The 2024 Cotton Season Is Off To A Rough Start In Tennessee

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Nearby corn futures continue to trade at a 20-cent discount compared to the harvest contract. December corn has consistently traded between $4.60 and $4.90 while July corn has traded mostly between $4.40 and $4.70. Abundant domestic carryover into the next marketing year (projected at 2.02 billion bushels in the June WASDE) and above average early crop condition ratings (74% good-to-excellent) has kept prices trading in a tight range with a risk/time premium in the deferred contracts. 

November soybeans posted a new three-month contract low, falling to $11.41 on June 12th after the USDA WASDE projected U.S. carryover stocks of 455 million bushels for the upcoming marketing year. The report also revised, foreign soybean stocks were down, mainly for Brazil. However, global stocks for the 2024/25 marketing year are currently projected to be up 15% year -over-year. 

The 2024 cotton season is off to a rough start in Tennessee. Not only have prices dropped from 84 cents in early May to 72 cents on June 12th, but planted acreage is likely to be down substantially from the 300,000 acres projected in the USDA March Prospective Plantings report. Challenging planting conditions and a rough start to establishing the 2024 crop has likely reduced Tennessee acreage by 50,000 to 80,000 acres. The USDA will release its acreage estimates on June 28. 

The June 12 USDA Crop Production report estimated Tennessee winter wheat harvested acres at 310,000, down 80,000 compared to last year. State average yield is estimated at 76 bu/acre down from last year’s record of 80 bu/acre. Based on the up- dated harvest and yield estimates Tennessee is expected to produce 23.6 million bushels, down 24% compared to last year. July futures prices have fallen from over $7.00 at the end of May to $6.12 3⁄4 on July 14. 

Corn 

Across Tennessee, average corn basis (cash price-nearby futures price) remained unchanged at West, Northwest, 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 June 7 was 1.023 million barrels per day, down 49,000 from the previous week. Ethanol stocks were 23.222 million barrels, up 0.17 million barrels compared to last week. Corn net sales reported by exporters for May 31-June 6 were net sales of 41.6 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 down 16% compared to last week at 49.26 million bushels. Corn export sales and commitments were 96% 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 $4.50, up 2 cents since last Friday. Jul/Sep and July/Dec future spreads were 7 and 20 cents. For the week July 2024 corn futures traded between $4.47 and $4.60. 

The Crop Progress report estimated corn condition at 74% good-to-excellent and 5% poor-to-very poor; corn planted at 95% compared to 91% last week, 98% last year, and a 5-year average of 95%; and corn emerged at 85% compared to 74% last week, 91% last year, and a 5-year average of 84%. In Tennessee, corn condition was estimated at 65% good-to-excellent and 9% poor- to-very poor; corn planting at 96% compared to 93% last week, 99% last year, and a 5-year average of 99%; corn emerged at 89% compared to 82% last week, 96% last year, and a 5-year average of 94%; and corn silking at 2% compared to 0% last week, 1% last year, and a 5-year average of 1%. September 2024 corn futures closed at $4.57, up 3 cents since last Friday. New crop cash prices ranged from $3.85 to $4.58 at elevators and barge points. December 2024 corn futures closed at $4.70, up 3 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 December 2024 Put Option costing 36 cents establishing a $4.44 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 even the July futures contract, with an average basis at the end of the week of 19 under. Soybean net weekly sales reported by exporters were net sales of 13.9 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 down 44% compared to last week at 7.9 million bushels. Soybean export sales and commitments were 95% 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 101%. July 2024 soybean futures closed at $11.79, unchanged since last Friday. For the week July 2024 soybean futures traded between $11.71 and $11.93. July 2024 soybean-to-corn price ratio was 2.62 at the end of the week. Jul/Aug and Jul/Nov future spreads were -11 and -30 cents. August 2024 soybean futures closed at $11.68, down 8 cents since last Friday. 

