Cotton Pricing Prospects Are Grim

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Abundant early season moisture has December corn futures poised to take out the current low of $4.46 established on February 26. If prices break through the current low, prices could challenge the $4.00 level. Weather will continue to dictate price direction as we move through the remainder of June into July and August. On the demand side, there does not appear to be a major reason for prices to improve, however drought conditions in China could provide price support if drought continues to intensify. 

This week November soybeans broke through the low of $11.22 3⁄4, established back on February 26. $11.00 will be a key level of support for soybean prices as that level has not been breached since 2020. Global supplies continue to be the main source of price weakness. The USDA projects global stocks at 4.7 billion bushels for the end of the 2024/25 marketing year. Unless a production disruption occurs in the U.S., Brazil, or Argentina substantial improvements in prices seem unlikely. Demand will be driven by China’s purchases, but this alone is unlikely to be sufficient to move prices noticeably upward. 

Cotton pricing prospects are grim. December futures are languishing between 71 and 74 cents with little indication of an improvement in the near future. Crop insurance price protection is near 71 cents, assuming 85% buyup coverage and APH yield being the same as projected yield (project crop insurance price was set at 83 cents this spring). Tennessee producers are likely best served to wait to see if prices improve this fall or winter. 

Over the past two months wheat markets have demonstrated the importance of incremental selling to avoid having to sell at futures market lows. On April 18, July wheat futures closed at $5.53. Prices peaked on May 28 at $7.20 before closing June 21 at $5.61. Each producer’s preference will vary, however pricing additional production (5-10%) based on a defined incremental price increase (20-25 cents, for example) is worth considering. 

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 14 was 1.057 million barrels per day, up 34,000 from the previous week. Ethanol stocks were 23.617 million barrels, up 0.395 million barrels compared to last week. Corn net sales reported by exporters for June 7-13 were net sales of 20.1 million bushels for the 2023/24 marketing year and 3.7 million bushels for the 2024/25 marketing year. Exports for the same period were up 19% compared to last week at 58.3 million bushels. Corn export sales and commitments were 97% 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 corn futures closed at $4.35, down 15 cents since last Friday. Jul/Sep and July/Dec future spreads were 5 and 18 cents. For the week July 2024 corn futures traded between $4.34 and $4.60. 

The Crop Progress report estimated corn condition at 72% good-to-excellent and 5% poor-to-very poor; and corn emerged at 93% compared to 85% last week, 95% last year, and a 5-year average of 92%. In Tennessee, corn condition was estimated at 71% good-to-excellent and 8% poor-to-very poor; corn planting at 98% compared to 99% last week, 100% last year, and a 5- year average of 100%; corn emerged at 95% compared to 89% last week, 98% last year, and a 5-year average of 98%; and corn silking at 14% compared to 2% last week, 3% last year, and a 5-year average of 5%. September 2024 corn futures closed at $4.40, down 17 cents since last Friday. New crop cash prices ranged from $3.76 to $4.44 at elevators and barge points. December 2024 corn futures closed at $4.53, down 17 cents since last Friday. Downside price protection could be obtained by purchasing a $4.60 December 2024 Put Option costing 31 cents establishing a $4.29 futures floor. 

Soybeans

Across Tennessee the average soybean basis 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 20.4 million bushels for the 2023/24 marketing year and 3.1 million bushels for the 2024/25 marketing year. Exports for the same period were up 58% compared to last week at 12.5 million bushels. Soybean 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 101%. July 2024 soybean futures closed at $11.60, down 19 cents since last Friday. For the week July 2024 soybean futures traded between $11.55 and $11.79. July 2024 soybean-to-corn price ratio was 2.67 at the end of the week. Jul/Aug and Jul/Nov future spreads were -13 and -40 cents. August 2024 soybean futures closed at $11.47, down 21 cents since last Friday. 

