USDA Chose To Leave National Average Soybean Yield At 52 Bushels
DR. AARON SMITH
KNOXVILLE, TENNESSEE
The July WASDE report was released this week. The national average corn yield was decreased from 181.5 bu/acre to 177.5 bu/acre. The reduction was due to drier conditions across a wide area of the Corn Belt in May, June, and early July that will likely limit yields in many regions. In spite of the reduction in yield, production was only increased 55 million bushels from last month due to the incorporation of the June planted acre estimate of 94.1 million acres. There remains a great deal of uncertainty in the US corn crop but the current estimated carryover of 2.26 billion bushel, if realized, will provide downward pressure on prices.
Soybean acres planted were adjusted in the July WASDE report, but USDA chose to leave national average soybean yield at 52 bushels per acre. It is likely that USDA will revise the yield number when their August estimate is released. One of the key numbers to watch moving forward for soybeans is the export estimate – currently, 1.85 billion bushels, down 125 million from last month. The June Acreage report surprise of 83.5 million acres planted will limit supplies, particularly if yields are decreased from the current estimate. Additionally, as US prices climb export business will shift to Brazil and potentially lend support to record soybean plantings in South America this fall.
For cotton, harvested acres and national average yield were increased. Cotton planted and harvested acres were estimated at 11.09 and 9.53 million acres, a 14% abandonment rate, down substantially from last year’s 47%. Additional, harvested acres, mostly in Texas, contributed to the national average yield declining from last month by 10 lbs/acre to 831 lbs/acre. Cotton markets are likely to remain in the well-established range of 77-85 cents into August when additional production information will be known. The USD index achieved its lowest level since April 2022. The index closed at 99.605, down 4.5% from the start of the year. A lower USD dollar increases the competitiveness of US agricultural exports to global markets.
Ethanol production for the week ending July 7 was 1.032 million barrels per day, down 28,000 barrels from the previous week. Ethanol stocks were 22.658 million barrels, down 0.398 million compared to last week. Corn net sales reported by exporters for June 30-July 6 were net sales of 18.4 million bushels for the 2022/23 marketing year and 18.5 million bushels for the 2023/24 marketing year. Exports for the same period were down 30% compared to last week at 19.4 million bushels. Corn export sales and commitments were 94% 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 102%. 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 20 under to 10 over, with an average of 7 under the September futures at elevators and barge points.
The Crop Progress report estimated corn condition at 55% good-to-excellent and 14% poor-to-very poor; corn silking at 22% compared to 8% last week, 14% last year, and a 5-year average of 21%; and corn dough at 3% compared to 2% last year and a 5 -year average of 2%. In Tennessee, corn condition was 68% good-to-excellent and 8% poor-to-very poor; corn silking was 71% compared to 51% last week, 64% last year, and a 5-year average of 66%; and corn dough at 15% compared to 4% last week, 10% last year, and a 5-year average of 17%. New crop cash prices ranged from $3.99 to $4.86 at elevators and barge points. September 2023 corn futures closed at $5.06, up 19 cents since last Friday. For the week, September 2023 corn futures traded between $4.74 and $5.08. Sep/Dec and Sep/Mar future spreads were 7 and 19 cents. December 2023 corn futures closed at $5.13, up 19 cents since last Friday. Downside price protection could be obtained by purchasing a $5.20 December 2023 Put Option costing 32 cents establishing a $4.88 futures floor. March 2024 corn futures closed at $5.25, up 19 cents since last Fri- day.
Soybeans
Across Tennessee average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 10 to 60 over, with an average basis of 37 over the August futures contract. Soybean net weekly sales reported by exporters were 3.0 million bushels for the 2022/23 marketing year and 7.7 million bushels for the 2023/24 marketing year. Exports for the same period were up 27% compared to last week at 12.4 million bushels. Soybean export sales and commitments were 98% 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 103%. August 2023 soybean futures closed at $14.80, up 53 cents since last Friday. For the week, August 2023 soybean futures traded between $14.27 and $14.98. Aug/Sep and Aug/Nov future spreads were -81 and -110 cents. September 2023 soybean futures closed at $13.99, up 61 cents since last Friday. September soybean-to-corn price ratio was 2.76 at the end of the week.
