March Cotton Traded At Its Highest Point Since November 1

DR. AARON SMITH

KNOXVILLE, TENNESSEE

On Friday, March corn futures moved 5 cents lower immediately following the WASDE report release. The only domestic adjustments made to the corn balance sheet were a 25 million bushel increase in exports and a
corresponding decline in ending stocks to 2.131 billion bushels. Foreign corn stocks were increased 34 million bushels, primarily due to increased stocks in Russia and Ukraine. Overall, the report can be deemed neutral to mildly bearish. March corn is likely to continue trading between $4.70 and $5.20 with a bias to the lower end of the range. 

January soybeans declined 20 cents following the WASDE report release. No changes were made to US supply and demand estimates. Foreign ending stocks were decreased 11 million bushels, largely due to a decline in Brazil’s production and ending stocks. Pre-report estimates were anticipating greater declines in Brazil soybean production and further tightening of US stocks – neither of which materialized. January futures have declined nearly $1.00 since November 15. The six-month trading range has been between $12.70 and $14.30. 

March cotton traded at its highest point since November 1st, closing the week at 81.44 cents. US production declined 310,000 bales due to an 18 lb/acre decline in estimated national average yield to 765 lbs/acre. Tighter US stocks, estimated at 3.1 million bales, will support prices, but for prices to surge higher, global cotton demand will need to improve. Foreign stocks were increased 1 million bales largely due to an increase in ending stocks for China. 

Analysis of this month’s USDA WASDE report and updated profitability estimates for corn, cotton, soybean, and double crop soybean and wheat production can be viewed at: https://arec.tennessee.edu/extension/tennessee-

Corn

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 20 to 5 under, with an average of 11 under the March futures at elevators and barge points. Ethanol production for the week ending December 1 was 1.076 million barrels per day, up 65,000 from the previous week. Ethanol stocks were 21.439 million barrels, up 60,000 barrels compared to last week. Corn net sales reported by ex- porters for November 24-30 were net sales of 50.7 million bushels for the 2023/24 marketing year and 0.9 million for the 2024/25 marketing year. Exports for the same period were up 117% compared to last week at 42.8 million bushels – a marketing year high. Corn export sales and commitments were 49% 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 53%. Cash prices ranged from $4.80 to $4.98 at elevators and barge points. March 2024 corn futures closed at $4.85, up 1 cent since last Friday. For the week, March 2024 corn futures traded between $4.81 and $4.93. Mar/May and Mar/Dec future spreads were 12 and 27 cents. May 2024 corn futures closed at $4.97, up 1 cent since last Friday. 

December 2024 corn futures closed at $5.12, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $5.20 December 2024 Put Option costing 44 cents establishing a $4.76 futures floor. 

Soybeans

Across Tennessee average soybean basis weakened or remained unchanged at Northwest, West, North-Central, West-Central, and Mississippi River elevators and barge points. Basis ranged from 53 under to even the January futures contract, with an average basis at the end of the week of 31 under. Soybean net weekly sales reported by exporters were net sales of 55.8 million bushels for the 2023/24 marketing year. Exports for the same period were down 8% compared to last week at 49.1 million bushels. Soybean export sales and commitments were 68% 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 69%. January 2024 soybean futures closed at $13.04, down 21 cents since last Friday. For the week, January 2024 soybean futures traded between $12.92 and $13.30. Cash soybean prices at elevators and barge points ranged from $12.60 to $13.27. March 2024 soybean-to-corn price ratio was 2.73 at the end of the week. Jan/Mar and Jan/Nov future spreads were 19 and -34 cents. March 2024 soybean futures closed at $13.23, down 22 cents since last Friday. 

November 2024 soybean futures closed at $12.70, down 12 cents since last Friday. Downside price protection could be achieved by purchasing a $12.80 November 2024 Put Option which would cost 82 cents and set a $11.98 futures floor. Nov/Dec soybean-to-corn price ratio was 2.48 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for December 7 were 80.09 cents/lb (41-4-34) and 82.09 cents/lb (31-3-35). Adjusted world price (AWP) was down 0.55 cents at 63.63 cents. Cotton net weekly sales reported by exporters were 116,400 bales for the 2023/24 marketing year and 29,600 bales for the 2024/25 marketing year. Exports for the same period were up 57% compared to last week at 139,200 bales. Upland cotton export sales were 69% 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 73%. March 2024 cotton futures closed at 81.44 cents, up 2.02 cents since last Friday. For the week, March 2024 cotton futures traded between 78.59 and 83.13 cents. Mar/May and Mar/Dec cotton futures spreads were 0.6 cents and 2.89 cents. May 2024 cotton futures closed at 82.04 cents, up 1.92 cents since last Friday. 

December 2024 cotton futures closed at 78.55 cents, up 1.16 cents since last Friday. Downside price protection could be obtained by purchasing a 79 cent December 2024 Put Option costing 5.71 cents establishing a 73.29 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 13.1 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 42% compared to last week at 7.3 million bushels. Wheat export sales were 69% 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 72%. Wheat cash prices at elevators and barge points ranged from $5.55 to $6.30. March 2024 wheat futures closed at $6.31, up 29 cents since last Friday. March 2024 wheat futures traded be- tween $6.00 and $6.49 this week. March wheat-to-corn price ratio was 1.30. Mar/May and Mar/Jul future spreads were 9 and 14 cents. May 2024 wheat futures closed at $6.40, up 23 cents since last Friday. 

July 2024 wheat futures closed at $6.45, up 17 cents since last Friday. Downside price protection could be obtained by purchasing a $6.50 July 2024 Put Option costing 52 cents establishing a $5.98 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.88 to $6.37.  ∆

DR. AARON SMITH: University of Tennessee