June 10, USDA World Supply and Demand Estimates

Transcription

1 June 10, USDA World Supply and Demand Estimates Corn Projected corn production for is unchanged at a record 14,430 million bushels. Corn ending stocks for 2015/16 are reduced 95 million bushels as a 100-million bushel increase in the corn export forecast more than offsets a slightly higher import projection. As of early June, total U.S. corn export commitments (accumulated exports plus outstanding sales) are above year-ago levels for the first time in the 2015/16 marketing year. Reduced corn production in Brazil and harvest delays in Argentina have improved the relative competitiveness of U.S. corn in recent weeks. The U.S. corn export projection for is raised 50 million bushels as U.S. supplies are expected to remain more competitive in with less production for Brazil. Corn ending stocks for are projected at 2,008 million bushels, down 145 million from last month. The season-average farm price for corn is raised for both 2015/16 and. The 2015/16 price is forecast up 10 cents per bushel at the midpoint with a range of $3.60 to $3.80 per bushel. The price is projected 15 cents per bushel higher at the midpoint with a range of $3.20 to $3.80 per bushel. Foreign coarse grain supplies for are projected up, driven mostly by larger corn production in Mexico and greater barley production in the EU and Ukraine. Brazil corn production for 2015/16 is lowered 138 million bushels to billion, as an early end to the rainy season in west-central Brazil has reduced yields for second-crop corn. Mexico corn production is raised 39 million bushels for 2015/16 based on revisions to official government estimates and 28 million bushels for reflecting a favorable start to the rainy season and improved reservoir levels. Global coarse grain consumption is raised with larger corn and barley feeding for Iran and greater barley feeding for the EU and Saudi Arabia. Reductions in 2015/16 and Brazil corn exports are offset by higher exports for the United States and reduced imports for the EU and Mexico. Global corn ending stocks for are projected 75 million bushels lower as the reduction for the United States more than offsets higher foreign stocks. At the projected billion bushels, world corn stocks are expected to decline slightly in. Market Reaction: July 2016 corn futures closed down 3 ½ cents at $4.23 with a trading range for the day of $4.20 to $4.37. December 2016 corn futures closed down 2 ¾ cents at $4.30 ¾ with a trading range for the day of $4.26 ¾ to $4.42 ¾. No major surprises on the report. Global stocks were lowered 76 million bushels due to a 145 million bushel reduction for the U.S. and a 70 million bushel increase in foreign stocks. The only revision for South American corn was a 39 million bushel reduction for Brazilian exports with the corresponding increase in ending stocks. Further South

2 American revisions are likely for both corn and soybeans in future WASDE s as more information will be revealed. 2012/ / / /16 Est. Projected May Projected June Planted and Harvested Acres & Yield Change 2015/16 to June Change From Previous Month Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) Supply (Million Bushels) Beg ,232 1,731 1,803 1, Production 10,755 13,829 14,216 13,601 14,430 14, Imports Total Supply 11,904 14,686 15,479 15,392 16,273 16, Use & Ending (Million Bushels) Feed and Residual 4,315 5,040 5,323 5,250 5,550 5, Ethanol 4,641 5,124 5,200 5,250 5,300 5, Food, Seed & Industrial 1,397 1,369 1,360 1,360 1,370 1, Exports 730 1,920 1,864 1,825 1,900 1, Total Use 11,083 13,454 13,748 13,685 14,120 14, U.S. Ending 821 1,232 1,731 1,708 2,153 2, Foreign 4,619 5,653 6,473 6,402 5,998 6, Price and to Use Ratio U.S. Avg. Season Price ($/Bu) $6.89 $4.46 $3.70 $3.60- $3.80 $3.05- $3.65 $3.20- $3.80 -$0.20 $0.15 U.S. /Use 7.41% 9.16% 12.59% 12.48% 15.25% 14.17% 2.8% -1.08% Source: USDA-WASDE June 10, 2016

3 Country / Region World Corn Supply and Use (Million Bushels) (June) Beginning Production Imports Feed Total Exports Ending World 8,128 39,831 5,006 24,520 39,883 5,241 8,075 US 1,708 14, ,550 12,220 1,950 2,008 Foreign 6,420 25,401 4,966 18,970 27,663 3,291 6,068 Argentina 63 1, Brazil 234 3, ,968 2, South Africa Egypt EU 247 2, ,224 2, Japan Mexico , Southeast Asia 159 1, ,388 1, South Korea Canada China 4,312 8, ,299 8, ,996 Ukraine 31 1, ROW 882 5,319 1,973 4,000 7, World Corn Supply and Use (Million Bushels) June-May Country / Region Beginning Production Imports Feed Total Exports Ending World US Foreign Argentina Brazil South Africa Egypt EU Japan Mexico Southeast Asia South Korea Canada China Ukraine ROW Source: USDA-WASDE June 10, 2016

