Category: Crop Marketing

Compared to last year, pre-planting relative financial risk between corn, cotton, and soybean production has changed for many mid-south crop producers. The change in pre-planting financial risk can be illustrated using projected crop insurance prices and crop budgets for 2024 and 2025. Crop insurance prices in this analysis were determined February 1-28 and crop budgets were University of Tennessee Crop Budgets for non-irrigated production. For ease of comparison, actual production history (APH) is unchanged between years and is equal to the target yield in the crop budgets.

Table 1 shows the difference between the crop insurance revenue guarantee for corn, cotton, and soybeans at a 75% buy-up coverage in 2024 and 2025. The crop insurance coverage per bushel or pound is the revenue guarantee divided by the APH. The crop insurance coverage level for corn increased slightly from $3.50/bu to $3.53/bu; however, coverage was reduced for cotton ($0.62/lb to $0.52/lb) and soybeans ($8.66/bu to $7.91/bu). At the same time, from 2024 and 2025, cost of production changed by +/- 2-3% depending on the commodity (Table 2). Cost of production will vary based on geographic location, targeted yield, and production practices.

Cost of production should be estimated for two separate measures—cash costs and economic costs. Cash costs are expenses that need to be paid during the production and marketing year, while economic costs include cash costs as well as ownership and other non-cash costs. In the short run, farms can operate covering cash costs, however, economic costs need to be covered for the operation to remain viable in the long-term. The cash and economic cost per bushel or pound are calculated by dividing cost by target yield (breakeven cash and economic cost per bushel or pound).

The crop insurance coverage per bushel or pound divided by the cash or economic cost provides an estimate of the relative financial risk by year and commodity. The analysis in Table 2 shows that in 2024, 74-75% of the economic cost of production for corn, cotton, and soybeans was covered by Revenue Protection crop insurance, compared to 76% for corn, 65% for cotton, and 67% for soybeans in 2025. For the start of the 2025 crop year, the financial risk mitigated by crop insurance favors corn over soybeans and cotton. 

Calculating relative cash and economic risk exposure between commodities produced on a farm can help guide crop insurance purchasing decisions (buyup coverage, unit structure, and companion policies) and guide a marketing and price risk management strategy to secure prices beyond crop insurance protection. 

Table 1. Revenue Protection Crop Insurance for Corn, Cotton, and Soybeans, 2024 and 2025

	2024 Crop Insurance
Commodity	Projected Crop Insurance Price($/bu or $/lb)	APH(bu or lb)	Coverage Level (%)	Revenue Guarantee ($/acre)	Crop Insurance Coverageper bu or lb
Corn	$4.66	175	75%	$612	$3.50
Cotton	$0.83	1,150	75%	$716	$0.62
Soybeans	$11.55	50	75%	$433	$8.66
	2025 Crop Insurance
Commodity	Projected Crop Insurance Price($/bu or $/lb)	APH(bu or lb)	Coverage Level (%)	Revenue Guarantee ($/acre)	Crop Insurance Coverage per bu or lb
Corn	$4.70	175	75%	$617	$3.53
Cotton	$0.69	1,150	75%	$595	$0.52
Soybeans	$10.54	50	75%	$395	$7.91

Table 2. 2024 and 2025 Estimated Cost of Production for Non-Irrigated Corn, Cotton, and Soybeans and Relative Crop Insurance Coverage 

	2024 Cost of Production
	Cash Costs ($/acre)	Economic Costs ($/acre)	Target Yield(bu or lb)	Cash Cost ($ per bu or lb)	Economic Cost ($ per bu or lb)	Crop Insurance Coverage divided by Cash Cost (%)	Crop Insurance Coverage divided by Economic Cost (%)
Corn	$697	$825	175	$3.98	$4.71	88%	74%
Cotton	$777	$958	1,150	$0.68	$0.83	92%	75%
Soybeans	$464	$579	50	$9.28	$11.58	93%	75%
	2025 Cost of Production
	Cash Costs ($/acre)	Economic Costs ($/acre)	Target Yield(bu or lb)	Cash Cost ($ per bu or lb)	Economic Cost ($ per bu or lb)	Crop Insurance Coverage divided by Cash Cost (%)	Crop Insurance Coverage divided by Economic Cost (%)
Corn	$696	$817	175	$3.98	$4.67	89%	76%
Cotton	$760	$932	1,150	$0.66	$0.81	78%	64%
Soybeans	$477	$587	50	$9.54	$11.74	83%	67%

References and Resources:

University of Tennessee Crop Budgets. 2024 and 2025. https://arec.tennessee.edu/extension/budgets/.

