Three dominant countries in soybean production are Brazil, U.S. and Argentina.

DR. AARON SMITH

KNOXVILLE, TENNESSEE

May corn futures bounced back from the six-month low of $6.06 3⁄4 on March 10, closing the week at $6.34 1⁄4. The previous level of support near $6.40 could provide short-term resistance as old crop prices rebound. Concerns over Brazil’s second crop corn planting progress provided a boost to corn prices this week. Moving forward Brazil’s planting pace and U.S. acreage projections will drive corn price direction. There remains a substantial amount of uncertainty in corn futures prices. Removing downside futures price risk and allowing for basis improvements, for both old and new crop, is a strategy that many Tennessee corn producers should contemplate. 

There are three dominant countries in soybean production. Brazil accounts for 41% of global production; U.S. for 31% of global production; and Argentina for 8.8% of global production (2022/23 crop year). Brazil is currently harvesting an estimated record crop, which is negative for global prices. Argentina’s estimated production continues to fall, due a severe drought across key production regions, which is positive for global prices. The U.S. is projected to have limited supplies (210 million bushels) at the end of this marketing year, which is positive for prices. The supply estimates from these three countries will continue to dictate price direction. 

Cotton futures prices have continued to be depressed by concerns over global demand and global economic stability. The collapse of Silicon Valley Bank and concerns with other financial institutions has added to trepidation over the global economy. This global economic uncertainty will make it very difficult for cotton prices to appreciate above 85 cents. It is currently more likely that prices will soften to the 74 to 78 cent price level in the short term. 

In the last six months July wheat prices have retreated from a high of $9.49 1⁄2 on October 10 to a low of $6.72 on March 10. There still remains a high degree of uncertainty in production and exports from Russia and Ukraine, which could result in short term volatility. However, projected global wheat production and supplies do not support prices above $8.00. A trading range between $6.50 and $7.80 is a realistic price range until more is known about the 2023 Northern Hemisphere winter wheat crop. 

Corn

Ethanol production for the week ending March 10 was 1.014 million barrels per day, up 4,000 from the previous week. Ethanol stocks were 26.394 million barrels, up 1.074 million compared to last week. Corn net sales reported by exporters for March 3-9 were 48.7 million bushels for the 2022/23 marketing year and 7.2 million bushels for the 2023/24 marketing year. Exports for the same period were up 11% compared to last week at 45.9 million bushels – a marketing year high. Corn export sales and commitments were 68% 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 82%. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 55 under to 37 over, with an average of 14 over the May futures at elevators and barge points. May 2023 corn futures closed at $6.34, up 17 cents since last Friday. For the week, May 2023 corn futures traded between $6.08 and $6.38. July 2023 corn futures closed at $6.17, up 11 cents since last Friday. May/Jul and May/Dec future spreads were -17 and -73 cents. 

New crop cash prices ranged from $4.77 to $5.58 at elevators and barge points. December 2023 corn futures closed at $5.61, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $5.70 December 2023 Put Option costing 46 cents establishing a $5.24 futures floor. 

Soybeans

Across Tennessee, average soybean basis weakened or remained unchanged at West, Northwest, West-Central, and Mississippi River elevators and barge points and strengthened at North-Central elevators and barge points. Basis ranged from 10 under to 53 over, with an average basis of 25 over the May futures contract. Soybean net weekly sales reported by exporters were 24.4 million bushels for the 2022/23 marketing year and net sales of 2.4 million bushels for the 2023/24 marketing year. Exports for the same period were up 33% compared to last week at 28.4 million bushels. Soybean export sales and commitments were 90% 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 90%. May 2023 soybean futures closed at $14.76, down 31 cents since last Friday. For the week, May 2023 soybean futures traded between $14.70 and $15.16. May/Jul and May/Nov future spreads were -15 and -163 cents. July 2023 soybean futures closed at $14.61, down 33 cents since last Friday. 

November 2023 soybean futures closed at $13.13, down 44 cents since last Friday. New crop cash soybean prices at elevators and barge points ranged from $12.92 to $13.58. Downside price protection could be achieved by purchasing a $13.20 November 2023 Put Option which would cost 76 cents and set a $12.44 futures floor. Nov/Dec 2023 soybean-to-corn price ratio was 2.34 at the end of the week. 

Cotton

Delta upland cotton spot price quotes for March 16 were 78.16 cents/lb (41-4-34) and 80.41 cents/lb (31-3-35). Adjusted world price (AWP) was down 3.37 cents at 68.58 cents. Cotton net weekly sales reported by exporters were net sales of 225,500 bales for the 2022/23 marketing year and 12,800 bales for the 2023/24 marketing year. Exports for the same period were down 5% compared to last week at 273,900 bales. Upland cotton export sales were 96% 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 98%. May 2023 cotton futures closed at 77.83 cents, down 0.35 cents since last Friday. For the week, May 2023 cotton futures traded between 76.86 and 82.49 cents. July 2023 cotton futures closed at 78.44 cents, down 0.5 cents since last Friday. May/Jul and May/Dec cotton futures spreads were 0.61 cents and 1.68 cents. 

December 2023 cotton futures closed at 79.51 cents, down 0.74 cents since last Friday. Downside price protection could be obtained by purchasing an 80 cent December 2023 Put Option costing 6.8 cents establishing a 73.2 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were 12.4 million bushels for the 2022/23 marketing year and 5.7 million bushels for the 2023/24 marketing year. Exports for the same period were down 34% compared to last week at 9.2 million bushels. Wheat export sales were 85% 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 98%. Wheat cash prices at elevators and barge points ranged from $6.55 to $6.98. May 2023 wheat futures closed at $7.10, up 31 cents since last Friday. May 2023 wheat futures traded between $6.67 and $7.12 this week. May wheat-to-corn price ratio was 1.12. May/Jul and May/Sep future spreads were 9 and 18 cents. 

New crop wheat cash prices at elevators and barge points ranged from $6.56 to $7.08. July 2023 wheat futures closed at $7.19, up 29 cents since last Friday. Downside price protection could be obtained by purchasing a $7.20 July 2023 Put Option costing 48 cents establishing a $6.72 futures floor. September 2023 wheat futures closed at $7.28, up 27 cents since last Friday. ∆

DR. AARON SMITH: University of Tennessee