4 Cotton A marginal reduction of 50,000 bales in 2015/16 domestic mill use is the sole revision in this month s U.S. cotton supply and demand estimates. U.S. ending stocks are now forecast at 4.1 million bales for 2015/16 and 4.8 million bales for. The forecasts for the marketing year average price received by producers are unchanged for both seasons. The world cotton projections include lower beginning and ending stocks, due mainly to reductions in expected production by China. The China crop estimates are reduced 1.3 million bales for 2015/16 and 1.0 million bales for, based on reports from Chinese sources indicating that 2015-crop production in eastern China was lower than previously estimated. Projected production is also reduced for Egypt and the African Franc Zone, with Egypt s production pegged at its lowest level since the mid-1800 s. Slightly lower world consumption includes a reduction for India, partially offset by an increase for Turkey. Projected global stocks of 94.7 million bales are 1.7 million bales below last month, reflecting a 2.0- million-bale decrease in China ending stocks. Market Reaction: July 2016 cotton futures closed down 0.21 cents at with a trading range for the day of to cents. December 2016 cotton futures closed down 0.23 cents at with a trading range for the day of to cents. Only minor tweaks were made on the domestic cotton balance sheet. China had production reductions in multiple years which dropped their estimated ending stocks by 2 million bales. World stocks under 95 million bales is a positive but will have to continue trending down before meaningful price increases occur.

5 Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (lbs/acre) 2012/ / / /16 Est. Projecte d May Projected June Planted and Harvested Acres & Yield Change 2015/16 to June Change From Previou s Month Supply (Million Bales) Beg Production Imports Total Supply Use & Ending (Million Bales) Exports Total Use U.S. Ending Foreign Chinese U.S. Avg. Season Price ($/lb) $0.73 $0.779 $0.613 $0.58 Price and to Use Ratio $0.47- $0.67 $0.47- $0.67 -$0.010 $0.00 U.S. /Use 22.99% 16.69% 24.97% 32.67% 33.33% 34.04% 1.37% 0.71% Chinese % % % % % -6.03% /Use % % Source: USDA-WASDE June 10, 2016

6 World Cotton Supply and Use (Million 480 lb Bales) (June) Country / Region Beginning Production Imports Use Exports Loss Ending World US Foreign Central Asia Afr. Fr. Zone Australia Brazil India Mexico China EU Turkey Pakistan Indonesia Thailand Bangladesh Vietnam ROW World Cotton Supply and Use (Million 480 lb Bales) June-May Beginning Production Imports Use Exports Loss Ending Country / Region World US Foreign Central Asia Afr. Fr. Zone Australia Brazil India Mexico China EU Turkey Pakistan Indonesia Thailand Bangladesh Vietnam ROW Source: USDA-WASDE June 10, 2016

7 Soybeans This month s U.S. soybean supply and use projections for include lower beginning stocks, higher exports, and lower ending stocks. Lower beginning stocks in reflect higher crush and export projections for 2015/16. Soybean crush for 2015/16 is raised 10 million bushels to 1,890 million reflecting an increase in projected soybean meal exports. Soybean meal exports are raised in part on commitments through early June. Soybean exports for 2015/16 are projected at 1,760 million bushels, up 20 million with reduced soybean production and exports for Brazil and Uruguay. Soybean ending stocks for 2015/16 are projected at 370 million bushels, down 30 million from last month. Ending stocks for are reduced 45 million bushels to 260 million on lower beginning stocks and increased exports. Exports are raised with reductions for Brazil and Ukraine. The season-average price for soybeans is forecast at $8.75 to $10.25 per bushel, up 40 cents at the midpoint. Soybean meal prices are forecast at $320 to $360 per short ton, up $20 at the midpoint. Soybean oil prices are unchanged at 30.5 to 33.5 cents per pound. Global oilseed production for is projected up fractionally from last month. Changes for 2015/16 include reduced soybean production for Brazil, Uruguay, and China. The Brazil soybean crop is reduced 73 million bushels to billion reflecting the latest crop production report from the Government of Brazil. Hot, dry conditions in parts of the Center-West and northeast resulted in reduced yields. With a lower soybean production estimate, Brazil October-September year exports and stocks are reduced for both 2015/16 and. Higher projected U.S. exports in 2015/16 and partly offset the decline to Brazil trade and reduce U.S. ending stocks. Other trade changes in 2015/16 include reduced exports for Uruguay and imports for Bangladesh, Pakistan, and Vietnam. Ukraine soybean exports are also cut with a lower forecast crop. With lower global soybean beginning stocks and production, and a negligible change to crush, global stocks for are projected at billion bushels, down 70 million from last month. Futures Market Reaction: July 2016 soybean futures were up 2 ¼ cents at $11.78 ¼ with a trading range for the day of $11.68 ¾ to $12.08 ½. November 2016 soybean futures closed up 10 cents at $11.62 ¾ with a trading range for the day of $11.50 to $10.84 ½. soybean stocks continued to be revised down as strong export and domestic demand continue to exceed past USDA expectations. South American revisions were not as large as some expected; however we could see revisions on future WASDE reports. The June Acreage report and U.S. weather will be important to watch this month and into July and August. If timely rain fall is received soybean and corn markets are likely to retreat substantially as there is a significant weather premium built into this market. On the other hand, if the dry hot weather is realized both commodities likely have another leg up. The current environment can be very challenging for many marketing