USDA Risk Management Price Discovery. https://public-rma.fpac.usda.gov/apps/PriceDiscovery.

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Smith, Aaron. “Changes in Relative Financial Risk for Corn, Cotton, and Soybeans in 2024 and 2025.” Southern Ag Today 5(10.3). March 5, 2025. Permalink

The February WASDE included an updated U.S. cotton balance sheet for 2024/25 (third column of numbers in the table below), with very minor month-over-month adjustments.  The supply side variables were unchanged from January, as were projected U.S. exports.  U.S. domestic use was cut 100,000 bales, which went straight to the bottom line of 100,000 additional ending stocks compared to last month.  This leaves U.S. ending stocks at a more bearish 4.9 million bales.

It is not surprising that the USDA left U.S. production unchanged from their January forecast.  As the ginning season winds down, cotton has two reliable measures to forecast production:  1) a count of actual physical bales (“running bales”) that are classed for fiber quality, and 2) a survey of running bales ginned.  Actual physical bales vary in weight but are around 500 pounds.  On the other hand, USDA-NASS cotton production forecasts and WASDE numbers are expressed in 480 pound “statistical bales.”  For conversion purposes, I assume a conversion factor of 1.02755 statistical bales for one running bale.

For the week ending February 6, USDA-AMS classing accounted for 13,855,096 running bales classed (or 14,236,804 statistical bales, about 99% of USDA-NASS’s production forecast). As of February 1, USDA-NASS also forecasted 13,961,700 running bales ginned (or 14,346,345 statistical bales, within about 60,000 bales of USDA-NASS’s production forecast).  So, the end of the 2024 crop processing is in sight, if not here, although they may sit on it until the final classing and ginning reports (typically in May). I don’t think there are any market changing surprises left on the production side that would affect prices moving forward.

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Robinson, John. “Late Season Indicators for 2024/25 U.S. Cotton Production.” Southern Ag Today 5(9.3). February 26, 2025. Permalink

On January 31, 2025, the White House announced a 25% import tariff on products from Canada and Mexico that was set to take effect on February 1^st but was soon after delayed for one month. Before the pause, Canada announced retaliatory tariffs on several agricultural products including peanut butter. Then on February 10^th, the White House announced a 25% tariff on aluminum and steel imports, and the European Union responded with a list of products that could be targeted with retaliatory tariffs, also including peanut butter. The recent trade disputes raise the question of how U.S. peanuts could potentially be affected.

While the U.S. only produces about 5% of the world’s peanuts, it exports 14% of the world’s peanuts. In the 2023/2024 marketing year, 22% of the 3.27 million tons of peanuts that the U.S. produced were exported to other countries. In contrast, 58% of U.S. peanuts went to domestic food production. The U.S. also exports significant amounts of processed peanuts, including peanut butter, which totaled over $256 million in the 2023/2024 marketing year. Thus, while export markets are not the largest destination for U.S. peanuts, they are still a significant portion, and the U.S. is a major peanut exporter. 

Figure 1 shows the top destinations for U.S. exported peanuts and processed peanut products over the past five marketing years. Mexico has been the top export destination for raw U.S. peanuts each of the past three years, at an average of 147,000 tons of peanuts per year. Canada ranks second over the same period, at 112,000 tons, on average. In the 2023/2024 marketing year, the European Union had a 126% increase in peanut imports from the U.S., totaling 142,000 tons. Lastly, China was the largest peanut export destination from 2019-2021, but has decreased its peanut imports from the U.S. the past three years. Overall, Mexico, Canada, China, and the European Union account for 90% of raw U.S. peanut exports. In contrast, 57% of U.S. processed peanut exports have gone to Canada and Mexico over the past five marketing years. The European Union nearly quadrupled its imports of processed peanut products from the U.S. this past marketing year. In sum, any reduction of U.S. raw or processed peanut exports to Canada, Mexico, and the European Union could present challenges to the U.S. peanut industry.

