USDA Projections Would Continue To Support The Bearish Trend In Corn Prices

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Cotton was up; corn, soybeans, and wheat were down for the week. On Thursday, February 15, the USDA hosted its 100th annual Agricultural Outlook Forum. The event provides early projections for primary crops and livestock production for the 2024 production year. Below is a summary of the USDA’s projections for corn, soybeans, cotton, and wheat. 

Corn planted area, harvested area, and yield were projected at 91 million acres, 83.1 million acres, and 181 bu/acre, resulting in estimated production of 15.04 billion bushels. Harvested area is projected down 3.4 million acres compared to last year and yield is projected 3.7 bu/acre higher. Endings stocks are projected to increase to 2.532 billion bushels with a season average farm price of $4.40/bu. If realized, the USDA projections would continue to support the bearish trend in corn prices. 

Soybean planted area, harvested area, and yield were projected at 87.5 million acres, 86.6 million acres, and 52 bu/acre, resulting in estimated production of 4.505 billion bushels. Harvested area is projected up 4.2 million acres compared to last year and yield is projected 1.4 bu/acre higher. Endings stocks are projected to increase to 435 million bushels with a season average farm price of $11.20/bu, down $1.45 compared to this year’s estimate. If realized, the USDA projections would continue to support the bearish trend in soybean prices.

Cotton planted area, harvested area, and yield were projected at 11 million acres, 9.29 million acres, and 827 lbs/acre, resulting in estimated production of 16 million bales. Harvested area is projected up 31.4% compared to the previous year. Abandonment is projected down 15.4% and production is projected up 28.7% (3.57 million bales). World production is projected up 3.3% at 116.5 million bales and ending stocks for the 2024/25 marketing year are projected at 84.6 million bales, up 1.1%. 

Wheat planted area, harvested area, and yield were projected at 47 million acres, 38.4 million acres, and 49.5 bu/acre, resulting in estimated production of 1.9 billion bushels. Harvested area is projected up 1.1 million acres compared to last year and yield is projected 0.9 bu/acre higher. Ending stocks are projected to increase to 111 million bushels with a season average farm price of $6.00/bu, down $1.20 compared to this year’s estimate. If realized, the USDA projections would continue to support the bearish trend in wheat prices. Full details of the report can be accessed at:
Corn, soybeans, and wheat: https://www.usda.gov/sites/default/files/documents/2024AOF-grains-oilseeds-outlook.pdf Cotton: https://www.usda.gov/sites/default/files/documents/2024AOF-cotton-outlook.pdf
All numbers are as of market close on Thursday February 15, 2024. 

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 55 under to 15 over, with an average of 12 under the March futures at elevators and barge points. Ethanol production for the week ending February 9 was 1.083 million barrels per day, up 50,000 from the previous week. Ethanol stocks were 25.81 million barrels, up 1.031 million barrels compared to last week. Corn net sales reported by exporters for February 2-8 were net sales of 54.5 million bushels for the 2023/24 marketing year and 0.1 million bushels for the 2024/25 marketing year. Exports for the same period were up 15% compared to last week at 35.6 million bushels. Corn 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 73%. Cash prices for February-March delivery ranged from $3.72 to $4.50 at elevators and barge points. March 2024 corn futures closed at $4.17, down 12 cents since last Friday. For the week March 2024 corn futures traded be- tween $4.17 and $4.34. Mar/May and Mar/Dec future spreads were 12 and 39 cents. May 2024 corn futures closed at $4.29, down 12 cents since last Friday. 

December 2024 corn futures closed at $4.56, down 12 cents since last Friday. Downside price protection could be obtained by purchasing a $4.60 December 2024 Put Option costing 38 cents establishing a $4.22 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 28 under to 23 over the March futures contract, with an average basis at the end of the week of 2 over. Soybean net weekly sales reported by exporters were net sales of 13.0 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 12% compared to last week at 53.4 million bushels. Soybean export sales and commitments were 83% 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 84%. March 2024 soybean futures closed at $11.62, down 21 cents since last Friday. For the week March 2024 soybean futures traded between $11.60 and $11.97. Cash soybean prices for February-March at elevators and barge points ranged from $11.65 to $12.12. March 2024 soybean-to-corn price ratio was 2.79 at the end of the week. Mar/May and Mar/ Nov future spreads were 4 and -22 cents. May 2024 soybean futures closed at $11.66, down 24 cents since last Friday. 

November 2024 soybean futures closed at $11.40, down 23 cents since last Friday. Downside price protection could be achieved by purchasing an $11.60 November 2024 Put Option which would cost 77 cents and set a $10.83 futures floor. Nov/ Dec soybean-to-corn price ratio was 2.50 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for February 14 were 91.48 cents/lb (41-4-34) and 93.48cents/lb (31-3-35). Adjusted World Price (AWP) increased 3.4 cents to 73.44 cents. Cotton net weekly sales reported by exporters were 160,500 bales for the 2023/24 marketing year and 7,700 bales for the 2024/25 marketing year. Exports for the same period were up 29% compared to last week at 276,100 bales. Upland cotton export sales were 89% 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 89%. March 2024 cotton futures closed at 94.63 cents, up 2.85 cents since last Friday. For the week, March 2024 cotton futures traded between 89.4 and 95.2 cents. Mar/May and Mar/Dec cotton futures spreads were 0.68 cents and -9.79 cents. May 2024 cotton futures closed at 95.31 cents, up 3.09 cents since last Friday. 

December 2024 cotton futures closed at 84.84 cents, up 1.62 cents since last Friday. Downside price protection could be obtained by purchasing an 85 cent December 2024 Put Option costing 5.31 cents establishing a 79.69 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 12.8 million bushels for the 2023/24 marketing year and 1.8 million bushels for the 2024/25 marketing year. Exports for the same period were up 29% compared to last week at 14.9 million bushels. Wheat export sales were 90% 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 88%. Wheat cash prices at elevators and barge points ranged from $5.74 to $6.18. March 2024 wheat futures closed at $5.67, down 29 cents since last Friday. March 2024 wheat futures traded between $5.65 and $6.03 this week. March wheat-to-corn price ratio was 1.36. Mar/May and Mar/Jul future spreads were 0 and 3 cents. May 2024 wheat futures closed at $5.67, down 32 cents since last Friday. 

July 2024 wheat futures closed at $5.70, down 31 cents since last Friday. Downside price protection could be obtained by purchasing a $5.80 July 2024 Put Option costing 42 cents establishing a $5.39 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.54 to $5.92.  ∆

DR. AARON SMITH: University of Tennessee