New Crop Prices Started Showing Signs Of Weakness
DR. AARON SMITH
KNOXVILLE, TENNESSEE
Weather has provided a double edge sword for markets this spring. Several areas have seen delays in planting due to frequent rains prohibiting field work and planting. This has created concerns with the number of
acres of corn and cotton planted and the potential for lower yields, due to planting outside the optimal window. Field work and planting delays have provided support for maintaining or improving commodity prices. The negative for prices has been the alleviation of drought across key production regions for corn, soybeans, cotton, and winter wheat. Compared to a year ago corn in moderate or more intense drought is down 29%, at 5% of production, soybeans down 25%, at 3% of production, cotton is down 23%, at 5% of production and winter wheat is down 21%, at 25% of production. Forecasts can change, however most of the key production regions for corn, soybeans, cotton, and spring wheat have 30-day NOAA forecasts of average to above average precipitation and average to slightly above average temperatures. If planting can be completed, the 2024 crop is likely to have sufficient moisture early in the growing season.
New crop prices started showing signs of weakness this week. December corn futures were trading above $4.90 at the start of the week before closing on Friday below $4.70. November soybeans were above $12.20 before dropping almost 40 cents to close the week at $11.84. December cotton dropped 4 cents after getting within 0.55 cents of the 80-cent level. Prices appear to be heading back towards established early spring price ranges of $4.60 to $4.80 for corn, $11.50 to $12.00 for soybeans, and 74 to 78 cents for cotton.
Wheat prices have been strongly influenced by global influences. Production concerns from Russia and Ukraine may reduce global export supplies from the region. Russia has been the largest wheat export in the world the past few years, so there may be an opportunity in the 2024/25 marketing year for the US to increase wheat exports if other global suppliers have reduced production. July wheat futures hit $7.20 at the start of the week before closing at $6.78. More volatility is likely for wheat with prices. However, in the short term it is most likely trade will be between $6.50 and $7.00.
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 8 over, with an average of 20 under the July futures at elevators and barge points. Ethanol production for the week ending May 24 was 1.068 million barrels per day, up 49,000 from the previous week. Ethanol stocks were 23.207 million barrels, down 1.005 million barrels compared to last week. Corn net sales reported by exporters for May 17-23 were net sales of 31.9 million bushels for the 2023/24 marketing year and 7.4 million bushels for the 2024/25 marketing year. Exports for the same period were down 28% compared to last week at 41.1 million bushels. Corn export sales and commitments were 92% 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 98%. July 2024 corn futures closed at $4.46, down 18 cents since last Friday. Jul/Sep and July/Dec future spreads were 8 and 21 cents. For the week July 2024 corn futures traded between $4.45 and $4.71.
The Crop Progress report estimated corn planted at 83% compared to 70% last week, 89% last year, and a 5-year average of 82%; and corn emerged at 58% compared to 40% last week, 66% last year, and a 5-year average of 58%. In Tennessee, corn condition was estimated at 66% good-to-excellent and 6% poor-to-very poor; corn planting at 87% compared to 83% last week, 96% last year, and a 5-year average of 93%; and corn emerged at 72% compared to 62% last week, 85% last year, and a 5-year average of 79%. September 2024 corn futures closed at $4.54, down 20 cents since last Friday. New crop cash prices ranged from $3.91 to $4.71 at elevators and barge points. December 2024 corn futures closed at $4.67, down 21 cents since last Friday. Downside price protection could be obtained by purchasing a $4.70 December 2024 Put Option costing 32 cents establishing a $4.38 futures floor.
Soybeans
Across Tennessee the average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 38 under to even the July futures contract, with an average basis at the end of the week of 21 under. Soybean net weekly sales reported by exporters were net sales of 12.1 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 19% compared to last week at 7.7 million bushels – a marketing year low. Soybean export sales and commitments were 93% 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 99%. July 2024 soybean futures closed at $12.05, down 43 cents since last Friday. For the week July 2024 soybean futures traded between $12.02 and $12.54. July 2024 soybean-to-corn price ratio was 2.70 at the end of the week. Jul/Aug and Jul/Nov future spreads were -2 and -21 cents. August 2024 soybean futures closed at $12.03, down 42 cents since last Friday.