Figure 1: U.S. Peanut Exports by Destination, Form, and Marketing Year (thousand tons)

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Sawadgo, Wendiam. “How Might Trade Disputes Affect the U.S. Peanut Industry?” Southern Ag Today 5(8.3). February 19, 2025. Permalink

Midsouth Production Expenses and Profitability

The global rice market is poised for significant shifts in the 2024/25 marketing year, driven mostly by relative profitability, policy changes, and evolving global trade dynamics. Domestic rice production expectations, specifically in Arkansas, look to increase slightly, marking three consecutive years of increased rice acres and production. Shifting off the traditional crop rotation may signal rice’s operating margins are a more attractive investment to farmers (and their lenders) again in 2025. Based on enterprise budgets published by the University of Arkansas, operating expenses for rice look to improve year-over-year (Table 1). Nitrogen inputs show the only increase in per-acre expenditures, with a 4% increase from 2024, while seed and diesel expenses have significantly declined. It’s worth noting that a possible 2025 seed shortage could hinder the expansion of rice acres; if this comes to fruition, seed expenses will likely increase relative to 2024, severely impacting profitability (Haigwood, 2025).  

Table 1. 2023 – 25 Selected Rice Operating Expenses

	2023	2024	2025	% Change          (2024 – 2025)
Seed ($/ac)	$43.92	$71.28	$45.36	-36.36%***
Nitrogen (N) ($/lb)	$0.40	$0.25	$0.26	4.00%
Phosphate (P) ($/lb)	$0.45	$0.35	$0.35	0.00%
Potash (K) ($/lb)	$0.41	$0.25	$0.25	0.00%
Herbicide ($/ac)	$138.78	$135.89	$131.62	-3.14%
Insecticide ($/ac)	$3.01	$9.04	$9.04	0.00%
Fungicide ($/ac)	$24.10	$11.32	$11.32	0.00%
Diesel ($/gal)	$4.50	$3.65	$2.80	-23.29%

Per-acre operating costs in Arkansas amount to roughly ~$992/acre, based on 2025 operating expense forecasts. Table 1 highlights the profitability of mid-south rice production using Arkansas County, Arkansas. Using the 2023 Arkansas state average yield and price of 186 bu/acre and $6.13/bu, a mid-south rice farmer under an 80/20 crop share agreement can expect to breakeven at 203 bu/acre (assuming $6.13/bu) or at $6.67/bu (assuming 186 bu/acre). Table 1 below highlights per-acre profit above operating expenses (~$992/acre) under a range of prices and yields.  

Figure 1. Rice Net Operating Returns, Arkansas County, Arkansas, 2025, 80-20 Crop Share

Quick Trade Update

The Mexico rice market will be worth watching as we move into the 2024/25 marketing year. The USDA-FAS forecasts Mexico to import nearly 860,000 metric tons of paddy/rough rice (a 1% increase YoY). The U.S. is poised to remain the primary source of these imports due to its proximity and relationship with Mexico. However, Brazil (and other countries such as Argentina and Thailand) are expected to increase their market share of Mexican paddy rice imports from lower prices and tariff exemptions through the extended Presidential Anti-inflation decree, which exempts tariffs on countries without a free trade agreement (FTA) for rough rice through 2025 (USDA-FAS, 2025). However, long-grain milled rice is not included in the tariff exemption, and as such, the import tariff returns to 20% for countries besides the United States, which is exempt due to the USMCA trade agreement. This helps the U.S. maintain competitiveness and retain market share for milled rice exports to Mexico (USDA-ERS, 2025).  Still, domestic U.S. rice supply has outpaced total use (including exports), with a 10.7% increase in ending stocks, according to the January 2025 WASDE Report. Current ending stocks, coupled with the expectation for increased rice acres and global trade uncertainty, could continue to put downward pressure on rice prices and hinder U.S. export competitiveness into this marketing year.  

