Peanut Cost and Returns Outlook for 2017

Peanut Cost and Returns
Outlook for 2017
January 26, 2017
Nathan B. Smith, Ph.D.
Extension Professor and Economist
2017 Budgeting Considerations
• Yield Expectation
• Two down years in SC,
• US down in 2016. Weather vs Rotation effects on yield?
• Fuel prices down but may ease up during the year.
• Fertilizer prices down in 2017
• Seed prices? Budgeted an increase.
• Updated machinery size and prices
• Updated chemical inputs
2017 Peanut Cost Analysis
Practice
Yield
Dryland
3000 lb
Irrigated
4000 lb
Per Acre Per Ton Per Acre Per Ton
Variable Costs
Fixed Costs
Management
Total Costs
$684
$155
$48
$887
$456
$104
$32
$591
$771
$197
$33
$1077
$386
$126
$27
$539
Price
$500
$500
Breakeven Yield lb/ac
Variable Costs
2821
3192
Breakeven Yield lb/ac
Total Costs
3789
4660
PRELIMINARY SUMMARY OF SOUTH CAROLINA CROP ENTERPRISE ESTIMATES, 2017
NON-IRRIGATED
Conservation Tillage
Cotton
750 lbs
$0.72 /lb
$540
Peanuts
Corn
3,000 lbs
120 bu
$500 /ton $4.25 /bu
$750
$510
Soybeans
35 bu
$10.00 /bu
$350
Grain
Sorghum
80 bu
$4.04 /bu
$323
$514
RETURN ABOVE VARIABLE COST per ACRE$26
BREAKEVEN PRICE (Variable Cost)
$0.69 /lb
$684
$448
$66
$62
$456 /ton $3.73 /bu
$335
$15
$9.57 /bu
$300
$23
$3.75 /bu
$158
$493
-$143
$170
$470
-$147
$14.09 /bu
49 bu
$5.88 /bu
116 bu
EXPECTED YIELD per ACRE
EXPECTED SEASON AVG PRICE
GROSS RETURN per ACRE
TOTAL VARIABLE COSTS per ACRE
TOTAL SPECIFIED FIXED COSTS per ACRE $224
TOTAL COST EXCL. MGT per ACRE
RETURN TO MGT per ACRE
BREAKEVEN PRICE (Total Costs)
BREAKEVEN YIELD per ACRE
$738
-$198
$0.98 /lb
1025 lbs
$203
$887
-$137
$140
$588
-$78
$591 /ton $4.90 /bu
3,548 lbs
138 bu
PRELIMINARY SUMMARY OF SOUTH CAROLINA CROP ENTERPRISE ESTIMATES, 2017
IRRIGATED
Conservation Tillage
EXPECTED YIELD per ACRE
EXPECTED SEASON AVG PRICE
GROSS RETURN per ACRE
TOTAL VARIABLE COSTS per ACRE
RETURN ABOVE VARIABLE COST per
ACRE
BREAKEVEN PRICE (Variable Cost)
TOTAL SPECIFIED FIXED COSTS per
ACRE
TOTAL COST EXCL. MGT per ACRE
RETURN TO MGT per ACRE
BREAKEVEN PRICE (Total Costs)
BREAKEVEN YIELD per ACRE
Cotton
1,000 lbs
$0.72 /lb
$720
Peanuts
4,000 lbs
$500 /ton
$1,000
Corn
200 bu
$4.25 /bu
$850
Soybeans
55 bu
$10.00 /bu
$550
$580
$771
$660
$430
$140
$0.58 /lb
$229
$386 /ton
$190
$3.30 /bu
$120
$7.82 /bu
$332
$912
-$192
$307
$1,078
-$78
$285
$945
-$95
$258
$688
-$138
$0.91 /lb
1,267 lbs
$539 /ton
4,312 lbs
$4.73 /bu
222 bu
$12.51 /bu
69 bu
Corn vs Peanut
Corn Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *
$7.00
$6.50
$5.50
$5.00
$4.50
$4.00
$3.50
$3.41
$3.66
$3.78
$3.91
$4.03
$4.16
$4.28
$4.41
$4.53
$4.66
$4.78
$4.91
$5.03
$5.16
Non Irrigated Corn
$2.50
$570
$560
$550
$540
$530
$520
$510
$500
$490
$480
$470
$430
$460
Irrigated Corn
$2.00
$450
$3.00
$3.53
$440
Corn Price ($/bu)
$6.00
Peanut Price ($/ton)
* The above chart is based on the following assumptions:
1) Irrigated corn is compared to irrigated peanut and non-irrigated corn is compared to non-irrigated peanut.
