March Corn Futures Continued The Downward Trend

DR. AARON SMITH

KNOXVILLE, TENNESSEE

March corn futures continued the downward trend setting a new contract low of $4.36 3⁄4 on Thursday, January 18. Since October 20, March corn futures have fallen over 70 cents. Large US projected ending stocks and
rapidly improving prospects for South America continue to provide down-ward price pressure. Chinese buying of corn has increased, however this is likely rebuilding stocks at substantially lower prices than the past two years. 

Current March soybean futures are $1 under the 200-day moving average of $13.15. The collapse in prices started in mid-November and accelerated in January with the nearby futures contract shedding $2.00 in two months. Soybean prices have declined as South American production is projected to achieve another record year, driven primarily by a rebound in Argentina’s production from last year’s drought. Larger projected South American production will supplant US exports and push domestic prices lower as ending stocks increase. The next key level of support for soybean futures is near $11.80. 

On Friday, March cotton broke above the established trading range of 78 to 83 cents reaching a high of 84.72 cents before closing the day at 83.64 cents. Export sales were a marketing year this week which helped push prices higher. To maintain prices above 83 cents, export sales will need to continue to show strength. It seems more likely that export sales will pull back as prices approach 85 cents. 

July wheat futures prices challenged the contract low of $5.86 before rebounding above $6.00 at the close on Friday. The dominant trading range Since the end of August has been between $6.00 and $6.50. Corn prices have contributed to the price declines and will continue to influence wheat prices this winter. The USDA estimated Tennessee planted 380,000 acres of winter wheat this past fall, down 90,000 acres compared to the previous year (US winter wheat planted was estimated at 34.4 million acres down 2.27 million acres from the previous year). The projected price for winter wheat in Tennessee was set at $6.61 which provides a minimum level of support for those that purchased crop insurance. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North-west, North-Central, West-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 60 under to 20 over, with an average of 10 under the March futures at elevators and barge points. Ethanol production for the week ending January 12 was 1.054 million barrels per day, down 8,000 from the previous week. Ethanol stocks were 25.695 million barrels, up 1.324 million barrels compared to last week. Corn net sales reported by exporters for January 5-11 were net sales of 49.3 million bushels for the 2023/24 marketing year and 0.8 million bushels for the 2024/25 marketing year. Exports for the same period were down 4% compared to last week at 39.4 million bushels. Corn export sales and commitments were 59% 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 63%. Cash prices for February delivery ranged from $3.87 to $4.66 at elevators and barge points. March 2024 corn futures closed at $4.45, down 2 cents since last Friday. For the week, March 2024 corn futures traded between $4.36 and $4.51. Mar/May and Mar/Dec future spreads were 11 and 31 cents. May 2024 corn futures closed at $4.56, down 3 cents since last Friday. 

December 2024 corn futures closed at $4.76, down 5 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 December 2024 Put Option costing 40 cents establishing a $4.40 futures floor. 

Soybeans

Across Tennessee average soybean basis strengthened or remained unchanged at Northwest, West, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 33 under to 35 over the March futures contract, with an average basis at the end of the week of 11 over. Soybean net weekly sales reported by exporters were net sales of 28.7 million bushels for the 2023/24 marketing year and 0.06 million bushels for the 2024/25 marketing year. Exports for the same period were up 94% compared to last week at 61.4 million bushels. Soybean export sales and commitments were 78% 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 79%. March 2024 soybean futures closed at $12.13, down 11 cents since last Friday. For the week, March 2024 soybean futures traded between $12.01 and $12.37. Cash soybean prices for February at elevators and barge points ranged from $12.05 to $12.53. March 2024 soybean-to-corn price ratio was 2.73 at the end of the week. Mar/May and Mar/Nov future spreads were 10 and -22 cents. May 2024 soybean futures closed at $12.23, down 12 cents since last Friday. 

 November 2024 soybean futures closed at $11.91, down 10 cents since last Friday. Downside price protection could be achieved by purchasing a $12.00 November 2024 Put Option which would cost 74 cents and set an $11.26 futures floor. Nov/ Dec soybean-to-corn price ratio was 2.5 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for January 18 were 80.26 cents/lb (41-4-34) and 82.26 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.19 cents to 65.47 cents. Cotton net weekly sales reported by exporters were 420,000 bales for the 2023/24 marketing year and 17,600 for the 2024/25 marketing year. Exports for the same period were up 13% compared to last week at 257,700 bales – a marketing year high. Upland cotton export sales were 82% 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 82%. March 2024 cotton futures closed at 83.95 cents, up 2.64 cents since last Friday. For the week, March 2024 cotton futures traded between 80.68 and 84.72 cents. Mar/May and Mar/Dec cotton futures spreads were 0.94 cents and -3.73 cents. May 2024 cotton futures closed at 84.89 cents, up 2.6 cents since last Friday. 

December 2024 cotton futures closed at 80.22 cents, up 0.59 cents since last Friday. Downside price protection could be obtained by purchasing an 81 cent December 2024 Put Option costing 5.82 cents establishing a 75.18 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 26.0 million bushels for the 2023/24 marketing year. Exports for the same period were down 58% compared to last week at 9.0 million bushels. Wheat export sales were 82% 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 82%. Wheat cash prices at elevators and barge points ranged from $5.82 to $5.87. March 2024 wheat futures closed at $5.93, down 3 cents since last Friday. March 2024 wheat futures traded between $5.73 and $6.02 this week. March wheat-to-corn price ratio was 1.33. Mar/May and Mar/Jul future spreads were 10 and 16 cents. May 2024 wheat futures closed at $6.03, down 7 cents since last Friday. 

July 2024 wheat futures closed at $6.09, down 9 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2024 Put Option costing 43 cents establishing a $5.73 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.72 to $5.96.  ∆

DR. AARON SMITH: University of Tennessee