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 Dryland Irrigated

Yield 3000 lb 4000 lb

Per Acre Per Ton Per Acre Per Ton

Variable Costs $684 $456 $771 $386

Fixed Costs $155 $104 $197 $126

Management $48 $32 $33 $27

Total Costs $887 $591 $1077 $539

Price $500 $500

Breakeven Yield lb/ac

Variable Costs2821 3192

Breakeven Yield lb/ac

Total Costs3789 4660

PRELIMINARY SUMMARY OF SOUTH CAROLINA CROP ENTERPRISE ESTIMATES, 2017

Conservation Tillage

EXPECTED YIELD per ACRE 750 lbs 3,000 lbs 120 bu 35 bu 80 bu

EXPECTED SEASON AVG PRICE $0.72 /lb $500 /ton $4.25 /bu $10.00 /bu $4.04 /bu

GROSS RETURN per ACRE

TOTAL VARIABLE COSTS per ACRE

RETURN ABOVE VARIABLE COST per ACRE

BREAKEVEN PRICE (Variable Cost) $0.69 /lb $456 /ton $3.73 /bu $9.57 /bu $3.75 /bu

TOTAL SPECIFIED FIXED COSTS per ACRE

TOTAL COST EXCL. MGT per ACRE

RETURN TO MGT per ACRE

BREAKEVEN PRICE (Total Costs) $0.98 /lb $591 /ton $4.90 /bu $14.09 /bu $5.88 /bu

BREAKEVEN YIELD per ACRE 1025 lbs 3,548 lbs 138 bu 49 bu 116 bu

$470

-$198 -$137 -$78 -$143 -$147

$738 $887 $588 $493

$224 $203 $140 $158 $170

$26 $66 $62 $15 $23

$514 $684 $448 $335 $300

$750 $510 $350 $323$540

Cotton

NON-IRRIGATED

Peanuts Corn Soybeans Sorghum

Grain

PRELIMINARY SUMMARY OF SOUTH CAROLINA CROP ENTERPRISE ESTIMATES, 2017

Conservation Tillage IRRIGATED

Cotton Peanuts Corn SoybeansEXPECTED YIELD per ACRE 1,000 lbs 4,000 lbs 200bu 55bu

EXPECTED SEASON AVG PRICE $0.72/lb $500/ton $4.25/bu $10.00/bu

GROSS RETURN per ACRE $720 $1,000 $850 $550

TOTAL VARIABLE COSTS per ACRE $580 $771 $660 $430RETURN ABOVE VARIABLE COST per ACRE $140 $229 $190 $120BREAKEVEN PRICE (Variable Cost) $0.58/lb $386/ton $3.30/bu $7.82/bu

TOTAL SPECIFIED FIXED COSTS per ACRE $332 $307 $285 $258TOTAL COST EXCL. MGT per ACRE $912 $1,078 $945 $688RETURN TO MGT per ACRE -$192 -$78 -$95 -$138

BREAKEVEN PRICE (Total Costs) $0.91/lb $539/ton $4.73/bu $12.51/bu

BREAKEVEN YIELD per ACRE 1,267 lbs 4,312 lbs 222bu 69bu

Corn vs Peanut

1)

2)

3)

4)

Irrigated corn is compared to irrigated peanut and non-irrigated corn is compared to non-irrigated peanut.

Irrigated corn yield is 160 bu. and irrigated peanut yield is 4000 lbs.

Non-irrigated corn yield is 120 bu. and non-irrigated peanut yield is 3000 lbs.

Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.

* The above chart is based on the following assumptions:

$3.41 $3.53

$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

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$43

0

$44

0

$45

0

$46

0

$47

0

$48

0

$49

0

$50

0

$51

0

$52

0

$53

0

$54

0

$55

0

$56

0

$57

0

Co

rn P

rice

($/b

u)

Peanut Price ($/ton)

Corn Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *

Non Irrigated Corn

Irrigated Corn

Cotton vs. Peanut

1)

2)

3)

4)

* The above chart is based on the following assumptions:

Irrigated cotton is compared to irrigated peanut and non-irrigated cotton is compared to non-irrigated peanut.

Irrigated cotton yield is 1000 lbs. and irrigated peanut yield is 4000 lbs.

Non-irrigated cotton yield is 750 lbs. and non-irrigated peanut yield is 3000 lbs.

Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.

$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

$0.50

$0.55

$0.60

$0.65

$0.70

$0.75

$0.80

$0.85

$0.90

$0.95

$1.00

$43

0

$44

0

$45

0

$46

0

$47

0

$48

0

$49

0

$50

0

$51

0

$52

0

$53

0

$54

0

$55

0

$56

0

$57

0

Co

tto

n P

rice

($/

lb)

Peanut Price ($/ton)

Cotton Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *

Non Irrigated Cotton

Irrigated Cotton

Soybean vs. Peanut

1)

2)

3)

4)

* The above chart is based on the following assumptions:

Irrigated soybean is compared to irrigated peanut and non-irrigated soybean is compared to non-irrigated peanut.

Irrigated soybean yield is 55 bu. and irrigated peanut yield is 4000 lbs.

Non-irrigated soybean yield is 35 bu. and non-irrigated peanut yield is 3000 lbs.

Prices shown are those needed to cover budgeted operating costs for conventional till production listed in the crop comparison tool.

$8.46 $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

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$43

0

$44

0

$45

0

$46

0

$47

0

$48

0

$49

0

$50

0

$51

0

$52

0

$53

0

$54

0

$55

0

$56

0

$57

0

Soyb

ean

Pri

ce (

$/b

u)

Peanut Price ($/ton)

Soybean Price Needed to Give Equal Returns Above Variable Costs to Peanuts at Budgeted Yields *

Non Irrigated Soybean

Irrigated Soybean

Crop Insurance Prices

2014 2015 20162017Proj*

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 $10.28

*2017 as off 1/25/17, South Carolina (Feb 28 Closing Date)

Compiled by Nathan Smith, Clemson Extension Economist, Source: NASS USDA, QuickStats*January 12, 2017 USDA NASS Annual Crop Production

2011 2012 2013 2014 2015 2016

Corn 360 330 350 295 295 375

Cotton 303 299 258 280 235 190

Peanuts 77 110 81 112 112 110

Soybeans 370 380 320 450 475 420

Tobacco (harvested) 15.5 12 14.5 15.8 13 13

Wheat 190 235 280 230 170 60

Total 1316 1366 1304 1383 1300 1168

South Carolina Major Row Crops Planted Acres*(1,000 Acres)

2017 Expectations

• Corn acres switch over to soybeans.

• Cotton Acres up, 5%-10%.

• Peanut up some.

• Soybean acres expected to increase.

• Spring wheat down

2017

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)