8 strategies. As such, it is very important to constantly analyze and amend your marketing plan and production estimates and remain vigilant in your decision making process. 2012/ / / /16 Est. Projected May Projected June Planted and Harvested Acres & Yield Change 2015/16 to June Change From Previous Month Acres Planted (Million Acres) Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) Supply (Million Bushels) Beg Production 3,042 3,358 3,927 3,929 3,800 3, Imports Total Supply 3,252 3,570 4,052 4,150 4,230 4, Use & Ending (Million Bushels) Crushing 1,689 1,734 1,873 1,890 1,915 1, Exports 1,317 1,638 1,843 1,760 1,885 1, Seed and Residual Total Use 3,111 3,478 3,862 3,780 3,925 3, U.S. Ending Foreign 1,948 2,211 2,686 2,286 2,202 2, Price and to Use Ratio U.S. Average Season Price ($/Bu) $14.40 $13.00 $10.10 $9.05 $8.35- $9.85 $8.75- $10.25 $0.45 $0.40 U.S. /Use 4.53% 2.65% 4.95% 9.79% 7.77% 6.60% -3.19% -1.17% Source: USDA-WASDE June 10, 2016

9 Country / Region World Soybean Supply and Use (Million Bushels) (June) Beginning Production Imports Crush Total Exports Ending World 2,656 11,894 4,998 10,598 12,052 5,060 2,436 US 370 3, ,915 2,040 1, Foreign 2,286 8,094 4,968 8,683 10,011 3,160 2,177 Argentina 993 2, ,628 1, Brazil 553 3, ,470 1,584 2, Paraguay China ,197 3,197 3, EU Japan Mexico ROW 107 1,325 1,034 1,508 1, World Soybean Supply and Use (Million Bushels) June-May Country / Region Beginning Production Imports Crush Total Exports Ending World US Foreign Argentina Brazil Paraguay China EU Japan Mexico ROW Source: USDA-WASDE June 10, 2016

10 Wheat Projected U.S. wheat supplies for are raised this month on both increased beginning stocks and larger winter wheat production. Beginning stocks are raised slightly with a 3-millionbushel decrease in 2015/16 imports partially offsetting a 5-million-bushel export reduction. Projected production for is up 79 million bushels mainly on improved prospects for the Hard Red Winter wheat crop in the Great Plains following excellent growing conditions throughout the spring months. Consequently, the winter wheat yield is forecast to be record high. Feed and residual use for is raised 30 million bushels to 200 million on the larger crop as well as increased wheat price competitiveness with corn. Imports are lowered 5 million bushels, and exports are raised 25 million bushels to 900 million, up significantly from the previous year s depressed total but still below the five year-average. Ending stocks are raised 21 million bushels to 1,050 million, the largest in 29years. Global wheat supplies for are raised 143 million bushels with production increases for the EU, Russia, and the United States more than offsetting reductions for Brazil and Mexico. The EU production increase is entirely for Spain and reflects favorable growing conditions as confirmed with satellite imagery data. The production forecast for France is unchanged despite heavy rain for the month of May. Although abundant precipitation can reduce yield prospects in low-lying areas, it may increase yield elsewhere. French wheat was in excellent condition prior to the onset of the rain and expectations for a return to dryness in the latter part of the grain filling stage is anticipated to further mitigate crop losses. Production in Russia is increased on updated government estimates showing larger spring wheat area. Foreign exports for are up 37 million bushels with the EU and Russia each up 18 million bushels given their increased production. The primary global import changes are a 37- million-bushel increase for India on low international prices increasing demand, and a 15- million-bushel increase for Indonesia. Total world consumption is up 125 million bushels led by a 44-million-bushel increase for India food use, a 37-million-bushel increase for EU feed use, and a 15-million-bushel increase for Indonesia feed use. For the EU, the late season rain in major producing regions is expected to reduce wheat quality and increase feeding. Global ending stocks are raised fractionally and remain record large. Futures Market Reaction: July 2016 wheat futures closed down 15 ¼ cents at $4.95 with a trading range for the day of $4.94 ¼ to $5.12 ½. July 2017 wheat futures closed down 12 ¾ cents at $5.63 with a trading range for the day of $5.62 ¾ to $5.79 ½. Global stocks were revised up an additional 18 million bushels to billion bushels, the highest in 29 years! Without the weather concerns driving soybean and corn markets up, making wheat more attractive for feed, I shudder to think where prices would be. Wheat currently has very problematic supply and demand concerns.

