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South Dakota Grain Net Income Tool

Written collaboratively by Matthew Elliott, SDSU Extension Agribusiness Specialist, Lisa Elliott, former Assistant Professor & SDSU Extension Commodity Marketing Specialist and Jack Davis, SDSU Extension Crops Business Management Field Specialist.

Planting and marketing decisions this spring are more complicated given the recent spread of COVID-19. COVID-19 is likely to cause continued market volatility due to potential supply and demand disruptions domestically and abroad. Producers need to actively monitor market events and changes in commodity prices to reduce their financial risk.

South Dakota producers can use the SDSU Extension Net Income Tool to monitor their expected net income per acre given their location, commodity of interest, and changes to market prices. The tool gathers the most-recent end of day market prices to determine the latest expected net income for wheat, corn, and soybeans in the different regions of the state. To use the tool, users need to select the commodity they are interested, their regional location, and the month the future month they are considering marketing their production. Users can make adjustments to yield and cash basis based on expectations at their own farm. Users can also make adjustments to the default inputs costs to reflect their own farm cost levels.

The default yield values are based off of trend yield calculations derived from USDA-NASS crop reporting district yields since 2000. Users can make adjustments to yields using the sliders on the side bar panel. The adjustment is based on the percentile that average farm yields this year are expected to exceed deviations from historical trend yields. For example, if the user adjusts the yield value from the default 50% to 75% then the user is expecting their farm yield deviation would exceed 75% and would be less than only 25% of historical yield deviations at the crop reporting district. Alternatively, if the user lowers the adjustment to 25% then the user is expecting that farm yield deviations will only exceed 25% of historical trend yield deviations and would be less than 75% of historical yield deviations. Adjustments of the expected yield (red dot) from trend yield line (blue line) can be viewed in the “Trend Yield” tab.

The basis adjustments work in the same manner that yield adjustments work. Average basis values and historical basis ranges are calculated based on the future marketing month and historical basis values in the crop reporting district. Changes to the futures prices and basis can be seen in the “Futures Price and Basis” tab.

The default input costs are based on SDSU crop enterprise budgets for the different crop reporting districts. Microsoft Excel workbooks with the detailed costs estimates can be found at South Dakota Crop Budgets. The input costs can adjusted by selecting the appropriate number box and entering in new numbers in the “Input Costs” tab. Historical basis values can be viewed at South Dakota Historical Basis Map Tool and at the South Dakota Historical Basis Charts Tool.

Real-time changes in expected net incomes per acre by commodity can be monitored on the initial tab “Expected Net Income.” The user can examine the data in the charts more closely by hovering their mouse selector over the elements in the chart.

Net Income Tool