The Crop Progress report estimated soybeans planted at 68% compared to 52% last week, 78% last year, and a 5-year average of 63%; and soybeans emerged at 39% compared to 26% last week, 50% last year, and a 5-year average of 36%. In Tennessee, soybean planting was estimated at 60% compared to 53% last week, 66% last year, and a 5-year average of 55%; and soybeans emerged at 45% compared to 34% last week, 46% last year, and a 5-year average of 35%. New crop cash soybean prices at elevators and barge points ranged from $11.48 to $11.97. November 2024 soybean futures closed at $11.84, down 35 cents since last Friday. Downside price protection could be achieved by purchasing a $12.00 November 2024 Put Option which would cost 63 cents and set an $11.37 futures floor. Nov/Dec soybean-to-corn price ratio was 2.54 at the end of the week.
Cotton
North Delta upland cotton spot price quotes for May 30 were 74.01 cents/lb (41-4-34) and 76.01 cents/lb (31-3-35). Adjusted World Price (AWP) increased 4.29 cents to 64.37 cents. Cotton net weekly sales reported by exporters were 222,600 bales for the 2023/24 marketing year and 78,100 bales for the 2024/25 marketing year. Exports for the same period were down 16% compared to last week at 172,200 bales. Upland cotton export sales were 106% 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 112%. July 2024 cotton futures closed at 76.15 cents, down 4.37 cents since last Friday. For the week July 2024 cotton futures traded between 76.07 and 83.19 cents. Jul/Dec and Jul/Mar cotton futures spreads were -1.04 cents and 0.64 cents.
The Crop Progress report estimated cotton condition at 60% good-to-excellent and 5% poor-to-very poor, cotton planted at 59% compared to 44% last week, 56% last year, and a 5-year average of 57%; and cotton squaring at 4% compared to 3% last year and a 5-year average of 5%. In Tennessee, cotton condition was estimated at 52% good-to-excellent and 14% poor-to-very poor; cotton planting was estimated at 68% compared to 52% last week, 78% last year, and a 5-year average of 73%; and cotton squaring at 2% compared to 1% last week, 2% last year, and a 5-year average of 2%. December 2024 cotton futures closed at 75.11 cents, down 2.9 cents since last Friday. Downside price protection could be obtained by purchasing a 76 cent December 2024 Put Option costing 4.95 cents establishing a 71.05 cent futures floor. March 2025 cotton futures closed at 76.79 cents, down 2.73 cents since last Friday.
Wheat
Wheat net weekly sales reported by exporters were net sales cancelations of 2.2 million bushels for the 2023/24 marketing year and net sales of 14.0 million bushels for the 2024/25 marketing year. Exports for the same period were up 80% compared to last week at 13.0 million bushels. Wheat export sales were 97% 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 106%. Wheat cash prices at elevators and barge points ranged from $6.31 to $6.60.
The Crop Progress report indicated winter wheat condition at 48% good-to-excellent and 19% poor-to-very poor; winter wheat headed at 77% compared to 69% last week, 69% last year, and a 5-year average of 69%; spring wheat planted at 88% compared to 79% last week, 79% last year, and a 5-year average of 81%; and spring wheat emerged at 61% compared to 43% last week, 50% last year, and a 5-year average of 52%. In Tennessee, winter wheat condition was estimated at 80% good-to- excellent and 4% poor-to-very poor; winter wheat headed at 98% compared to 93% last week and 98% last year; winter wheat coloring at 81% compared to 45% last week, 74% last year, and a 5-year average of 63%; and winter wheat mature at 14%. July 2024 wheat futures closed at $6.78, down 19 cents since last Friday. July wheat-to-corn price ratio was 1.52. Jul/Sep and Jul/ Jul future spreads were 21 and 64 cents. July 2024 wheat futures traded between $6.73 and $7.20 this week. New crop wheat cash prices at elevators and barge points ranged from $6.41 to $6.82. September 2024 wheat futures closed at $6.99, down 18 cents since last Friday. July 2025 wheat futures closed at $7.42, down 2 cents since last Friday. Downside price protection could be obtained by purchasing a $7.50 July 2025 Put Option costing 80 cents establishing a $6.70 futures floor. ∆
DR. AARON SMITH: University of Tennessee