11 2012/ / / /16 Est. Projected May Projected June Planted and Harvested Acres & Yield Change 2015/16 to June Change From Previous Month Acres Planted (Million Acres) -5 0 Acres Harvested (Million Acres) U.S. Average Yield (Bu/Acre) Supply (Million Bushels) Beg Production 2,252 2,135 2,026 2,052 1,998 2, Imports Total Supply 3,118 3,026 2,766 2,921 3,106 3, Use & Ending (Million Bushels) Food Seed Feed Exports 1,012 1, Total Use 2,400 2,436 2,014 1,941 2,077 2, U.S. Ending ,029 1, Foreign 5,735 6,524 7,204 7,949 8,427 8, Price and to Use Ratio U.S. Avg. Season Price ($/Bu) $7.77 $6.87 $5.99 $4.90 $3.70- $4.50 $3.60- $4.40 -$0.85 -$0.05 U.S. /Use 29.92% 24.22% 37.34% 50.26% 49.54% 49.25% -1.01% -0.29% Source: USDA-WASDE June 10, 2016

12 Country / Region World Wheat Supply and Use (Million Bushels) (June) Beginning Production Imports Feed Total Exports Ending World 8,929 26,853 5,953 4,905 26,308 6,084 9,474 US 980 2, , ,050 Foreign 7,949 24,776 5,828 4,705 25,076 5,185 8,424 Argentina Australia Canada 142 1, EU 688 5, ,113 4,696 1, Brazil China 3,538 4, , ,336 Sel. Mideast , N. Africa , , Pakistan Southeast Asia India 533 3, , Russia 244 2, , Kazakhstan Ukraine ROW 896 2,392 2, , World Wheat Supply and Use (Million Bushels) June-May Country / Region Beginning Production Imports Feed Total Exports World US Foreign Ending Argentina Australia Canada EU Brazil China Sel. Mideast N. Africa Pakistan Southeast Asia India Russia Kazakhstan Ukraine ROW Source: USDA-WASDE June 10, 2016

13 2016 Estimated Returns Non-Irrigated The projected profitability outlook for the 2016 crop has been updated after the release of the June 10, USDA Supply & Demand reports. Yields used for non-irrigated estimates are a 5 year Tennessee state average year plugging in the 2015 state average projection of 160 bushels per acre for corn, 46 bushels per acre for soybeans, and 1046 pounds per acre cotton. The wheat yield of 71 bushels per acre is the 2016 NASS estimate ate for Tennessee. Prices used for 2016 are an average of prices currently offered for Fall 2016 delivery. Since the May 10 th USDA reports, prices for 2016 harvest are 53 cents higher for corn, 82 cents lower for milo, $1.05 per bushel higher for soybeans and wheat 21 cents higher. Cotton prices based on cotton buyer s pricing has stayed the same. Cotton returns do not consider any additional government payments such as the Cotton Ginning Cost Share program that was implemented for the 2015 cotton crop. It is unknown at this time whether that will be available for Certainly yield and prices received for a producer s product are major components of the profitability equation but expenses or cost are also. As input prices for the 2016 crop are being realized, cost of production has come down and may come down further depending on how producers use generic products. Since profitability estimates at the first of the year, I have reduced cotton variable expenses $27, soybeans $15, corn $13, milo $9, and wheat/soybeans $20. This is going in the right direction and could be reduced further as the season progresses. More and more producers are exploring the use of generic chemical products both through their traditional and non-traditional suppliers. Returns over variable expenses and returns over variable expenses and land costs are positive for all crops. Net Returns for corn, soybeans, and wheat/soybeans are also positive considering fixed costs for machinery and equipment and a $15 per acre management cost. As prices have rallied, producers will need to consider their net price averaging in any forward priced crops. This year s market has again turned volatile with any increases or decreases hinging on weather conditions in the U.S. and abroad mainly in South America. This has the potential to not only affect supply, but also export demand. Producers should not become complacent and take a sell all at harvest market strategy. A prudent strategy should still involve forward pricing and the use of options if so inclined. Pricing in increments on rallies is still a sound strategy. Producers will need to look closely at their plans for the 2016 crop and make adjustments where needed. 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. A cotton price of 72 cents is being used in the profitability outlook. The price of 72 cents is made up of a cash price of cents and gin rebates (seed & hauling) of 7-8 cents. The cash price of cents is composed of a loan rate of 52 cents or 53 cents with a slight premium and a cent equity from the buyer.. 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 a cent range. Basically, this is a result of the way the cotton marketing loan program works. My observations and discussions with cotton buyers would

