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Posted on 9/29/22 at 8:44 am to GREENHEAD22
I’m 2020 your 90 or so units of N for cotton cost you about $30/acre. In 22-23’ that same 90 units is gonna cost you more like $100/acre
Posted on 9/29/22 at 9:39 am to drakeT1217
quote:Per WSJ yesterday, cotton future prices down 40%+ from its spring (‘22) peak.
I’m 2020 your 90 or so units of N for cotton cost you about $30/acre. In 22-23’ that same 90 units is gonna cost you more like $100/acre
Posted on 9/29/22 at 10:41 am to White Bear
You would think or hope guys took advantage of the record prices and contracted as much as they could.
But back to the 2020 cost, if you go linear with it, which I am sure it is not. Prices were 350 an acre, realistically say 500 and acre. That makes a little more sense and puts net for only inputs at 200-350 an acre.
But back to the 2020 cost, if you go linear with it, which I am sure it is not. Prices were 350 an acre, realistically say 500 and acre. That makes a little more sense and puts net for only inputs at 200-350 an acre.
Posted on 9/29/22 at 1:37 pm to GREENHEAD22
Cotton farming is all about keeping a sharp pencil and working with the weather to manage the plant from day 1 to harvest.
It’s high risk, but highly rewarding. Honestly though, it’s rarely the best looking on a budget sheet, but always seems turn out just fine for us.
If you really have somebody that’s got a little runway before retirement that’s been in it for a long time and is willing to pay you a reasonable wage while teaching you, it’s your best shot to get in. Patience is a virtue in that situation, because the closer they get to retirement, the more they seem to say one more year.
FWIW, I don’t find the MSU budget to be all that accurate when comparing our farm history to it. It’s been a few years since I really paid attention to MSU though, so maybe it’s better now. We just use a 5 yr historical avg adjusted for current prices and that’s how we budget.
I have no clue how to grow a peanut, so I’m no help there.
It’s high risk, but highly rewarding. Honestly though, it’s rarely the best looking on a budget sheet, but always seems turn out just fine for us.
If you really have somebody that’s got a little runway before retirement that’s been in it for a long time and is willing to pay you a reasonable wage while teaching you, it’s your best shot to get in. Patience is a virtue in that situation, because the closer they get to retirement, the more they seem to say one more year.
FWIW, I don’t find the MSU budget to be all that accurate when comparing our farm history to it. It’s been a few years since I really paid attention to MSU though, so maybe it’s better now. We just use a 5 yr historical avg adjusted for current prices and that’s how we budget.
I have no clue how to grow a peanut, so I’m no help there.
Posted on 9/29/22 at 2:38 pm to GREENHEAD22
Hard work to make a living outside the delta cotton farming.
Price of cotton if you do get the yields you think you can get, that would be about $855 an acre on Cotton.
I would guess it would be between $100 and $150 per acre to lease.
I would estimate about $550 an acre for seed, fertilizer, and chemicals.
Looking at being up $180 an acre to pay farm loans and field hands and other expenses.
There is room to make decent money on a good year.
Price of cotton if you do get the yields you think you can get, that would be about $855 an acre on Cotton.
I would guess it would be between $100 and $150 per acre to lease.
I would estimate about $550 an acre for seed, fertilizer, and chemicals.
Looking at being up $180 an acre to pay farm loans and field hands and other expenses.
There is room to make decent money on a good year.
Posted on 9/29/22 at 3:16 pm to White Bear
current cotton contract price is $85.16
High was $154.76 on 5/4/22
Corn:
Current = $669.5
high = 818.25 on 4/29/22
Soybeans:
current = 1410
high = 1769 on 6/9/22
High was $154.76 on 5/4/22
Corn:
Current = $669.5
high = 818.25 on 4/29/22
Soybeans:
current = 1410
high = 1769 on 6/9/22
Posted on 9/29/22 at 5:53 pm to bbvdd
One thing that has to be considered with cotton is the ginning and grading of it. A lot of gins will give a $25-35/bale rebate, so that’s 5-7 cents of additional income. We, in the south, also tend to average a 2-3 cent premium after it’s graded.
What I’m saying is there’s more to it than market price * yield when it comes to cotton. There’s opportunities to incrementally carve out some extra income with grades and ginning at certain gins.
Also, politics… The cotton lobby is strong. Second only to the sugar lobby, I think. See the STAX program. Gives you the opportunity purchase additional insurance. I don’t look at insurance options more than about 2 days a year, but my understanding is that it’s fairly predictable whether or not it’s going to pay out according to our agent and it’s reasonably priced if you do decide to buy it and it doesn’t trigger, so you’re not out a shite load of money or anything.
What I’m saying is there’s more to it than market price * yield when it comes to cotton. There’s opportunities to incrementally carve out some extra income with grades and ginning at certain gins.