The Crop Progress report estimated soybean condition at 72% good-to-excellent and 4% poor-to-very poor; soybeans planted at 87% compared to 78% last week, 95% last year, and a 5-year average of 84%; and soybeans emerged at 70% compared to 55% last week, 83% last year, and a 5-year average of 66%. In Tennessee, soybean condition was estimated at 65% good-to- excellent and 8% poor-to-very poor; soybean planting at 74% compared to 68% last week, 80% last year, and a 5-year average of 75%; and soybeans emerged at 61% compared to 54% last week, 69% last year, and a 5-year average of 61%. New crop cash soybean prices at elevators and barge points ranged from $11.01 to $11.46. November 2024 soybean futures closed at $11.49, down 8 cents since last Friday. Downside price protection could be achieved by purchasing an $11.60 November 2024 Put Option which would cost 57 cents and set an $11.03 futures floor. Nov/Dec soybean-to-corn price ratio was 2.44 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for June 13 were 67.6 cents/lb (41-4-34) and 69.6 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.81 cents to 57.32 cents. Cotton net weekly sales reported by exporters were 177,100 bales for the 2023/24 marketing year and 177,400 bales for the 2024/25 marketing year. Exports for the same period were up 19% compared to last week at 186,600 bales. Upland cotton export sales were 108% 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 114%. July 2024 cotton futures closed at 70.97 cents, down 2.87 cents since last Friday. For the week July 2024 cotton futures traded between 70.84 and 74.28 cents. Jul/Dec and Jul/Mar cotton futures spreads were 1.17 cents and 2.46 cents. 

The Crop Progress report estimated cotton condition at 56% good-to-excellent and 8% poor-to-very poor, cotton planted at 80% compared to 70% last week, 78% last year, and a 5-year average of 80%; and cotton squaring at 14% compared to 9% last week, 10% last year, and a 5-year average of 12%. In Tennessee, cotton condition was estimated at 49% good-to-excellent and 15% poor-to-very poor; cotton planting was estimated at 92% compared to 83% last week, 97% last year, and a 5-year average of 95%; and cotton squaring at 13% compared to 7% last week, 8% last year, and a 5-year average of 11%. December 2024 cotton futures closed at 72.14 cents, down 0.75 cents since last Friday. Downside price protection could be obtained by purchasing a 73 cent December 2024 Put Option costing 4.5 cents establishing a 68.5 cent futures floor. March 2025 cotton futures closed at 73.43 cents, down 1.21 cents since last Friday. 

Wheat 

A total of 4.2 million bushels in sales were carried over from the 2023/2024 marketing year, which ended May 31. Accumulated exports came to 680.8 million bushels, up 4 percent from the prior year’s total of 652.5 million bushels. Wheat net weekly sales reported by exporters were net sales of 8.2 million bushels for the 2024/25 marketing year and 0.8 million bushels for the 2024/25 marketing year. Exports for the same period were down 40% compared to last week at 9.8 million bushels. Wheat export sales were 25% of the USDA estimated total annual exports for the 2024/25 marketing year (June 1 to May 31), compared to the previous 5-year average of 25%. 

The Crop Progress report indicated winter wheat condition at 47% good-to-excellent and 19% poor-to-very poor; winter wheat headed at 89% compared to 83% last week, 87% last year, and a 5-year average of 86%; winter wheat harvested at 12% compared to 6% last week, 7% last year, and a 5-year average of 6%; spring wheat condition at 72% good-to-excellent compared to 3% poor-to-very poor; spring wheat planted at 98% compared to 94% last week, 96% last year, and a 5-year average of 96%; and spring wheat emerged at 87% compared to 78% last week, 86% last year, and a 5-year average of 83%. In Tennessee, winter wheat condition was estimated at 71% good-to-excellent and 8% poor-to-very poor; winter wheat mature at 87% compared to 60% last week and 75% last year; and winter wheat harvested at 26% compared to 7% last week, 17% last year, and a 5-year average of 11%. July 2024 wheat futures closed at $6.12, down 15 cents since last Friday. July wheat-to-corn price ratio was 1.36. Jul/Sep and Jul/Jul future spreads were 16 and 59 cents. July 2024 wheat futures traded between $6.05 and $6.33 this week. Wheat cash prices at elevators and barge points ranged from $5.57 to $6.09. September 2024 wheat futures closed at $6.28, down 21 cents since last Friday. July 2025 wheat futures closed at $6.71, down 30 cents since last Friday. Downside price protection could be obtained by purchasing a $6.80 July 2025 Put Option costing 71 cents establishing a $6.09 futures floor.   ∆

DR. AARON SMIITH: University of Tennessee