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10
Aug
2012
Profitability Outlook
Author: Chuck Danehower, Extension Area Specialist - Farm Management 1 Comment

This table should be used as a guide as yields, prices, and expenses will vary among producers and locations. This table looks at yields for Tennessee as reported in the August 10, 2012 USDA Crop Production report crop and prices adjusted for the 2013 production year. The average soybean yield is estimated at 26 bushels per acre for Tennessee. For the purposes of this table, it has been adjusted to 28 bushels per acre for full season soybeans and 21 bushels per acre for double crop soybeans. A yield estimate for milo was not available from USDA and was adjusted based on observations. Wheat prices are an average as of harvest time for the 2012 crop while corn, cotton, and soybean prices attempt to take into account an average price reflecting any forward priced contracts. Next month, this table will shift to looking at 2013 production and the possible returns from that crop as the wheat seeding time will soon be upon us. One of the expense items that have to be watched is fertilizer. Fertilizer cost, particularly nitrogen prices have gone up recently for producers who did not have it already priced. I have updated the table below to reflect this higher cost.   For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: cotton – $ 155, Soybeans – $53, Corn – $186 (includes 150 units of N), Milo – $145, and wheat/soybeans – $138. Production costs will be updated as we go through the year. Due to the warm spring, additional burndowns are needed in cotton (+$39 chemical) and soybeans (+$11 chemical) and the increased chemical and sprayer cost have been updated. 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 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. Please contact your local County Extension office or Area Specialist – Farm Management for assistance in developing your own budget or farm financial plan.

 

2012 Estimated Returns

 

Cotton

Soybeans

Corn

Milo

Wheat/Soybeans

Yield

755 lbs.

28 bu.

82 bu.

65 bu.

66 bu./21 bu.

Price (average)

$0.80 lb.

$14.50 bu.

$7.00 bu.

$6.65 bu.

$6.75 bu./$14.50 bu.

Revenue

$604

$406

$574

$432

 

$750

Variable Expenses

$522

$226

$346

$245

$431

Returns Over Variable

$82

$180

$228

$187

$319

Land Costs (25% of Revenue)

$150

$102

$144

$108

$188

Returns Over Variable and Land Costs

($69)

$78

$84

$79

$132

Fixed Costs
Depreciation & interest on machinery

$79

$42

$39

$34

$83

Returns Over Specified Costs

($148)

$36

$45

$45

$49

 

Some differences have occurred due to rounding.

 

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One Response to Profitability Outlook

  1. Richard Jameson says:

    I appreciate you periodically updating the Profitability Outlook. This provides a realistic snapshot of where we are and how the variables have changed as we have progressed through this calendar year/growing season. A graph or bar chart on where we started in February and where we ended up in December would be an interesting talk during the winter meeting season. RMJ