -30 -27 Production 2,062 2,309 1,741 1,884 1,903 1,921 18 37 Imports 113 118 158 135 140 140 0 5 Total Supply 2,927 3,402 3,080 3,118 3,145 3,133 -12 15


Food 957 949 964 960 965 965 0 5 Seed 67 61 63 60 68 68 0 8 Feed 149 160 47 91 140 150 10 59 Exports 778 1,051 906 936 900 950 50 14 Total Use 1,951 2,222 1,981 2,046 2,073 2,133 60 87 U.S. Ending Stocks 976 1,181 1,099 1,072 1,072 1,000 -72 -72 Foreign Stocks 7,944 8,457 9,228 9,038 9,744 9,526 -218 488


U.S. Avg. Season Price ($/Bu) $4.89 $3.89 $4.72 $5.16 $5.10 $5.20 $0.10 $0.04

U.S. Stocks/Use 50.03% 53.15% 55.48% 52.39% 51.71% 46.88% -4.8% -5.5% Source: USDA-WASDE July 11, 2019

World Wheat Supply and Use (Million Bushels) 2019/20 Current Month



Feed Domestic


World 10,110 28,346 6,574 5,555 27,931 6,728 10,526 United States 1,072 1,921 140 150 1,183 950 1,000 Total Foreign 9,038 26,425 6,434 5,405 26,748 5,778 9,526 Argentina 51 735 0 2 219 514 53 Australia 180 772 6 184 312 459 186 Canada 172 1,224 17 158 342 882 188 E.U. 360 5,559 202 2,076 4,703 992 427 Russia 284 2,726 18 661 1,488 1,268 273 Ukraine 51 1,066 3 136 360 698 61 Bangladesh 25 40 239 0 268 0 36 Brazil 49 195 276 18 448 22 49 China 5,133 4,850 129 772 4,703 48 5,361 Japan 39 35 217 26 239 10 42 N. Africa 592 693 1,007 83 1,714 25 553 Nigeria 7 2 191 2 179 15 7 Sel. Mideast 408 825 636 144 1,433 26 411 S.E. Asia 176 0 1,018 321 971 39 184 India 624 3,718 1 220 3,601 18 724 Kazakhstan 47 514 2 66 243 276 46 ROW 838 3,470 2,473 536 5,526 485 925

World Wheat Supply and Use (Million Bushels) 2019/20: Current - Previous Month



Feed Domestic


World -52 -344 -39 -51 -107 -84 -290 United States -30 18 - 10 10 50 -71 Total Foreign -23 -363 -39 -61 -117 -134 -218 Argentina - - - - - - - Australia 4 -55 - -18 -18 -37 4 Canada -4 -44 - -7 -7 - -40 E.U. 7 -92 - - - 18 -103 Russia - -140 - -37 -37 -92 -11 Ukraine 1 -37 - -7 -11 -18 -7 Bangladesh - - - - - - - Brazil -6 - - - - - -6 China -11 - - - - - -11 Japan - - - - - - - N. Africa 9 - - - - - 9 Nigeria - - -4 - -4 - - Sel. Mideast -5 - -3 - -1 - -7 S.E. Asia -11 - -22 -7 -18 - -15 India -24 - - 18 37 - -61 Kazakhstan - 7 - - - - 7 ROW 17 -3 -11 -2 -58 -6 22


