Southern Ag Today

Author: Brian E. Mills

  • Crop Returns Comparison

    Crop Returns Comparison

    Agriculture has experienced a significant amount of change in both crop prices and input prices in the last couple of months. These changes can make it difficult for producers to determine which crop is going to be the most profitable for their situation. When deciding between two different crops a producer should examine what the costs of production for those two systems would be, along with their respective yield potential and crop price. Yield can vary from year to year so evaluating over a range of yield outcomes can give a better idea of how optimal crop choice could change as well.

    Figure 1 is an example output from the Net Returns Comparison Calculator developed at Mississippi State, showing the difference in net returns between an irrigated corn system and an irrigated soybean system across a range of yield outcomes. Returns were compared using costs of production from the Mississippi State Enterprise Budgets and prices of $6.00/bu for corn and $14.68/bu for soybeans. Corn is shown to have higher returns than soybeans at most of the yields examined. Soybeans have higher returns than corn when soybean yields are relatively high. In this situation the producer can see that corn will generally be the more profitable option, unless they have a field that historically produces high yielding soybeans and low yielding corn. These results will change as prices and input costs change. For example, a fertilizer price increase would negatively impact corn more than soybeans, making soybeans more competitive.

    The results shown in Figure 1 are not going to be the same for every producer. Every producer has their own unique costs and yield potential. It is important for them to evaluate their crop choices given their own situation. The Excel tool used to create Figure 1 can be found at https://www.agecon.msstate.edu/whatwedo/budgets.php (select and download the Net Returns Comparison Calculator). Users can compare net returns between various crop production practices for corn, cotton, rice, and soybeans. This tool can even be used for enterprises outside of Mississippi as users can customize the budgets to reflect their own farm’s costs, yields, and prices received. The more information collected on costs of production the more accurate these comparisons will be and ultimately the more informed decision on which crop is going to be the most profitable. 

    Figure 1. Comparison of Net Returns between a Corn and Soybean Production System with MSU Net Returns Comparison Tool

    Difference in Returns Between Corn and Soybeans $/ac

    Corn Yields bu/ac

    190200210220230240250
    45$       246$       303$       361$       419$       476$       534$       592
    50$       173$       231$       289$       347$       404$       462$       520
    55$       101$       159$       217$       275$       332$       390$       448
    60$         29$         87$       145$       202$       260$       318$       376
    65$        (43)$         15$         73$       130$       188$       246$       304
    70$     (115)$        (57)$           1$         58$       116$       174$       231
    75$     (187)$     (129)$        (71)$        (14)$         44$       102$       159

    Note: Any value in white, corn has higher returns than soybeans. Any value in red, soybeans has higher returns than corn

    Mills, Brian E. . “Crop Returns Comparison“. Southern Ag Today 2(13.3). March 23, 2022. Permalink

  • Rice Outlook

    Rice Outlook

    Rice acreage decreased significantly from 3.04 million acres in 2020 to 2.54 million acres in 2021. This decrease can be attributed to higher corn and soybean prices, as well as to the typical crop rotation seen in rice production. The majority of U.S. rice acres are in long-grain rice with the USDA projecting 2.08 million planted acres for 2021. 

    Long-grain rice production for 2021 is projected to be 144.2 million hundredweight, down 15.6% from 170.9 million hundredweight in 2020 (Figure 1). Despite the decrease in production, exports in 2021 are expected to remain steady at 65 million hundredweight. An average of 47% of U.S. rice production has been exported since 2008. Accounting for over 50 percent of exports, Japan, Mexico, Haiti, and Canada are by far the largest importers of U.S. rice.

    The price of long-grain rice for the 2021 crop is projected to be up to $13.00/cwt (Figure 2). Rice prices in general have been trending upwards since 2016. Prices are still well below the $15.40/cwt received by producers in 2013 and are also below the $14.00/cwt Effective Reference Price used to calculate payments for the Price Loss Coverage (PLC) farm program. However, U.S. prices are still relatively high compared to Asian markets which makes it difficult for U.S. rice to remain competitive in those areas. This has contributed to exports remaining flat since 2017.   

    Figure 1. Long-grain rice production, beginning stocks, ending stocks, and exports from USDA WASDE Report 2008-2021. * Projected

    Figure 2. Long-grain rice marketing year average price from USDA WASDE Report and PLC Effective Reference Price. *Projected marketing year average price

    Mills, Brian E. . “Rice Outlook.” Southern Ag Today 1(43.1b). October 18, 2021. Permalink