WASDE estimates corn exports for the 2022/23 marketing year at 2.075 billion bushels
DR. AARON SMITH
KNOXVILLE, TENNESSEE
Export demand will be a key factor in futures market price direction between now and March. The December WASDE estimates corn exports for the 2022/23 marketing year at 2.075 billion bushels, 14.7% of total
projected use; soybean exports at 2.045 billion bushels, 46.3% of projected use; cotton exports at 12.25 million bales, 84.8% of projected use; and wheat exports at 775 million bushels, 41.5% of projected use. Total export commitments as a percent of projected marketing year exports for corn (41%), cotton (76%), and wheat (71%) are behind last year’s pace (69%, 80%, and 85%) and the five-year averages (58%, 78%, and 80%). Soybean export commitments are 79% of the marketing year projected total, ahead of the five-year average (74%) and last year (73%).
January soybean futures breached $15.00/bu, on December 27, for the first time since September 13. The increased prices continue the five-month uptrend from the July 22nd low of $12.96 1⁄2. The price rally has been led by a combination of strong export shipments, favorable domestic crushing margins, and concerns over drought in Argentina. However, Brazil’s projected record soybean crop of 5.585 billion bushels should provide stiff competition for global demand starting at the end of January. Brazil’s crop is estimated at 20% greater than last year.
March corn futures have trended lower since October 10 moving from $7.11 3⁄4 to $6.54. The weak export sales pace has many traders speculating that USDA will further reduce projected exports for the current marketing year resulting in increased projected ending stocks from the current estimate of 1.257 billion bushels. Ethanol production for the week was the lowest since February 2021.
March cotton closed Friday up 3.10 cents this is the 26th time since November 1 that the March contract has closed up or down for the day by more than one cent. The volatility in old crop prices is likely to continue, due to a high degree of uncertainty with the global economy.
March wheat futures have not exceeded $8.00 in over a month.
Ethanol production for the week ending December 30 was 0.844 million barrels per day, down 119,000 from the previous week. Ethanol stocks were 24.444 million barrels, down 192,000 compared to last week. Corn net sales reported by exporters for December 23-29 were 12.6 million bushels for the 2022/23 marketing year. Exports for the same period were down 25% compared to last week at 30 million bushels. Corn export sales and commitments were 41% 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 58%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, North- Central, and West-Central elevators and barge points and weakened at West and Mississippi River elevators and barge points. Overall, basis for the week ranged from 45 under to 36 over, with an average of 12 over the March futures at elevators and barge points. March 2023 corn futures closed at $6.54, down 24 cents since last Friday. For the week, March 2023 corn futures traded between $6.48 and $6.81. May 2023 corn futures closed at $6.54, down 24 cents since last Friday. Mar/May and Mar/ Dec future spreads were 0 and -63 cents.
New crop cash prices ranged from $5.01 to $5.97 at elevators and barge points. December 2023 corn futures closed at $5.91, down 19 cents since last Friday. Downside price protection could be obtained by purchasing a $6.00 December 2023 Put Option costing 54 cents establishing a $5.46 futures floor.
Soybeans
Across Tennessee, average soybean basis strengthened or remained unchanged at Northwest and Mississippi River elevators and barge points and weakened at West, West-Central, and North-Central elevators and barge points. Basis ranged from 10 under to 58 over, with an average basis of 23 over the January futures contract. Soybean net weekly sales reported by exporters were 26.4 million bushels for the 2022/23 marketing year. Exports for the same period were down 20% compared to last week at 54.3 million bushels. Soybean export sales and commitments were 79% 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 74%. January 2023 soy- bean futures closed at $15.01, down 18 cents since last Friday. For the week, January 2023 soybean futures traded between $14.62 and $15.23. Jan/Mar and Jan/Nov future spreads were -9 and -104 cents. March 2023 soybean futures closed at $14.92, down 32 cents since last Friday.
November 2023 soybean futures closed at $13.97, down 19 cents since last Friday. New crop cash soybean prices at elevators and barge points ranged from $13.48 to $13.87. Downside price protection could be achieved by purchasing a $14.00 November 2023 Put Option which would cost 90 cents and set a $13.10 futures floor. Nov/Dec 2023 soybean-to-corn price ratio was 2.36 at the end of the week.
Cotton
Delta upland cotton spot price quotes for January 5 were 83.58 cents/lb. (41-4-34) and 85.83 cents/lb. (31-3-35). Adjusted world price (AWP) was down 1.52 cents at 72.98 cents. Cotton net weekly sales reported by exporters were net sales of 39,600 bales for the 2022/23 marketing year. Exports for the same period were down 33% compared to last week at 93,600 bales. Up- land cotton export sales were 76% 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 78%. March 2023 cotton futures closed at 85.68 cents, up 2.31 cents since last Friday. For the week, March 2023 cotton futures traded between 80.37 and 86.1 cents. May 2023 cotton futures closed at 85.65 cents, up 2.2 cents since last Friday. Mar/May and Mar/Dec cotton futures spreads were -0.03 cents and -3.05 cents.
December 2023 cotton futures closed at 82.63 cents, up 1.75 cents since last Friday. Downside price protection could be obtained by purchasing an 83 cent December 2023 Put Option costing 10.6 cents establishing a 72.4 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were 1.7 million bushels for the 2022/23 marketing year and 3.6 million bushels for the 2023/24 marketing year. Exports for the same period were down 76% compared to last week at 3.0 million bushels. Wheat export sales were 71% 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 81%. Wheat cash prices at elevators and barge points ranged from $7.28 to $7.86. March 2023 wheat futures closed at $7.43, down 49 cents since last Friday. March 2023 wheat futures traded between $7.36 and $7.94 this week. March wheat-to-corn price ratio was 1.14. May 2023 wheat futures closed at $7.51 down 47 cents since last Friday. Mar/May and Mar/Jul future spreads were 8 and 13 cents.
New crop wheat cash prices at elevators and barge points ranged from $7.01 to $7.72. July 2023 wheat futures closed at $7.56 down 30 cents since last Friday. Downside price protection could be obtained by purchasing a $7.60 July 2023 Put Option costing 62 cents establishing a $6.98 futures floor. ∆
DR. AARON SMITH, University of Tennessee