Ethanol production for the week ending July 7 was 1.032 million barrels per day, down 28,000 barrels from the previous week. Ethanol stocks were 22.658 million barrels, down 0.398 million compared to last week. Corn net sales reported by exporters for June 30-July 6 were net sales of 18.4 million bushels for the 2022/23 marketing year and 18.5 million bushels for the 2023/24 marketing year. Exports for the same period were down 30% compared to last week at 19.4 million bushels. Corn export sales and commitments were 94% of the USDA estimated total annual exports for the 2022/23 marketing year (September 1 to Au- gust 31) compared to the previous 5-year average of 102%. 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 20 under to 10 over, with an average of 7 under the September futures at elevators and barge points.
The Crop Progress report estimated corn condition at 55% good-to-excellent and 14% poor-to-very poor; corn silking at 22% compared to 8% last week, 14% last year, and a 5-year average of 21%; and corn dough at 3% compared to 2% last year and a 5 -year average of 2%. In Tennessee, corn condition was 68% good-to-excellent and 8% poor-to-very poor; corn silking was 71% compared to 51% last week, 64% last year, and a 5-year average of 66%; and corn dough at 15% compared to 4% last week, 10% last year, and a 5-year average of 17%. New crop cash prices ranged from $3.99 to $4.86 at elevators and barge points. September 2023 corn futures closed at $5.06, up 19 cents since last Friday. For the week, September 2023 corn futures traded between $4.74 and $5.08. Sep/Dec and Sep/Mar future spreads were 7 and 19 cents. December 2023 corn futures closed at $5.13, up 19 cents since last Friday. Downside price protection could be obtained by purchasing a $5.20 December 2023 Put Option costing 32 cents establishing a $4.88 futures floor. March 2024 corn futures closed at $5.25, up 19 cents since last Fri- day.
Soybeans
Across Tennessee average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 10 to 60 over, with an average basis of 37 over the August futures contract. Soybean net weekly sales reported by exporters were 3.0 million bushels for the 2022/23 marketing year and 7.7 million bushels for the 2023/24 marketing year. Exports for the same period were up 27% compared to last week at 12.4 million bushels. Soybean export sales and commitments were 98% 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 103%. August 2023 soybean futures closed at $14.80, up 53 cents since last Friday. For the week, August 2023 soybean futures traded between $14.27 and $14.98. Aug/Sep and Aug/Nov future spreads were -81 and -110 cents. September 2023 soybean futures closed at $13.99, up 61 cents since last Friday. September soybean-to-corn price ratio was 2.76 at the end of the week.
2023 Put Option costing 4.34 cents establishing a 77.66 cent futures floor. March 2024 cotton futures closed at 81.35 cents, up 0.37 cents since last Friday. May 2023 cotton futures closed at 81.32 cents, up 0.28 cents since last Friday. Dec/Mar and Dec/ May cotton futures spreads were 0.13 cents and 0.10 cents.
Wheat
Wheat net weekly sales reported by exporters were net sales of 14.5 million bushels for the 2023/24 marketing year. Exports for the same period were up 26% compared to last week at 14.1 million bushels. Wheat export sales were 25% of the USDA estimated total annual exports for the 2023/24 marketing year (June 1 to May 31), compared to the previous 5-year average of 33%. Wheat cash prices at elevators and barge points ranged from $5.77 to $6.23.
The Crop Progress report estimated winter wheat condition at 40% good-to-excellent and 28% poor-to-very poor; winter wheat harvested at 46% compared to 37% last week, 62% last year, and a 5-year average of 59%; spring wheat condition at 47% good-to-excellent and 16% poor-to-very poor; and spring wheat headed at 72% compared to 51% last week, 41% last year, and a 5-year average of 67%. In Tennessee, winter wheat harvested was estimated at 95% compared to 88% last week. September 2023 wheat futures closed at $6.61, up 12 cents since last Friday. September 2023 wheat futures traded between $6.22 and $6.65 this week. September wheat-to-corn price ratio was 1.31. Sep/Dec and Sep/Jul future spreads were 19 and 46 cents. December 2023 wheat futures closed at $6.80, up 14 cents since last Friday. July 2024 wheat futures closed at $7.07, up 14 cents since last Friday. Downside price protection could be obtained by purchasing a $7.10 July 2024 Put Option costing 70 cents establishing a $6.40 futures floor. ∆
DR. AARON SMITH: University of Tennessee