December corn futures fell to its lowest point since August 26
DR. AARON SMIT
KNOXVILLE, TENNESSEE
December corn futures fell to its lowest point since August 26, closing at $6.58. If prices fail to hold at $6.50 the next major level of support is near $6.25. Corn prices continue to be affected by poor export sales and shipments. Currently, USDA estimates export commitments at 27% of the marketing year total compared to a five-year average of 43%. If limited export sales continue, it is very likely that USDA will need to revise exports for the 2022/23 marketing year, which will raise U.S. projected ending stocks and decrease prices, baring other adjustments.
January soybean futures finished the week on a strong note closing up 27 cents on Friday at $14.50. Soybean futures have in- creased 50 cents in the past two weeks, in addition to basis offerings improving. Basis along the Mississippi River remains depressed but basis has moved off the extreme discounts that were prevalent a few weeks ago. With the South American soy- bean harvest less than three months away it would be extremely beneficial to see increased soybean export sales before the new year.
December cotton futures have come off the lows established at the end of October, when prices drifted to a low of 70.21. Last week was the major move with prices gaining over 10 cents. This week gains were more modest increasing 1.27 cents closing the week at 88.20. In the short term it is likely that cotton futures prices will level off and trade between 81 and 90 cents. Long term improvements in cotton prices will be influenced by improvements in demand.
Corn
Ethanol production for the week ending November 4 was 1.051 million barrels per day, up 11,000 from the previous week. Ethanol stocks were 22.192 million barrels, down 40,000 compared to last week. Corn net sales reported by exporters for October 22 to November 3 were 10.4 million bushels for the 2022/23 marketing year. Exports for the same period were down 42% com- pared to last week at 10.2 million bushels. Corn export sales and commitments were 27% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to August 31) compared to the previous 5-year average of 43%. Nationally, the Crop Progress report estimated corn harvested at 87% compared to 76% last week, 83% last year, and a 5-year average of 76%. In Tennessee, corn harvested was estimated at 99% compared to 97% last week, 94% last year, and a 5-year average of 97%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, Northwest, North-Central, West-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 66 under to 35 over, with an average of 2 under the December futures at elevators and barge points. New crop cash prices ranged from $6.04 to $7.00 at elevators and barge points. December 2022 corn futures closed at $6.58, down 23 cents since last Friday. For the week, December 2022 corn futures traded between $6.52 and $6.80. Dec/Mar and Dec/Dec future spreads were 5 and -49 cents.
March 2023 corn futures closed at $6.63, down 23 cents since last Friday. December 2023 corn futures closed at $6.09, down 16 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 December 2023 Put Option costing 57 cents establishing a $5.53 futures floor.
Soybeans
Across Tennessee, average soybean basis strengthened at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 69 under to 64 over, with an average basis of 32 over the January futures contract. Soybean net weekly sales reported by exporters were 29.2 million bushels for the 2022/23 marketing year. Exports for the same period were up 4% compared to last week at 101.1 million bushels. Soybean export sales and commitments were 59% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to August 31), compared to the previous 5-year average of 59%. Nationally, the Crop Progress report estimated soybeans harvested at 94% compared to 88% last week, 86% last year, and a 5-year average of 86%. In Tennessee, soybeans harvested were estimated at 80% compared to 73% last week, 64% last year, and a 5-year average of 69%. Nov/Dec 2022 soybean-to-corn price ratio was 2.21 at the end of the week. November 2022 soybean futures closed at $14.55, up 4 cents since last Friday. For the week, November 2022 soy- bean futures traded between $14.30 and $14.65. Nov/Jan and Nov/Nov future spreads were -5 and -68 cents.
January 2023 soybean futures closed at $14.50, down 12 cents since last Friday. Cash soybean prices at elevators and barge points ranged from $14.33 to $14.97. November 2023 soybean futures closed at $13.87, down 12 cents since last Friday. Down- side price protection could be achieved by purchasing a $14.00 November 2023 Put Option which would cost 106 cents and set a $12.94 futures floor. Nov/Dec 2023 soybean-to-corn price ratio was 2.28 at the end of the week.
Cotton
Delta upland cotton spot price quotes for November 11 were 89.45 cents/lb (41-4-34) and 91.70 cents/lb (31-3-35). Adjusted world price (AWP) was down 11.28 cents at 76.74 cents. Cotton net weekly sales reported by exporters were 145,800 bales for the 2022/23 marketing year and 11,400 bales for the 2023/24 marketing year. Exports for the same period were down 9% com- pared to last week at 108,100 bales. Upland cotton export sales were 75% of the USDA estimated total annual exports for the 2022/23 marketing year (August 1 to July 31), compared to the previous 5-year average of 64%. Nationally, the Crop Progress report estimated cotton harvested at 62% compared to 55% last week, 54% last year, and a 5-year average of 55%. In Tennessee, cotton harvested was estimated at 74% compared to 65% last week, 52% last year, and a 5-year average of 66%. December 2022 cotton futures closed at 88.2 cents, up 1.27 cents since last Friday. For the week, December 2022 cotton futures traded between 84.19 and 89.31 cents. Dec/Mar and Dec/Dec cotton futures spreads were -1.87 cents and -8.64 cents.
March 2023 cotton futures closed at 86.33 cents, up 0.66 cents since last Friday. December 2023 cotton futures closed at 79.56 cents, up 1.19 cents since last Friday. Downside price protection could be obtained by purchasing an 80 cent December 2022 Put Option costing 10.63 cents establishing a 69.37 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were 11.8 million bushels for the 2022/23 marketing year. Exports for the same period were up 28% compared to last week at 5.6 million bushels. Wheat export sales were 60% of the USDA estimated total annual exports for the 2022/23 marketing year (June 1 to May 31), compared to the previous 5-year average of 65%. Wheat cash prices at elevators and barge points ranged from $7.53 to $8.39. December 2022 wheat futures closed at $8.13, down 34 cents since last Friday. December 2022 wheat futures traded between $7.95 and $8.63 this week. December wheat-to-corn price ratio was 1.24. March 2023 wheat futures closed at $8.35, down 31 cents since last Friday. Dec/Mar and Dec/Jul future spreads were 22 and 39 cents.
Nationally, the Crop Progress report estimated winter wheat condition at 30% good-to-excellent and 44% poor-to-very poor; winter wheat planted at 92% compared to 87% last week, 90% last year, and a 5-year average of 90%; and winter wheat emerged at 73% compared to 62% last week, 73% last year, and a 5-year average of 74%. In Tennessee, winter wheat condition was 49% good-to-excellent and 8% poor-to-very poor; winter wheat planted at 80% compared to 63% last week, 69% last year, and a 5-year average of 68%; and winter wheat emerged at 56% compared to 36% last week, 48% last year, and a 5-year average of 47%. New crop wheat cash prices at elevators and barge points ranged from $7.86 to $8.54. July 2023 wheat futures closed at $8.52, down 28 cents since last Friday. Downside price protection could be obtained by purchasing an $8.60 July 2023 Put Option costing 97 cents establishing a $7.63 futures floor. ∆
DR. AARON SMITH: University of Tennessee