Changes In Prices Can Assist In Guiding Marketing And Risk Management Decisions

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Where are futures prices compared to last? 

December corn futures, in the first week of June 2023 averaged $5.36, this year prices averaged $4.64, 72 cents per bushel lower. November soybean futures, in the first week of June 2023 averaged $11.79, this year prices averaged $11.63, 16 cents per bushel lower. December cotton futures, in the first week of June 2023 averaged 81.6 cents, this year prices averaged 73.4 cents, 8.2 cents per pound lower. July wheat futures, in the first week of June 2023 averaged $6.20, this year prices averaged $6.49, 29 cents per bushel higher. Corn and cotton prices are down 13% and 10% and soybeans and wheat are up 1% and 5% compared to the first week of June a year ago. 

Another comparison between last year and this year is the change in daily closing price ranges. Last year from March 1 to June 7, December corn futures had a daily closing price in a 73-cent range ($4.99 to $5.72). This year that closing price range was 34 cents ($4.59 to $4.93). Last year, November soybean futures had a daily closing price in a 233-cent range ($11.46 to $13.79). This year that closing price range was 95 cents ($11.33 to $12.28). Last year, December cotton futures had a daily closing price in a 6.87-cent range (78.4 to 85.27). This year that closing price range was 11.47 cents (72.88 to 84.35). July wheat futures had a closing price in a 128-cent range ($5.91 to $7.19). This year that closing range was 160 cents ($5.40 to $7.00). The closing daily price range for November soybeans and corn was less than half of the year ago range, and the cotton and wheat daily closing price range increased 67% and 25%, respectively. 

Changes in prices can assist in guiding marketing and risk management decisions. Examining year-over-year price changes and daily closing price ranges can help formulate reasonable price expectations when considering marketing and risk management strategies. 

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 20 under, with an average of 45 under the July futures at elevators and barge points. Ethanol production for the week ending May 31 was 1.072 million barrels per day, up 4,000 from the previous week. Ethanol stocks were 23.052 million barrels, down 0.155 million barrels compared to last week. Corn net sales reported by exporters for May 24-30 were net sales of 46.5 million bushels for the 2023/24 marketing year and 4.5 million bushels for the 2024/25 marketing year. Exports for the same period were up 43% compared to last week at 58.6 million bushels. Corn export sales and commitments were 94% 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 corn futures closed at $4.48, up 2 cents since last Friday. Jul/Sep and July/Dec future spreads were 6 and 19 cents. For the week July 2024 corn futures traded between $4.38 and $4.54. 

The Crop Progress report estimated corn condition at 75% good-to-excellent and 4% poor-to-very poor; corn planted at 91% compared to 83% last week, 95% last year, and a 5-year average of 89%; and corn emerged at 74% compared to 58% last week, 81% last year, and a 5-year average of 73%. In Tennessee, corn condition was estimated at 66% good-to-excellent and 9% poor- to-very poor; corn planting at 93% compared to 87% last week, 98% last year, and a 5-year average of 96%; corn emerged at 82% compared to 72% last week, 93% last year, and a 5-year average of 88%; and corn silking at 0%. September 2024 corn futures closed at $4.54, unchanged since last Friday. New crop cash prices ranged from $3.79 to $4.51 at elevators and barge points. December 2024 corn futures closed at $4.67, unchanged 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 strengthened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 38 under to 10 under the July futures contract, with an average basis at the end of the week of 24 under. Soybean net weekly sales reported by exporters were net sales of 7.0 million bushels for the 2023/24 marketing year and 2.7 million bushels for the 2024/25 marketing year. Exports for the same period were up 86% compared to last week at 14.3 million bushels. Soybean export sales and commitments were 94% 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 100%. July 2024 soybean futures closed at $11.79, down 26 cents since last Friday. For the week July 2024 soybean futures traded between $11.74 and $12.05. July 2024 soybean-to-corn price ratio was 2.63 at the end of the week. Jul/ Aug and Jul/Nov future spreads were -3 and -22 cents. August 2024 soybean futures closed at $11.76, down 27 cents since last Friday. 

