Soybeans Have Been More Volatile Than Corn This Fall

DR. AARON SMITH

KNOXVILLE, TENNESSEE

A shortened holiday week saw corn futures continue to move sideways to lower. The March corn contract is trading below the 50-day moving average of $4.95/bu. USDA projects national average corn yield, production,
and ending stocks at 174.9 bu/acre, 15.234 billion bushels, and 2.156 billion bushels. These estimates do not support higher prices. The most likely path to higher corn prices is a weather disruption in South America. 

Soybeans have been more volatile than corn this fall with a trading range of $12.70/bu to $14.20/bu. For the January contract, prices are threatening to drop below the 50-day moving average of $13.26/bu. If the 50-day moving average is crossed further price weakness is likely to occur. The domestic supply and demand picture is far more supportive of prices than the international picture. US ending stocks of 245 million bushels and crush of 2.3 billion bushels will help hold prices (or basis) at higher prices. However, foreign ending stocks of 3.962 billion bushels, up 544 million compared to last year, will continue to provide downward price pressure. Moving through the winter export sales and South American crop progress will be key factors in determining soybean price direction. 

After the runup in March cotton futures to 90 cents at the end of September prices have settled back into the previous March through July trading range of 77 to 85 cents, with a narrower range of 79 to 82 cents likely to persist. For cotton prices to im- prove export demand will need to increase. The marketing year low in exports this past week will not provide confidence that this is likely to occur. 

Corn

Ethanol production for the week ending November 17 was 1.023 million barrels per day, down 24,000 from the previous week. Ethanol stocks were 21.652 million barrels, up 698,000 barrels compared to last week. Corn net sales reported by exporters for November 10-16 were net sales of 56.4 million bushels for the 2023/24 marketing year. Exports for the same period were down 9% compared to last week at 24.6 million bushels. Corn export sales and commitments were 43% of the USDA estimated total annual exports for the 2023/24 marketing year (September 1 to August 31) compared to the previous 5-year average of 49%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at North- west, North-Central, and West-Central and weakened at West and Mississippi River elevators and barge points. Overall, basis for the week ranged from 55 under to 8 over, with an average of 25 under the December futures at elevators and barge points. 

The Crop Progress report estimated corn harvested at 93% compared to 88% last week, 96% last year, and a 5-year average of 91%. In Tennessee, corn harvested was estimated at 98% compared to 97% last week, 100% last year, and a 5-year average of 100%. Cash prices ranged from $4.28 to $4.90 at elevators and barge points. December 2023 corn futures closed at $4.63, down 4 cents since last Friday. For the week, December 2023 corn futures traded between $4.62 and $4.75. Dec/Mar and Dec/ May future spreads were 19 and 31 cents. March 2024 corn futures closed at $4.82, down 3 cents since last Friday. May 2024 corn futures closed at $4.94, down 2 cents since last Friday. Downside price protection could be obtained by purchasing a $5.10 December 2024 Put Option costing 43 cents establishing a $4.67 futures floor. 

Soybeans

Across Tennessee average soybean basis weakened or remained unchanged at West, North-Central, West-Central, and Mississippi River elevators and barge points and strengthened at Northwest elevators and barge points. Basis ranged from 52 under to 5 over the January futures contract, with an average basis at the end of the week of 26 under. Soybean net weekly sales reported by exporters were net sales of 35.3 million bushels for the 2023/24 marketing year and 0.3 million bushels for the 2024/25 marketing year. Exports for the same period were down 17% compared to last week at 61 million bushels. Soybean export sales and commitments were 61% of the USDA estimated total annual exports for the 2023/24 marketing year (September 1 to August 31), compared to the previous 5-year average of 65%. 

In Tennessee, the Crop Progress report estimated soybeans harvested at 93% compared to 87% last week, 92% last year, and a 5-year average of 84%. January 2024 soybean futures closed at $13.30, down 10 cents since last Friday. For the week, January 2024 soybean futures traded between $13.27 and $13.89. Cash soybean prices at elevators and barge points ranged from $13.26 to $13.85. March 2024 soybean-to-corn price ratio was 2.80 at the end of the week. Jan/Mar and Jan/Nov future spreads were 18 and -50 cents. March 2024 soybean futures closed at $13.48, down 8 cents since last Friday. November 2024 soybean futures closed at $12.80, down 3 cents since last Friday. Downside price protection could be achieved by purchasing a $12.80 November 2024 Put Option which would cost 88 cents and set a $11.92 futures floor. Nov/Dec soybean-to-corn price ratio was 2.51 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for November 24 were 77.49 cents/lb (41-4-34) and 79.74 cents/lb (31-3-35). Adjusted world price (AWP) was up 1 cent at 65.23 cents. Cotton net weekly sales reported by exporters were 322,200 bales for the 2023/24 marketing year and 5,700 bales for the 2024/25 marketing year. Exports for the same period were down 31% compared to last week at 77,900 bales – a marketing year low. Upland cotton export sales were 66% of the USDA estimated total annual exports for the 2023/24 marketing year (August 1 to July 31), compared to the previous 5-year average of 70%. 

The Crop Progress report estimated cotton harvested at 77% compared to 67% last week, 78% last year, and a 5-year average of 71%. In Tennessee, the Crop Progress report estimated cotton harvested at 95% compared to 86% last week, 89% last year, and a 5-year average of 85%. December 2023 cotton futures closed at 80.39 cents, up 1.47 cents since last Friday. For the week, December 2023 cotton futures traded between 76.68 and 79.75 cents. March 2024 cotton futures closed at 80.99 cents, down 0.52 cents since last Friday. May 2024 cotton futures closed at 81.69 cents, down 0.5 cents since last Friday. Dec/Mar and Dec/ May cotton futures spreads were 0.6 cents and 1.3 cents. Downside price protection could be obtained by purchasing a 78 cent December 2024 Put Option costing 5.3 cents establishing a 72.7 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 6.3 million bushels for the 2023/24 marketing year and 0.9 million bushels for the 2024/25 marketing year. Exports for the same period were down 4% compared to last week at 11 million bushels. Wheat export sales were 64% 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 69%. Wheat cash prices at elevators and barge points ranged from $4.78 to $5.36. December 2023 wheat futures closed at $5.48, down 2 cents since last Friday. December 2023 wheat futures traded between $5.41 and $5.63 this week. December wheat-to-corn price ratio was 1.18. Dec/Mar and Dec/Jul future spreads were 29 and 56 cents. March 2024 wheat futures closed at $5.77, up 2 cents since last Friday. 

The Crop Progress report estimated winter wheat condition at 48% good-to-excellent and 17% poor-to-very poor; winter wheat planted at 95% compared to 93% last week, 98% last year, and a 5-year average of 96%; and winter wheat emerged at 87% compared to 81% last week, 86% last year, and a 5-year average of 85%. In Tennessee, winter wheat condition was estimated at 58% good-to-excellent and 15% poor-to-very poor; winter wheat planted at 88% compared to 74% last week, 92% last year, and a 5-year average of 85%; and winter wheat emerged at 65% compared to 52% last week, 75% last year, and a 5- year average of 68%. July 2024 wheat futures closed at $6.04, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2024 Put Option costing 52 cents establishing a $5.58 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.78 to $5.89.  ∆

DR. AARON SMITH: University of Tennessee