Prices Are Downright Depressing
DR. AARON SMITH
KNOXVILLE, TENNESSEE
There is no way to sugar coat it, prices are downright depressing. Corn, cotton, soybean, and wheat futures are well below the cost of production for most producers. Since April 1st, harvest futures contracts for corn, cotton, and soybeans have declined 70 cents ($4.74 3⁄4 to $4.04 3⁄4), 13.65 cents ($0.8435 to $0.7070), and 146.5 cents ($11.82 1⁄2 to $10.36). These are ugly numbers for any producer, particularly anyone who did not price at least a portion of their crop prior to planting. In Tennessee things may be even worse for many producers who, in addition to facing low prices, are also looking at lower yields due to drought. As of July 18th, the USDA Drought Monitor had over 70% of Tennessee in some form of drought with the hardest hit areas in southern-middle and east Tennessee.
At current prices it is unlikely that producers will find opportunities to price at profitable levels in the futures market. There could be opportunities to secure strong basis bids, but this is contingent on if there is an expected crop to market in the area. So, what is there to do? First, if drought has adversely affected production or prices and yields are likely to push insured units below the revenue guarantee, talk to your crop insurance agent to determine your options. Second, determine how much of projected production is priced versus unpriced. If you use a consultant or broker, give them the needed production and financial information and marketing flexibility to do their jobs (remember they are not miracle workers, but they can be a great resource for your business in difficult times). Third, determine your storage capacity to estimate how much of the crop can be stored versus what will need to be marketed at harvest. This includes evaluating temporary storage options such as bags or commercial storage. Lastly, take time to think through a strategy to market the 2024 crop over time. Do not make hasty decisions that can further complicate a very challenging situation, sometimes it’s best to hold and wait to make a marketing decision. Now may also be a good time to touch base with your ag lender to ensure that financial resources are in place, and the needed liquidity flexibility, to meet these challenging circumstances. This could be a financially distressing winter for many Tennessee producers, so be sure to obtain the support necessary to assist you through this challenging time.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) remained unchanged at Northwest, 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 18 under the September futures at elevators and barge points. Ethanol production for the week ending July 12 was 1.106 million barrels per day, up 52,000 from the previous week. Ethanol stocks were 23.16 million barrels, down 0.443 million barrels compared to last week. Corn net sales reported by exporters for July 5-11 were net sales of 17.2 million bushels for the 2023/24 marketing year and 19.1 million bushels for the 2024/25 marketing year. Exports for the same period were up 26% compared to last week at 43.5 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 102%. September 2024 corn futures closed at $3.90, down 12 cents since last Friday. Sep/Dec and Sep/Mar future spreads were 14 and 28 cents. For the week September 2024 corn futures traded between $3.89 and $4.03.
The Crop Progress report estimated corn condition at 68% good-to-excellent and 9% poor-to-very poor; corn silking at 41% compared to 24% last week, 40% last year, and a 5-year average of 32%; and corn dough or beyond at 8% compared to 3% last week, 6% last year, and a 5-year average of 4%. In Tennessee, corn condition was estimated at 56% good-to-excellent and 18% poor-to-very poor; corn silking at 81% compared to 68% last week, 80% last year, and a 5-year average of 75%; and corn dough at 30% compared to 12% last week, 29% last year, and a 5-year average of 27%. New crop cash prices ranged from $3.24 to $3.93 at elevators and barge points. December 2024 corn futures closed at $4.04, down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2024 Put Option costing 22 cents establishing a $3.88 futures floor. March 2025 corn futures closed at $4.18, down 10 cents since last Friday.
Soybeans
Across Tennessee the average soybean basis remained unchanged at Northwest, West, North-Central, West-Central, and Mississippi River elevators and barge points. Basis ranged from 25 under to 15 over the August futures contract, with an average basis at the end of the week of 5 under. Soybean net weekly sales reported by exporters were net sales of 8.4 million bushels for the 2023/24 marketing year and 18.6 million bushels for the 2024/25 marketing year. Exports for the same period were down 25% compared to last week at 7.4 million bushels. Soybean export sales and commitments were 98% of the USDA estimated total annual exports for the 2023/24 marketing year (September 1 to August 31), compared to the previous 5-year aver- age of 103%. August 2024 soybean futures closed at $10.97, down 8 cents since last Friday. For the week August 2024 soybean futures traded between $10.75 and $11.07. September 2024 soybean-to-corn price ratio was 2.66 at the end of the week. Aug/ Sep and Aug/Nov future spreads were -61 and -61 cents. September 2024 soybean futures closed at $10.36, down 22 cents since last Friday.
