Cotton Prices Continue To Fall

DR. AARON SMITH

KNOXVILLE, TENNESSEE

July corn futures broke above $4.60 after closing up for three consecutive days to close the week. On Friday, July corn futures reached a high of $4.68, its highest point since January 26. Flooding in parts of Brazil and Russian attacks on Ukrainian infrastructure have facilitated the bullish response in the market. The next level of price resistance for nearby corn futures is $4.70 with solid price support near $4.40. 

Soybean futures increased 40 cents at the end of the week due to heavy rainfall potentially causing production losses and quality deterioration in parts of Southern Brazil where harvest is still occurring. Nearby soybean prices have price support at $11.60 and price resistance at $12.40. US planting progress is ahead of last year and the 5-year average, however above normal precipitation is in the 30-day NOAA forecast which could restrict planting progress. 

Cotton prices have continued to fall past previous levels of support and are now trading near 75 cents. The last five trading days have had high levels of price volatility with daily price changes of +0.94, -1.42, -1.66, -0.99, and +1.79 cents. A glimpse of increased demand will be needed to help pull prices higher, however this week’s USDA export sales report was not supportive of higher prices with net old crop sales of only 97,400 bales. The supply side also remains bearish with good early season moisture across a large portion of the cotton belt. On April 30th USDA estimated that 8% of cotton production was in drought. Last year for the same week 38% of US cotton was in drought. 

July wheat futures have pulled back into the longer-term trading range of $6.00-$6.60 after spending two months trading between $5.40 and $5.90. Concerns over Russia-Ukraine escalations and lower year-over year global stocks of wheat will provide price support. The USDA currently projects global wheat stocks 468 million bushels less than last year’s ending stocks estimate. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 70 under to 15 over, with an average of 13 under the May futures at elevators and barge points. Ethanol production for the week ending April 26 was 0.987 million barrels per day, up 33,000 from the previous week. Ethanol stocks were 25.488 million barrels, down 0.245 million barrels compared to last week. Corn net sales reported by exporters for April 19-25 were net sales of 29.9 million bushels for the 2023/24 marketing year and 1.3 million bushels for the 2024/25 marketing year. Exports for the same period were down 19% compared to last week at 54.4 million bushels. Corn export sales and commitments were 88% 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 95%. May 2024 corn futures closed at $4.47, down 3 cents since last Friday. May/Jul and May/Dec future spreads were 13 and 35 cents. July 2024 corn futures closed at $4.60, up 10 cents since last Friday. For the week July 2024 corn futures traded between $4.43 and $4.68. 

The Crop Progress report estimated corn planted at 27% compared to 12% last week, 23% last year, and a 5-year average of 22%; and corn emerged at 7% compared to 3% last week, 5% last year, and a 5-year average of 4%. In Tennessee, corn planting was estimated at 49% compared to 31% last week, 57% last year, and a 5-year average of 45%. New crop cash prices ranged from $3.89 to $4.61 at elevators and barge points. December 2024 corn futures closed at $4.82, up 9 cents since last Friday. Downside price protection could be obtained by purchasing a $4.90 December 2024 Put Option costing 40 cents establishing a $4.50 futures floor. 

Soybeans

Across Tennessee the average soybean basis strengthened or remained unchanged at West, Northwest, West-Central, and Mississippi River elevators and barge points and weakened at North-Central elevators and barge points. Basis ranged from 33 un- der to 7 over the May futures contract, with an average basis at the end of the week of 15 under. Soybean net weekly sales reported by exporters were net sales of 15.2 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 36% compared to last week at 9.9 million bushels – a marketing year low. Soybean export sales and commitments were 91% 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 97%. May 2024 soybean futures closed at $12.01, up 42 cents since last Friday. May 2024 soybean-to-corn price ratio was 2.69 at the end of the week. May/Jul and May/Nov future spreads were 14 and 0 cents. July 2024 soybean futures closed at $12.15, up 38 cents since last Friday. For the week May 2024 soybean futures traded between $11.56 and $12.15. 

The Crop Progress report estimated soybeans planted at 18% compared to 8% last week, 16% last year, and a 5-year average of 10%. In Tennessee, soybean planting was estimated at 28% compared to 17% last week, 21% last year, and a 5-year average of 10%. New crop cash soybean prices at elevators and barge points ranged from $11.25 to $11.76. November 2024 soybean futures closed at $12.01, up 40 cents since last Friday. Downside price protection could be achieved by purchasing a $12.20 November 2024 Put Option which would cost 73 cents and set an $11.47 futures floor. Nov/Dec soybean-to-corn price ratio was 2.49 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for May 2 were 71.37 cents/lb (41-4-34) and 73.38 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.78 cents to 60.55 cents. Cotton net weekly sales reported by exporters were 97,400 bales for the 2023/24 marketing year and 34,400 bales for the 2024/25 marketing year. Exports for the same period were down 31% compared to last week at 180,000 bales. Upland cotton export sales were 98% 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 106%. May 2024 cotton futures closed at 77.36 cents, down 2.04 cents since last Friday. May/Jul and May/Dec cotton futures spreads were 0.7 cents and -1.39 cents. July 2024 cotton futures closed at 78.06 cents, down 2.84 cents since last Friday. For the week July 2024 cotton futures traded between 74.93 and 82.5 cents. 

The Crop Progress report estimated cotton planted at 15% compared to 11% last week, 14% last year, and a 5-year average of 14%. In Tennessee, cotton planting was estimated at 5% compared to 1% last week, 4% last year, and a 5-year average of 2%. December 2024 cotton futures closed at 75.97 cents, down 1.34 cents since last Friday. Downside price protection could be obtained by purchasing a 76 cent December 2024 Put Option costing 5.35 cents establishing a 70.65 cent futures floor. 

Wheat 

Wheat net weekly sales reported by exporters were net sales cancelations of 0.7 million bushels for the 2023/24 marketing year and net sales of 15 million bushels for the 2024/25 marketing year. Exports for the same period were down 11% compared to last week at 18.7 million bushels. Wheat export sales were 98% 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 105%. Wheat cash prices at elevators and barge points ranged from $5.49 to $5.81. May 2024 wheat futures closed at $6.06, up 3 cents since last Friday. May wheat -to-corn price ratio was 1.36. May/Jul and May/Sep future spreads were 16 and 37 cents. 

The Crop Progress report indicated winter wheat condition at 49% good-to-excellent and 16% poor-to-very poor; winter wheat headed at 30% compared to 17% last week, 23% last year, and a 5-year average of 21%; spring wheat planted at 34% compared to 15% last week, 10% last year, and a 5-year average of 19%; and spring wheat emerged at 5% compared to 2% last week, 2% last year, and a 5-year average of 5%. In Tennessee, winter wheat condition was estimated at 76% good-to-excellent and 7% poor-to-very poor; winter wheat jointing at 92% compared to 86% last week, 93% last year, and a 5-year average of 92%; and winter wheat headed at 60% compared to 36% last week, 54% last year, and a 5-year average of 49%. July 2024 wheat futures closed at $6.22, unchanged since last Friday. July 2024 wheat futures traded between $5.93 and $6.32 this week. Downside price protection could be obtained by purchasing a $6.25 July 2024 Put Option costing 33 cents establishing a $5.92 futures floor. New crop wheat cash prices at elevators and barge points ranged from $5.70 to $5.94. September 2024 wheat futures closed at $6.43, up 59 cents since last Friday.  ∆

DR. AARON SMITH: University of Tennessee