Also, politics… The cotton lobby is strong. Second only to the sugar lobby, I think. See the STAX program. Gives you the opportunity purchase additional insurance. I don’t look at insurance options more than about 2 days a year, but my understanding is that it’s fairly predictable whether or not it’s going to pay out according to our agent and it’s reasonably priced if you do decide to buy it and it doesn’t trigger, so you’re not out a shite load of money or anything.
Posted on 9/29/22 at 6:23 pm to deltafarmer
quote:
Lucrative is a term not usually associated with operating a farm.
Every farmer I know says they’re broke.
With their million dollar home, 100k truck and trophy wife in the background
Posted on 9/29/22 at 6:42 pm to prostyleoffensetime
That is good to know. It is not something that I will account for, I am very conservative, run numbers off lower than average prices and yields and higher than average cost. A minimum net of 200k doesn't seem to be looking to hard to pencil out and that is being conservative. The other half of his operation pencils out the same with considerable upside. He has a 3rd part to his operation but I don't want anything to do with that. He is a workaholic but more because he wants to than needs to.
This post was edited on 9/29/22 at 6:43 pm
Posted on 9/29/22 at 8:14 pm to GREENHEAD22
quote:
It is not something that I will account for, I am very conservative, run numbers off lower than average prices and yields and higher than average cost.
We don’t account for the potential grade premium, and conservatively estimate the gin rebate when budgeting. Definitely don’t count on STAX payment.
I was just pointing out some upside that isn’t talked about as much, and saying there’s more to consider than just the price of Dec Cotton #2.
Posted on 9/29/22 at 8:16 pm to prostyleoffensetime
I appreciate it, that is good to know and wasn't aware of it.
Posted on 9/29/22 at 8:29 pm to GREENHEAD22
I haven’t looked at my figures for this year yet, but I’d say $1000/ac for everything was insanely high. It depends on how much you shop for deals on inputs/equipment and what your labor costs are, but I’d have guessed $/ac around 7-800 before land rent. Just seed, chemicals, and fertilize I’d guess running around $500/ac.
Yield estimates for cotton are difficult to make. On average you may be far over what you need to pay all the bills, but eventually there’s going to be a year where the crop takes a beating (like this one has been). You need to make sure there’s enough margin or dry powder to survive even on those years. Never skimp on crop insurance.
Yield estimates for cotton are difficult to make. On average you may be far over what you need to pay all the bills, but eventually there’s going to be a year where the crop takes a beating (like this one has been). You need to make sure there’s enough margin or dry powder to survive even on those years. Never skimp on crop insurance.
Posted on 9/29/22 at 8:38 pm to deltaland
We feel broke. We have assets but no cash. We always owe a lot of money. I’m not complaining though. I wouldn’t want to do anything else. Every year is new and different. If you have a bad year you may have a carryover debt but you start over with hope. If my banker sticks with me, and he has for 30+ years I’m good
Posted on 9/29/22 at 9:03 pm to GREENHEAD22
Here’s LSU AgCenters budget for 2022. I don’t see much meat left on the bone at $.90 and 1100 lb yield. The cost numbers do not include rent (read the info at the beginning of the report)so if you’re paying 20% rent on cotton gross income that’s a big fkn bite off the top. These dudes that are in the game obviously know more than I do but I’d guess you’d have to cap with a cash rent of sorts around $120-150/acre. I would, no way I’d leave it open ended on a straight fifth, maybe a fifth not to exceed $x?
The economics look better than 10 -12 years ago when I was studying these same budgets. 2022 AgCenter Cotton Budgets
The economics look better than 10 -12 years ago when I was studying these same budgets. 2022 AgCenter Cotton Budgets
This post was edited on 9/29/22 at 9:05 pm
Posted on 9/29/22 at 9:09 pm to deltaland
100x this. Makes me think I could make a go of it if I just kept my same spending habits.
Posted on 9/29/22 at 9:15 pm to deltafarmer
quote:There’s a term for that as I recall.
We have assets but no cash. We always owe a lot of money.
Posted on 9/29/22 at 9:18 pm to White Bear
His rent is about half that and only has one full-time guy for labor. Also like I said, that 1100lb yield was better than the state average with highest average at 1350 so if that is the case there is a lot if farmers in the red.
He has purchased roughly 700 acres in the last two year and while not paying delta prices that is still a chunk of $ that I wouldn't think he could afford if he wasn't in the green more than not.
He has purchased roughly 700 acres in the last two year and while not paying delta prices that is still a chunk of $ that I wouldn't think he could afford if he wasn't in the green more than not.
This post was edited on 9/29/22 at 9:19 pm
Posted on 9/29/22 at 9:20 pm to White Bear
Yup, have to sharpen that pencil and tell mama to buy great value!
Posted on 9/29/22 at 9:23 pm to Decisions
Unfortunately for me in my area, there is pretty much no decent rent that isn’t either $150+ or 22.5-25% which makes things really suck.
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