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Corn and Soybean Projected Profitability 2013 October 24, 2012

Corn and Soybean Projected Profitability 2013 October 24, 2012. Greg Halich 859-257-8841 Greg.Halich@uky.edu. 311 CE Barnhart Dept . Agricultural Economics University of Kentucky Lexington, KY 40546. Budget Assumptions. Input w/Greatest Impact on Profit? Fertilizer Cost.

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Corn and Soybean Projected Profitability 2013 October 24, 2012

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  1. Corn and Soybean Projected Profitability 2013October 24, 2012 Greg Halich 859-257-8841 Greg.Halich@uky.edu 311 CE Barnhart Dept. Agricultural Economics University of Kentucky Lexington, KY 40546

  2. Budget Assumptions Input w/Greatest Impact on Profit? • Fertilizer Cost. → Let’s look at fertilizer prices.

  3. Budget Assumptions

  4. Budget Assumptions

  5. Budget Assumptions

  6. Budget AssumptionsFertilizer Quantity (per acre) 125 bu corn: → 150 units N → 50 units P2O5 → 44 units K2O 39.1 bu soybeans: → 27 units P2O5 → 43 units K2O

  7. Budget AssumptionsFertilizer Quantity (per acre) 150 bu corn: → 160 units N → 60 units P2O5 → 53 units K2O 45.5 bu soybeans: → 32 units P2O5 → 50 units K2O

  8. Budget AssumptionsFertilizer Quantity (per acre) 175 bu corn: → 170 units N → 70 units P2O5 → 61 units K2O 54.3 bu soybeans: → 38 units P2O5 → 60 units K2O

  9. Budget Assumptions Land Rent: • Highly variable. • Not included in the budgets. → Subtract from net revenue.

  10. Budget Assumptions Machinery and Labor: • Fuel, Repairs, Deprecation, Labor.

  11. Budget Assumptions Machinery and Labor: • Fuel, Repairs, Deprecation, Labor. • Based on Custom Machinery Rates. → Increased 25%.

  12. Budget Assumptions Machinery and Labor: • Fuel, Repairs, Deprecation, Labor. • Based on Custom Machinery Rates. → Increased 25%. • Adjusted to $3.75 fuel price.

  13. Budget Assumptions Machinery and Labor: • Fuel, Repairs, Deprecation, Labor. • Based on Custom Machinery Rates. → Increased 25%. • Adjusted to $3.75 fuel price. • Trucking – 15 miles (one-way).

  14. Budget Assumptions Other: • $2.50/gallon LP 3 pts removed. • Direct Payment $20/acre.

  15. Three Soil Productivity Levels

  16. Three Soil Productivity Levels

  17. Three Soil Productivity Levels

  18. Following Costs Increase with Yield: • Fertilizer • Machinery and Labor • Drying (corn)

  19. Critical Budget AssumptionsSummary Does not include land rent.

  20. Critical Budget AssumptionsSummary Does not include land rent. Includes “non-cash” costs (e.g. depreciation/overhead, unpaid labor).

  21. Critical Budget AssumptionsSummary Does not include land rent. Includes “non-cash” costs (e.g. depreciation/overhead, unpaid labor). P and K application at removal rate.

  22. What if Commodity Prices Change? How will this impact profit? → Let’s look at two scenarios.

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