14 indicate that if futures move above 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 2016 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 - $ 105, Soybeans - $38, Corn - $135 (includes 170 units of N), Milo - $87, and Wheat/Soybeans - $101. 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 2016 University of Tennessee Crop Budgets with adjustments made where needed. An adjustment was made in March in cotton weed control as one chemical in our budget is reportedly priced 40% less than our budgeted cost. Depending on varieties, soybean costs could also be reduced but based on our budget, I have not done so at this time. Hopefully, we will see other costs reduced or possibly suitable generic products available. 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.

15 2016 Estimated Returns Non-Irrigated Cotton Soybeans Corn Milo Wheat/Soybeans Yield 908 lbs. 42 bu. 140 bu. 90 bu. 71 bu./30 bu. Price (as of 6/10/16) $0.72 lb. $11.69 bu. $4.25 bu. $3.76 bu. $4.85 bu./$11.69 bu. Revenue $654 $491 $595 $338 $695 Variable Expenses $397 $250 $341 $228 $397 Returns Over Variable $257 $241 $254 $111 $298 Land Costs (25% of Revenue-25% crop insurance) Returns Over Variable and Land Costs Fixed Costs Depreciation & interest on machinery $162 $121 $145 $84 $170 $95 $121 $108 $27 $129 $126 $62 $56 $62 $99 Returns Over Specified Costs -$31 $58 $52 -$35 $30 Breakeven Price at Average Yield and Specified Cost $0.75 $10.30 $3.88 $4.15 $5.13/10.08

16 Estimated Returns - Irrigated Net returns for corn, soybeans, and wheat/soybeans are all positive considering variable, fixed, land and irrigation expenses. Cotton returns do not consider any additional government payments such as the Cotton Ginning Cost Share program that was implemented for the 2015 cotton crop. It is unknown at this time whether that will be available for Please note that input costs have been adjusted downward to reflect lower costs of production since the first of the year. As some profitability has returned, producers should continue to 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 2016 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 $21 per acre and $11 per acre of irrigation repairs and maintenance. Fixed costs of $88 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. Cotton prices include revenue for cottonseed and hauling. A cotton price of 72 cents is being used in the profitability outlook. The price of 72 cents is made up of a cash price of cents and gin rebates (seed & hauling) of 7-8 cents. The cash price of cents is composed of a loan rate of 52 cents or 53 cents with a slight premium and a cent equity from the buyer.. 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 a 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 if futures move above cents, then the prices to the producers would start to move up penny for penny. For reference, in variable expenses below, fertilizer expense per acre is estimated as follows: Cotton - $109, Soybeans - $38, Corn - $172 (includes 225 units of N), Milo - $114, and Wheat/Soybeans - $101. Cost of production will continue to be adjusted as information becomes available. Depending on varieties, soybean costs could also be reduced but based on our budget, I have not done so at this time. Hopefully, we will see other 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 2016 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

17 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 Estimated Returns Irrigation Cotton Soybeans Corn Milo Wheat/Soybeans Yield 1100 lbs. 60 bu. 190 bu. 130 bu. 71 bu./45 bu. Price (as of 6/10/16) $0.72 lb. $11.69 bu. $4.25 bu. $3.76 bu. $4.85 bu./$11.69 bu. Revenue $792 $701 $808 $489 $870 Variable Expenses( include energy cost) $455 $282 $421 $288 $429 Fixed Irrigation Costs per Acre $88 $88 $88 $88 $88 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 $250 $331 $298 $113 $353 $174 $151 $176 $99 $192 $75 $180 $122 $14 $162 $151 $91 $86 $84 $122 Returns Over Specified Costs -$76 $89 $36 -$70 $40 Breakeven Price at Average Yield and Specified Cost $0.79 $9.97 $3.98 $4.25 $5.13/$10.38