Nationally, Corn Acres Are Likely To Fall Between 90-93 Million Acres
DR. AARON SMITH
KNOXVILLE, TENNESSEE
May corn and soybean futures appear to be developing new trading ranges. The ranges could change as additional information is revealed regarding South America production and weather estimates and U.S. planted acreage and weather forecasts. For corn, the lower bound of the trading range is $4.30 and the upper bound is $4.50. For soybeans, the range is between $11.80 and $12.40.
Next week’s USDA Prospective Plantings report will provide new survey-based projections for U.S. planted acres. Nationally, corn acres are likely to fall between 90-93 million acres; soybean planted acres between 85-89 million acres; and cotton 11-12 million acres. For Tennessee, corn planted acreage will likely be between 750,000 and 1 million acres; soybeans 1.5 to 1.8 million acres; and cotton 320,000 to 380,000 acres. The report will be released March 28 at noon.
Weather will also be a major factor in price direction. Currently, the USDA estimates 34% of corn, 30% of soybeans, 12% of winter wheat, and 7% of cotton production to be in drought. The key areas to watch for intensification of drought are Iowa, Minnesota, and Southwest Texas. NOAA’s Monthly Temperature and Precipitation Outlook, issued March 21, projects above average temperatures for most of the Corn Belt and Southwest Texas. Precipitation is projected to be above average for the Southeast and the Mississippi River Portal from Louisiana to Missouri. Southwest Texas is projected to have below average precipitation in the next month. Additional information regarding Ag in Drought and 30-day forecasts can be found at https:// www.usda.gov/sites/default/files/documents/AgInDrought.pdf and https://www.cpc.ncep.noaa.gov/products/ predictions/30day/.
May cotton prices are approaching a key level of support. Cotton futures prices increased dramatically from 82.28 cents on January 16th to a high of 103.8 cents on February 28th. Two scenarios seem equally plausible at this time. Prices could trade between 91-96 cents or prices could fall to a trading range of 86-90 cents. Export demand, speculative positioning, and mill price fixations will be key in determining cotton prices.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 60 under to 8 over, with an average of 16 under the May futures at elevators and barge points. Ethanol production for the week ending March 15 was 1.046 million barrels per day, up 22,000 from the previous week. Ethanol stocks were 26.009 million barrels, up 0.227 million barrels compared to last week. Corn net sales reported by exporters for March 8-14 were net sales of 46.7 million bushels for the 2023/24 marketing year. Exports for the same period were up 21% compared to last week at 60.2 million bushels – a marketing year high. Corn 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 85%. May 2024 corn futures closed at $4.39, up 3 cents since last Friday. For the week May 2024 corn futures traded between $4.34 and $4.45. May/Jul and May/Dec future spreads were 13 and 36 cents. July 2024 corn futures closed at $4.52, up 3 cents since last Friday.
New crop cash prices ranged from $3.90 to $4.58 at elevators and barge points. December 2024 corn futures closed at $4.75, up 5 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 December 2024 Put Option costing 39 cents establishing a $4.41 futures floor.
Soybeans
Across Tennessee the average soybean basis strengthened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 33 under to 15 over the May futures contract, with an average basis at the end of the week of 4 under. Soybean net weekly sales reported by exporters were net sales of 13.8 million bushels for the 2023/24 marketing year and 0.01 million bushels for the 2024/25 marketing year. Exports for the same period were down 18% compared to last week at 28.4 million bushels. Soybean export sales and commitments were 86% 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 92%. May 2024 soybean futures closed at $11.92, down 6 cents since last Friday. For the week May 2024 soybean futures traded between $11.81 and $12.26. May 2024 soybean-to-corn price ratio was 2.72 at the end of the week. May/ Jul and May/Nov future spreads were 13 and -5 cents. July 2024 soybean futures closed at $12.05, down 7 cents since last Friday.
New crop cash soybean prices at elevators and barge points ranged from $11.48 to $11.85. November 2024 soybean futures closed at $11.87, down 3 cents since last Friday. Downside price protection could be achieved by purchasing a $12.00 November 2024 Put Option which would cost 72 cents and set a $11.28 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 March 21 were 89.21 cents/lb (41-4-34) and 91.21 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 3.6 cents to 72.5 cents. Cotton net weekly sales reported by exporters were 92,600 bales for the 2023/24 marketing year and 40,500 bales for the 2024/25 marketing year. Exports for the same period were up 35% compared to last week at 397,300 bales – a marketing year high. Upland cotton export sales were 93% 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 99%. May 2024 cotton futures closed at 91.53 cents, down 2.41 cents since last Friday. For the week, May 2024 cotton futures traded between 91.42 and 96.2 cents. May/Jul and May/Dec cotton futures spreads were 0.32 cents and -7.58 cents. July 2024 cotton futures closed at 91.85 cents, down 1.74 cents since last Friday.
December 2024 cotton futures closed at 83.95 cents, up 0.27 cents since last Friday. Downside price protection could be obtained by purchasing an 84 cent December 2024 Put Option costing 5 cents establishing a 79 cent futures floor.
Wheat
Wheat net weekly sales reported by exporters were net sales cancelations of 4.0 million bushels for the 2023/24 marketing year – a marketing year low - and net sales of 10.5 million bushels for the 2024/25 marketing year. Exports for the same period were down 13% compared to last week at 14.5 million bushels. Wheat export sales were 96% 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 98%. Wheat cash prices at elevators and barge points ranged from $5.12 to $5.25. May 2024 wheat futures closed at $5.54, up 26 cents since last Friday. May 2024 wheat futures traded between $5.27 and $5.59 this week. May wheat-to-corn price ratio was 1.26. May/Jul and May/Sep future spreads were 15 and 31 cents.
July 2024 wheat futures closed at $5.69, up 25 cents since last Friday. Downside price protection could be obtained by purchasing a $5.70 July 2024 Put Option costing 37 cents establishing a $5.33 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.27 to $5.48. September 2024 wheat futures closed at $5.85, up 25 cents since last Friday. ∆
DR. AARON SMITH: University of Tennessee