The Crop Progress report estimated soybean condition at 68% good-to-excellent and 8% poor-to-very poor; soybeans blooming at 51% compared to 34% last week, 51% last year, and a 5-year average of 44%; and soybeans setting pods at 18% compared to 9% last week, 17% last year, and a 5-year average of 12%. In Tennessee, soybean condition was estimated at 62% good-to- excellent and 14% poor-to-very poor; soybeans emerged at 98% compared to 94% last week, 99% last year, and a 5-year average of 98%; soybean blooming at 61% compared to 53% last week, 61% last year, and a 5-year average of 44%; and soybeans setting pods at 31% compared to 20% last week, 27% last year, and a 5-year average of 17%. New crop cash soybean prices at elevators and barge points ranged from $9.86 to $10.36. November 2024 soybean futures closed at $10.36, down 29 cents since last Friday. Downside price protection could be achieved by purchasing a $10.40 November 2024 Put Option which would cost 29 cents and set a $10.01 futures floor. Nov/Dec soybean-to-corn price ratio was 2.56 at the end of the week.
Cotton
North Delta upland cotton spot price quotes for July 19 were 64.98 cents/lb (41-4-34) and 66.98 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.34 cents to 56.42 cents. Cotton net weekly sales reported by exporters were 27,200 bales for the 2023/24 marketing year – a marketing year low - and 165,600 bales for the 2024/25 marketing year. Exports for the same period were down 30% compared to last week at 113,100 bales. Upland cotton export sales were 119% 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 116%.
The Crop Progress report estimated cotton condition at 45% good-to-excellent and 23% poor-to-very poor; cotton squaring at 64% compared to 52% last week, 61% last year, and a 5-year average of 63%; and cotton setting bolls at 27% compared to 19% last week, 23% last year, and a 5-year average of 22%. In Tennessee, cotton condition was estimated at 50% good-to-excellent and 18% poor-to-very poor; cotton squaring at 84% compared to 70% last week, 82% last year, and a 5-year average of 71%; and cotton setting bolls at 32% compared, 16% last week, 29% last year, and a 5-year average of 22%. December 2024 cotton futures closed at 70.7 cents, down 0.57 cents since last Friday. For the week December 2024 cotton futures traded between 70.54 and 73 cents. Dec/Mar and Dec/May cotton futures spreads were 1.92 cents and 3.3 cents. Downside price protection could be obtained by purchasing a 71 cent December 2024 Put Option costing 3.43 cents establishing a 67.57 cent futures floor.
March 2025 cotton futures closed at 72.62 cents, down 0.48 cents since last Friday. May 2025 cotton futures closed at 74 cents, down 0.47 cents since last Friday.
Wheat
Wheat net weekly sales reported by exporters were net sales of 21.3 million bushels for the 2024/25 marketing year. Exports for the same period were up 114% compared to last week at 23.2 million bushels. Wheat export sales were 35% 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 34%. The Crop Progress report estimated winter wheat harvested at 71% compared to 63% last week, 53% last year, and a 5 -year average of 62%; spring wheat condition at 77% good-to-excellent compared to 3% poor-to-very poor; and spring wheat headed at 76% compared to 59% last week, 82% last year, and a 5-year average of 78%. Wheat cash prices at elevators and barge points ranged from $4.49 to $5.23. September 2024 wheat futures closed at $5.42, down 8 cents since last Friday. September wheat-to-corn price ratio was 1.39. Sep/Mar and Sep/Jul future spreads were 46 and 61 cents. September 2024 wheat futures traded between $5.25 and $5.56 this week. March 2025 wheat futures closed at $5.88, down 9 cents since last Friday.
July 2025 wheat futures closed at $6.03, down 13 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2025 Put Option costing 58 cents establishing a $5.52 futures floor. ∆
DR. AARON SMITH: University of Tennessee