2) Irrigated corn yield is 160 bu. and irrigated peanut yield is 4000 lbs.
3) Non-irrigated corn yield is 120 bu. and non-irrigated peanut yield is 3000 lbs.
4) Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.
Cotton vs. Peanut
Cotton Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *
$1.00
$0.95
Cotton Price ($/lb)
$0.90
$0.85
$0.80
$0.75
$0.70
$0.65
$0.60
$0.63
$0.65
$0.67
$0.69
$0.71
$0.73
$0.75
$0.77
$0.79
$0.81
$0.83
$0.85
$0.87
$0.89
$0.91
Non Irrigated Cotton
$0.55
Irrigated Cotton
$570
$560
$550
$540
$530
$520
$510
$500
$490
$480
$470
$460
$450
$440
$430
$0.50
Peanut Price ($/ton)
* The above chart is based on the following assumptions:
1) Irrigated cotton is compared to irrigated peanut and non-irrigated cotton is compared to non-irrigated peanut.
2) Irrigated cotton yield is 1000 lbs. and irrigated peanut yield is 4000 lbs.
3) Non-irrigated cotton yield is 750 lbs. and non-irrigated peanut yield is 3000 lbs.
4) Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.
Soybean vs. Peanut
Soybean Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *
$16.00
Soybean Price ($/bu)
$14.00
$12.00
$10.00
$8.00
$8.46
$6.00
$8.89
$9.31
$9.74
$10.17
$10.60
$11.03
$11.46
$11.89
$12.31
$12.74
$13.17
$13.60
$14.03
$14.46
Non Irrigated Soybean
Irrigated Soybean
$570
$560
$550
$540
$530
$520
$510
$500
$490
$480
$470
$460
$450
$440
$430
$4.00
Peanut Price ($/ton)
* The above chart is based on the following assumptions:
1) Irrigated soybean is compared to irrigated peanut and non-irrigated soybean is compared to non-irrigated peanut.
2) Irrigated soybean yield is 55 bu. and irrigated peanut yield is 4000 lbs.
3) Non-irrigated soybean yield is 35 bu. and non-irrigated peanut yield is 3000 lbs.
4) Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.
Crop Insurance Prices
2014
2015
2016
2017
Proj*
Corn
$4.49
$3.68
$3.81
$3.87
Cotton
$0.78
$0.63
$0.62
$0.71
Grain Sorghum
$4.38
$3.64
$3.75
$3.80
Peanut, Runner
$532.00 $416.20 $407.80
$395
Peanut, Virginia
$532.00 $482.80 $493.40
$439
Soybean
$11.19
$8.66
$8.91
*2017 as off 1/25/17, South Carolina (Feb 28 Closing Date)
$10.28
South Carolina Major Row Crops Planted Acres*
(1,000 Acres)
2011
Corn
360
Cotton
303
Peanuts
77
Soybeans
370
Tobacco (harvested) 15.5
Wheat
190
Total
1316
2012
330
299
110
380
12
235
1366
2013
350
258
81
320
14.5
280
1304
Compiled by Nathan Smith, Clemson Extension Economist,
Source: NASS USDA, QuickStats
*January 12, 2017 USDA NASS Annual Crop Production
2014
295
280
112
450
15.8
230
1383
2015
295
235
112
475
13
170
1300
2016
375
190
110
420
13
60
1168
2017 Expectations
2017
• Corn acres switch over
to soybeans.
• Cotton Acres up, 5%10%.
• Peanut up some.
• Soybean acres expected
to increase.
• Spring wheat down
CORN
COTTON
GRN.
SORGHUM
PEANUT
SOYBEAN
WHEAT
Thank You
Nathan Smith
nathan5@clemson.edu
Sandhill Research and Education Center
803-788-5700 (o)
229-392-3948 (m)

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