2019 Estimated Returns - Non-Irrigated

The profitability outlook has been updated after the release of the July 11, 2019 USDA WASDE reports. The corn crop is mostly through pollination and by all reports looks to be an excellent crop. Soybeans and cotton continue to develop with most of the region receiving much needed rainfall this week. Yields used for non- irrigated estimates are a 5 year Tennessee state average year of 164 bushels per acre for corn, 47 bushels per acre for full-season soybeans, 1023 pounds per acre cotton, and 68 bushels per acre wheat. Prices used for grain sales are based on 2019 harvest cash bids as reported by the USDA Tennessee Cash Grain report dated July 11, 2019. The price of $0.57 per lb. of cotton is based on a cotton loan price of $0.52 and an $0.05 cotton equity. Based on these yields and prices, all crops are projected to have positive net returns over variable, land, and fixed costs with the exception of cotton. Cotton, soybeans, and wheat result in a net loss after factoring in fixed expenses. Corn is the only exception to this as it is projected to have positive returns above both variable and fixed costs. The continuing increase in corn prices has in has caused the anticipated profitability for corn to improve even further. Cotton profitability has declined as a result of lower futures prices and declining cotton equities. Costs are based on the 2019 UT Extension Row Crop budgets with adjustments made where warranted. 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. The projected cotton price of 57 cents assumes no gin rebates (seed & hauling) in 2019. Gin rebates for seed and hauling are an estimate as those are generally not known until harvest time and could be in the range of 0 to 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 2019 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 - $ 110, Soybeans - $47, Corn - $161 (includes 180 units of N), and Wheat/Soybeans - $106. These cost

reflect a slight increase from 2018 to 2019 along with micronutrients where warranted. Operating expenses 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 with resistant weeds. Production costs are estimates based on the 2019 University of Tennessee Crop Budgets with adjustments made where needed. Please visit with your farm supplier on estimated costs for your operation. 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. A whole farm financial plan can be completed for you for free by your Area Farm Management Specialist. Cotton Soybeans Corn Wheat/Soybeans

Yield 1023 lbs. 47 bu. 164 bu. 68 bu./35 bu. Price (as of 7/11/2019) $0.58 lb. $8.76 bu. $4.31 bu. $5.16 bu./$8.76

Revenue $583 $412 $707 $657 Variable Expenses $475 $246 $371 $455

Returns Over Variable $108 $166 $336 $202 Land Costs (25% of Revenue-

25% crop insurance) $143 $101 $175 $161

Returns Over Variable and Land Costs ($35) $65 $162 $42

Fixed Costs (Capital Recovery and Management Labor) $110 $65 $64 $114

Returns Over Specified Costs ($145) ($0) $98 ($72) Breakeven Price at Average

Yield and Specified Cost $0.76 $8.76 $3.52 $6.15/$9.60

2019 Estimated Returns - Irrigated

Considering irrigation, Returns Over Variable, Land, and Fixed Costs are negative for all principal row crops except corn. Again, the profit potential in corn has improved greatly due to the recent increase in prices. 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 2019 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: variable expenses energy costs for irrigation of $32 per acre for corn, $27 per acre for cotton, and $20 per acre for soybeans. Irrigation repairs and maintenance are estimated at $16 per acre for corn, $13 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 - $115, Soybeans - $57, Corn - $198 (includes 240 units of N), and Wheat/Soybeans - $106. 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 2019 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 – Capital Recovery and Management Labor. 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. A whole farm financial plan can be completed for you for free by your Area Farm Management Specialist. Cotton Soybeans Corn Wheat/Soybeans

Yield 1200 lbs. 60 bu. 210 bu. 68 bu./45 bu. Price (as of 7/11/2019) $0.57 lb. $8.76 bu. $4.31 bu. $5.16 bu./$8.76 bu.

Revenue $684 $526 $906 $745 Variable Expenses(includes

energy cost) $475 $289 $489 $455

Fixed Irrigation Costs per Acre $86 $86 $86 $86 Returns Over Variable & Fixed

IR Costs $123 $151 $331 $204

Land Costs (25% of Revenue-25% crop insurance-25% fixed

irrigation costs) $207 $132 $189 $177

Returns Over Variable, IR Fixed Cost and Land Costs ($84) $19 $102 $27

Fixed Costs (Capital Recovery and Management Labor) $125 $81 $84 $114

Returns Over Specified Costs ($209) ($62) $18 ($87) Breakeven Price at Average Yield

and Specified Cost $0.75 $9.80 $4.04 $5.82/$9.70

Documents

July 11, 2019 - USDA World Supply and Demand Estimates...Ukraine corn production is raised, reflecting increased area. For 2018/19, Argentina corn production is higher based on harvest