The Crop Progress report estimated soybean condition at 70% good-to-excellent and 5% poor-to-very poor; soybeans planted at 93% compared to 87% last week, 97% last year, and a 5-year average of 91%; and soybeans emerged at 82% compared to 70% last week, 90% last year, and a 5-year average of 79%. In Tennessee, soybean condition was estimated at 64% good-to- excellent and 6% poor-to-very poor; soybean planting at 83% compared to 74% last week, 86% last year, and a 5-year average of 83%; soybeans emerged at 69% compared to 61% last week, 76% last year, and a 5-year average of 71%; and soybean blooming at 17% compared to 4% last week, 8% last year, and a 5-year average of 2%. New crop cash soybean prices at elevators and barge points ranged from $10.67 to $11.22. November 2024 soybean futures closed at $11.20, down 29 cents since last Friday. Downside price protection could be achieved by purchasing an $11.20 November 2024 Put Option which would cost 48 cents and set a $10.72 futures floor. Nov/Dec soybean-to-corn price ratio was 2.47 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for June 20 were 65.88 cents/lb (41-4-34) and 67.88 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.67 cents to 56.65 cents. Cotton net weekly sales reported by exporters were 189,000 bales for the 2023/24 marketing year and 111,800 bales for the 2024/25 marketing year. Exports for the same period were up 6% compared to last week at 197,900 bales. Upland cotton export sales were 111% 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 115%. July 2024 cotton futures closed at 68.19 cents, down 2.78 cents since last Friday. For the week July 2024 cotton futures traded between 67.85 and 71.98 cents. Jul/Dec and Jul/Mar cotton futures spreads were 4.02 cents and 5.41 cents. 

The Crop Progress report estimated cotton condition at 54% good-to-excellent and 13% poor-to-very poor, cotton planted at 90% compared to 80% last week, 87% last year, and a 5-year average of 91%; cotton squaring at 22% compared to 14% last week, 17% last year, and a 5-year average of 18%; and cotton setting bolls at 6% compared to 2% last year and a 5-year average of 3%. In Tennessee, cotton condition was estimated at 52% good-to-excellent and 12% poor-to-very poor; cotton planting was estimated at 96% compared to 92% last week, 98% last year, and a 5-year average of 98%; and cotton squaring at 27% com- pared to 13% last week, 19% last year, and a 5-year average of 20%. December 2024 cotton futures closed at 72.21 cents, up 0.07 cents since last Friday. Downside price protection could be obtained by purchasing a 73 cent December 2024 Put Option costing 4.19 cents establishing a 68.81 cent futures floor. March 2025 cotton futures closed at 73.6 cents, up 0.17 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 21.7 million bushels for the 2024/25 marketing year and 0.4 million bushels for the 2025/26 marketing year. Exports for the same period were up 36% compared to last week at 13.4 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 27%. The Crop Progress report estimated winter wheat condition at 49% good-to-excellent and 17% poor-to-very poor; winter wheat headed at 94% compared to 89% last week, 93% last year, and a 5-year average of 91%; winter wheat harvested at 27% compared to 12% last week, 13% last year, and a 5-year average of 14%; spring wheat condition at 76% good-to-excellent compared to 4% poor-to-very poor; spring wheat emerged at 95% compared to 87% last week, 96% last year, and a 5-year average of 93%; and spring wheat headed at 4% compared to 8% last year and a 5-year average of 7%. In Tennessee, winter wheat condition was estimated at 66% good-to-excellent and 8% poor- to-very poor; winter wheat mature at 96% compared to 87% last week, 22% last year, and a 5-year average of 80%; and winter wheat harvested at 57% compared to 26% last week, 42% last year, and a 5-year average of 35%. July 2024 wheat futures closed at $5.61, down 51 cents since last Friday. July wheat-to-corn price ratio was 1.29. Jul/Sep and Jul/Jul future spreads were 14 and 70 cents. July 2024 wheat futures traded between $5.57 and $6.10 this week. Wheat cash prices at elevators and barge points ranged from $5.09 to $5.77. 

September 2024 wheat futures closed at $5.75, down 53 cents since last Friday. July 2025 wheat futures closed at $6.31, down 40 cents since last Friday. Downside price protection could be obtained by purchasing a $6.40 July 2025 Put Option costing 65 cents establishing a $5.75 futures floor.  ∆

DR. AARON SMITH: University of Tennessee