The Crop Progress report estimated soybeans planted at 78% compared to 68% last week, 89% last year, and a 5-year average of 73%; and soybeans emerged at 55% compared to 39% last week, 69% last year, and a 5-year average of 52%. In Tennessee, soybean condition was estimated at 63% good-to-excellent and 8% poor-to-very poor; soybean planting at 68% compared to 60% last week, 74% last year, and a 5-year average of 65%; and soybeans emerged at 54% compared to 45% last week, 59% last year, and a 5-year average of 48%. New crop cash soybean prices at elevators and barge points ranged from $11.08 to $11.52. November 2024 soybean futures closed at $11.57, down 27 cents since last Friday. Downside price protection could be achieved by purchasing a $11.60 November 2024 Put Option which would cost 55 cents and set an $11.05 futures floor. Nov/ Dec soybean-to-corn price ratio was 2.48 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for June 6 were 71.69 cents/lb (41-4-34) and 73.69 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 6.24 cents to 58.13 cents. Cotton net weekly sales reported by exporters were 138,700 bales for the 2023/24 marketing year and 54,100 bales for the 2024/25 marketing year. Exports for the same period were down 9% compared to last week at 157,000 bales. Upland cotton export sales were 107% 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 113%. July 2024 cotton futures closed at 73.84 cents, down 2.31 cents since last Friday. For the week July 2024 cotton futures traded between 72.26 and 76.53 cents. Jul/Dec and Jul/Mar cotton futures spreads were -0.95 cents and 0.8 cents. 

The Crop Progress report estimated cotton condition at 61% good-to-excellent and 8% poor-to-very poor, cotton planted at 70% compared to 59% last week, 68% last year, and a 5-year average of 70%; and cotton squaring at 9% compared to 4% last week, 5% last year, and a 5-year average of 8%. In Tennessee, cotton condition was estimated at 47% good-to-excellent and 17% poor-to-very poor; cotton planting was estimated at 83% compared to 68% last week, 93% last year, and a 5-year average of 88%; and cotton squaring at 7% compared to 2% last week, 3% last year, and a 5-year average of 5%. December 2024 cotton futures closed at 72.89 cents, down 2.22 cents since last Friday. Downside price protection could be obtained by purchasing a 73 cent December 2024 Put Option costing 4.48 cents establishing a 68.52 cent futures floor. March 2025 cotton futures closed at 74.64 cents, down 2.15 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales cancelations of 8.4 million bushels for the 2023/24 marketing year and net sales of 22.7 million bushels for the 2024/25 marketing year. Exports for the same period were up 27% compared to last week at 16.5 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 109%. Wheat cash prices at elevators and barge points ranged from $5.97 to $6.60. 

The Crop Progress report indicated winter wheat condition at 49% good-to-excellent and 18% poor-to-very poor; winter wheat headed at 83% compared to 77% last week, 79% last year, and a 5-year average of 78%; winter wheat harvested at 3% compared to 6% last week and a 5-year average of 3%; spring wheat condition at 74% good-to-excellent compared to 2% poor-to-very poor; spring wheat planted at 94% compared to 88% last week, 91% last year, and a 5-year average of 90%; and spring wheat emerged at 78% compared to 61% last week, 71% last year, and a 5-year average of 69%. In Tennessee, winter wheat condition was estimated at 75% good-to-excellent and 6% poor-to-very poor; winter wheat coloring at 95% compared to 81% last week, 93% last year, and a 5-year average of 87%; winter wheat mature at 60% compared to 14% last week and 43% last year; and winter wheat harvested at 7% compared to 2% last year. July 2024 wheat futures closed at $6.27, down 51 cents since last Friday. July wheat-to-corn price ratio was 1.40. Jul/Sep and Jul/Jul future spreads were 22 and 74 cents. July 2024 wheat futures traded between $6.18 and $6.97 this week. New crop wheat cash prices at elevators and barge points ranged from $6.00 to $6.60. September 2024 wheat futures closed at $6.49, down 50 cents since last Friday. July 2025 wheat futures closed at $7.01, down 41 cents since last Friday. Downside price protection could be obtained by purchasing a $7.10 July 2025 Put Option costing 75 cents establishing a $6.35 futures floor.   ∆

DR. AARON SMITH: University of Kentucky