March 2023 corn futures closed at $6.75
DR. AARON SMITH
KNOXVILLE, TENNESSEE
The USDA Quarterly Grain Stocks Report was released on Thursday. The report estimated corn stored on December 1, 2022, totaled 10.8 billion bushels, down 7 percent from the previous year. The September-
November 2022 indicated disappearance was 4.30 billion bushels, compared with 4.67 billion bushels during the same period last year. Soybeans stored on December 1, 2022, totaled 3.02 billion bushels, down 4 percent from the previous year. Indicated disappearance for September-November 2022 totaled 1.53 billion bushels, down 4 percent from the same period a year earlier. All wheat stored on December 1, 2022, totaled 1.28 billion bushels, down 7 percent from a year ago. The September-November 2022 indicated disappearance is 498 million bushels, 26 per- cent above the same period a year earlier.
On January 12, the USDA released the Winter Wheat and Canola Seedings report. The report indicated 36.95 million acres seeded in the U.S., up 3.679 million acres compared to last year. Tennessee seeded acreage was projected at 410,000 acres, up 10,000 acres compared to last year. The largest increase was Texas, which was estimated to have planted 6.7 million acres, 1.4 million acres more than last year. Elevated futures prices as a result of continuation of the Russia-Ukraine conflict and a strong crop insurance projected price ($8.40/bu in Tennessee) have encouraged increased winter wheat plantings. Domestic markets will now focus on weather through the winter and the continuation of drought in key production regions. The Crop Progress report, on November 29, had winter wheat condition estimated at 34% good-to-excellent and 26% poor-to-very poor.
The January WASDE report decreased corn production 200 million bushels, decreasing harvested acres, but increasing national average yield 1 bu/acre to 173.2 bu/acre. On the demand side, the major revision was a 150-million-bushel reduction in projected exports. Overall corn ending stocks for the 2022/23 marketing year were decreased 15 million bushels to 1,242 million bushels. Soybean harvested acres and national average yield were both decreased resulting in a 70-million-bushel reduction in U.S. production. Exports were reduced 55 million bushels despite a strong export sales and shipment pace indicated by the weekly export sales report. Soybean ending stocks were projected at 210 million bushels, down 10 million compared to the previous month. Corn and soybean futures reacted positively to the report release.
Cotton prices did not fare as well due to the WASDE report. Harvested acres were decreased to 7.44 million acres, however national average yield was increased to 947 lbs/acre, resulting in an estimated increase in U.S. production of 440,000 bales. Additionally, exports were reduced 250,000 bales resulting in an increase in projected ending stocks of 700,000 bales. For the day, the March futures contract closed down 2.22 cents.
Corn
Ethanol production for the week ending January 6 was 0.943 million barrels per day, up 99,000 from the previous week. Ethanol stocks were 23.8 million barrels, down 644,000 compared to last week. Corn net sales reported by exporters for December 30-January 5 were 10.1 million bushels for the 2022/23 marketing year and 0.9 million bushels for the 23/24 marketing year. Exports for the same period were down 49% compared to last week at 15.2 million bushels. Corn export sales and commitments were 42% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to August 31) com- pared to the previous 5-year average of 60%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, North-Central, West-Central, and Mississippi River elevators and barge points and weakened at West elevators and barge points. Overall, basis for the week ranged from 45 under to 35 over, with an average of 13 over the March futures at elevators and barge points. March 2023 corn futures closed at $6.75, up 21 cents since last Friday. For the week, March 2023 corn futures traded between $6.48 and $6.76. May 2023 corn futures closed at $6.73, up 19 cents since last Friday. Mar/May and Mar/Dec future spreads were -2 and -77 cents.
New crop cash prices ranged from $5.00 to $5.89 at elevators and barge points. December 2023 corn futures closed at $5.98, up 7 cents since last Friday. Downside price protection could be obtained by purchasing a $6.00 December 2023 Put Option costing 51 cents establishing a $5.49 futures floor.
Soybeans
Across Tennessee, average soybean basis strengthened or remained unchanged at West, Northwest, North-Central, and Mississippi River elevators and barge points and weakened at West-Central elevators and barge points. Basis ranged from 10 under to 44 over, with an average basis of 20 over the January futures contract. Soybean net weekly sales reported by exporters were 26.4 million bushels for the 2022/23 marketing year and 2.4 million bushels for the 2023/24 marketing year. Exports for the same period were up 10% compared to last week at 59.6 million bushels. Soybean export sales and commitments were 80% 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 75%. January 2023 soybean futures closed at $15.38, up 37 cents since last Friday. For the week, January 2023 soybean futures traded between $15.01 and $15.41. Jan/Mar and Jan/Nov future spreads were -11 and -145 cents. March 2023 soybean futures closed at $15.27, up 35 cents since last Friday.
November 2023 soybean futures closed at $13.93, down 4 cents since last Friday. New crop cash soybean prices at elevators and barge points ranged from $13.55 to $13.91. Downside price protection could be achieved by purchasing a $14.00 November 2023 Put Option which would cost 89 cents and set a $13.11 futures floor. Nov/Dec 2023 soybean-to-corn price ratio was 2.33 at the end of the week.
Cotton
Delta upland cotton spot price quotes for January 12 were 82.54 cents/lb (41-4-34) and 84.79 cents/lb (31-3-35). Adjusted world price (AWP) was up 1.7 cents at 74.68 cents. Cotton net weekly sales reported by exporters were net sales of 72,600 bales for the 2022/23 marketing year. Exports for the same period were up 61% compared to last week at 150,500 bales. Up- land cotton export sales were 77% 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 80%. March 2023 cotton futures closed at 82.29 cents, down 3.39 cents since last Friday. For the week, March 2023 cotton futures traded between 81.65 and 87.97 cents. May 2023 cotton futures closed at 82.6 cents, down 3.05 cents since last Friday. Mar/May and Mar/Dec cotton futures spreads were 0.31 cents and -1.5 cents.
December 2023 cotton futures closed at 80.79 cents, down 1.84 cents since last Friday. Downside price protection could be obtained by purchasing an 81 cent December 2023 Put Option costing 9.49 cents establishing a 71.51 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were 3.3 million bushels for the 2022/23 marketing year and 0.06 million bushels for the 2023/24 marketing year. Exports for the same period were up 138% compared to last week at 7.1 million bushels. Wheat export sales were 72% 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 $7.33 to $7.53. March 2023 wheat futures closed at $7.43, unchanged since last Friday. March 2023 wheat futures traded between $7.20 and $7.58 this week. March wheat-to-corn price ratio was 1.10. May 2023 wheat futures closed at $7.52 up 1 cent since last Friday. Mar/May and Mar/Jul future spreads were 9 and 10 cents. New crop wheat cash prices at elevators and barge points ranged from $6.90 to $7.41. July 2023 wheat futures closed at $7.53 down 3 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