Budget Comparison 2015 Crop Year of Crop Choices Given Current Market Conditions and Expected Yields
Sorghum
Corn
Yield (Bu.)1
Units
Price (New Crop Futures Price from CME & NYBOT 3/9/15)
Cotton Seed
Current New Crop Basis
Expected Net Price (New Crop Futures + Basis)2
Gross Revenue
VARIABLE EXPENSES
Seed
Fertilizer & Lime
Chemicals
Fuel & Lubrication
Labor
Land Rent
Insurance
Interest on Capital
Drying and Cleaning or Ginning
Total Variable Costs
Return Above Variable Costs
Machinery and Equipment
Buildings
Total Fixed Less Mgt.
Total Cost Less Mgt.
Return To Management
Soybeans
(Double Crop
(Double Crop
Wheat-Sorghum) Wheat-Soybeans)
Wheat
Cotton Lint
130
bu/acre
---$4.11
-$0.70
100
bu/acre
---$3.90
-$0.21
38
bu/acre
---$9.67
-($0.40)
57
bu/acre
---$4.89
-$0.80
954
lbs/acre
Cotton Seed
$4.81
$626.90
$4.11
$411.45
$9.27
$349.17
$5.69
$326.23
$0.62
$744.36
$70.00
$152.14
$46.93
$61.00
$12.00
$85.00
$22.00
$8.00
$23.00
$480.07
$146.83
$42.00
$42.00
$522.07
$104.83
VARIABLE EXPENSES
$11.50
$58.00
$92.00
$55.00
$37.00
$33.00
$61.00
$61.00
$7.00
$3.00
$42.50
$42.50
$13.00
$15.00
$10.00
$4.00
$16.00
$0.00
$290.00
$271.50
$121.45
$77.67
Fixed Expenses
$42.00
$42.00
$42.00
$332.00
$79.45
$42.00
$313.50
$35.67
lbs
1,479
$0.63
$0.11
($0.01)
$30.00
$66.00
$35.00
$61.00
$3.00
$42.50
$11.00
$4.00
$16.00
$268.50
$57.73
$92.80
$205.59
$94.90
$91.68
$17.96
$85.00
$24.85
$10.60
$80.85
$704.23
$40.13
$42.00
$70.17
$42.00
$310.50
$70.17
$774.40
$15.73
Year
2010
2011
2012
Corn Soybeans Wheat Cotton
bu/ac
bu/ac
bu/ac
bu/ac
91
26
38
838
84
30.5
68
616
117
39.5
57
1,014
2013
2014
142
132
33.5
40
57
58
799
1,049
3-yr Aver
130
38
57
954
5-yr Aver
113
34
56
863
3-yr/5-yr 115.1%
111.1% 103.1% 110.5%
Source: USDA, NASS
($30.04)
Break Even Yield
Break Even Price
109
$4.01
81
$3.32
34
$8.32
55
$5.42
1,254
$0.81
Break Even Yield % of 5 yr aver.
95.9%
--
99.8%
98.1%
145.3%
Notes
MB grain for Aug delivery corn, Oct delivery for grain sorghum, harvest 2015 for wheat;
Current new crop cotton basis for 2015 was obtained from a market expert as their best guesstimate with significant uncertainty at this time, given market conditions and time of the year.
1. Based on the 3 year average yield for NC with the exception of grain sorghum which is set at 100 bu/ac (which is considered reasonable with good farming practices)
2. No one knows if new crop futures with be higher or lower at harvest. However, using a basis contract now to lock in strong basis levels allows producers
to lock in a higher net price later (as basis will likely weaken over time) if the new crop futures rally. Current new crop futures price levels are low due to high ending
stocks, and there is a good chance there will be better new crop futures prices between now and harvest, but there are no guarantees.
3. Other sources utilized for various estimates above include:
Ron Heinger "100 Bushel Grain Sorghum: We Can DO THAT!", [Slide 3], Presented at "Managing Crop Strategies & Farm Profitability in 2015", Marriott Crabtree Valley, Raleigh, NC, February 4, 2015.
http://ag-econ.ncsu.edu/extension/cotton-budgets
http://mbgrain.com/home/
http://www.cmegroup.com/trading/agricultural/
http://futures.tradingcharts.com/marketquotes/CT.html
Prepared by:
Nick Piggott, Professor and Extension Specialist
Mitch Buck, Extension Associate
Department of Agricultural and Resource Economics, NCSU
10 March, 2015