References

University of Arkansas, Division of Agriculture. (2025). Crop Enterprise Budgets for Arkansas. Retrieved January 2025, from, https://www.uaex.uada.edu/farm-ranch/economics-marketing/farm-planning/budgets/crop-budgets.aspx

United States Department of Agriculture, Economic Research Service. (2025). Rice Outlook: January 2025. Retrieved January 2025, from, https://downloads.usda.library.cornell.edu/usda-esmis/files/dn39x152w/3f464060c/t722k493j/RCS-25A.pdf

United States Department of Agriculture, Foreign Agricultural Service. (2025). Grain and Feed Update: Mexico, January 2025. Retrieved February 2025, from, https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Grain%20and%20Feed%20Update_Mexico%20City_Mexico_MX2025-0003.pdf

United States Department of Agriculture. (2025). World Agricultural Supply and Demand Estimates, January 10, 2025. Retrieved January 2025, from, https://www.usda.gov/oce/commodity/wasde/wasde0125.pdf

Haigwood, W.S. (2025). Rice Seed Availability Tightens Even More for 2025. Retrieved February 3, 2025, from, https://www.farmprogress.com/rice/rice-seed-availability-tightens-for-2025

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Loy, Ryan. “Midsouth Rice Production and Trade Update for 2024/25.” Southern Ag Today 5(7.3). February 12, 2025. Permalink

Knowing the expected cost of production for a farmer is essential for developing effective risk management and marketing strategies.  At an aggregate level, forecasts of costs provided by the USDA Economic Research Service (ERS) can offer a useful benchmark to help understand the gross revenue and cost of production for commodities at the national or regional level.  These forecasts can be used to determine breakeven prices to inform a risk management and marketing plan.

The ERS’s 2025 national cost of production forecast for major southern row crops (cotton, peanuts, corn, and soybeans) indicates a decline in fertilizer and interest costs, contributing to lower total operating cost for most crops compared to 2024, except cotton. However, rising custom rates, other variable expenses, and allocated overhead costs offset some of these savings, resulting in an expected total cost of production that is effectively the same (within +/- 1%) as the estimated 2024 cost of production.  As shown in Figure 1, peanuts has the highest forecasted total cost per acre ($1,181.84), followed by cotton ($899.96), corn ($871.09), and soybeans ($624.77), highlighting the significant investment in producing southern row crops. It is important to note that these forecasts were released by the ERS in November of 2024, before tariff threats were made, that if implemented may increase costs of some agricultural inputs, notably fertilizer.

At the currently forecasted cost of production, the negative returns experienced by row crop producers in 2024 are expected to remain a major concern for all four crops in 2025 if prices do not improve. Figure 1 shows the 2024/25 marketing year estimated gross revenue for each crop based on estimated yields and prices as of January 2025.  The gap between the two bars on each graph illustrates the potential shortfall in revenue needed to cover 2025 production costs if yields and prices are maintained at current 2024/25 marketing year levels.

Whether yields can provide increased revenue is a question for the future, but given national corn yields in 2024/25 being estimated at record levels and soybean yields being estimated at about 2% below record levels, it is more likely that price is going to be the primary driver to increase revenue for these crops. Meanwhile, multiple weather events made a major impact on cotton yields that were about 12% below record levels and peanut yields that were about 11% below record levels.  Therefore, some of the shortfall in revenue for cotton and peanuts could come from higher yields.

The other component of the revenue equation is price.  Determining a breakeven price assists in making informed decisions about the price necessary to cover production costs.  To determine a breakeven price, divide the forecasted cost of production by expected yield.  To help adjust for record yields or significant shortfalls, Table 1 shows the five-year average yield for each crop along with the computed breakeven price. At the current national forecasted cost of production and average yield for the last five years, the breakeven price for corn and peanuts would have to increase 17% over the estimated 2024/25 price.  For soybeans, the price would have to increase 21%, while cotton prices would have to rise 59%.  

Ultimately, the actual cost of production varies among individual farms, as it depends on many factors such as economies of size and scope, relationships with input suppliers, and adopted management practices. Actual yields also vary, and thus, producers need to consider their own potential breakeven price. Repeating this exercise for a specific farm can be helpful in planning, making risk management and marketing decisions, and finding potential opportunities to make efficiency improvements to reduce costs for the upcoming crop year.