Farmers Need To Evaluate Storage Options As We Enter Harvest Season

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Corn and soybean futures continue to look for a bottom. December corn and November soybean futures established new lows on August 1st of $3.95 and $10.13. Improved forecasts for August pushed prices lower. NOAA updated its 30-day forecast on July 31 . The forecast indicates above average temperatures for western states, the southern plains, and the southeast. Most of the corn belt has an average temperature outlook. For precipitation, there is an above average chance for precipitation for the northern corn belt, Atlantic coast and the southern portion of the southeast. There is a below normal precipitation forecast for the northwest and southern plains, extending into west Tennessee. Mostly beneficial growing conditions and forecasts have caused many to project record national average corn yield, with estimates between 180-184 bushels per acre. 

Farmers need to evaluate storage options as we enter the harvest season. Producers should estimate anticipated production, storage capacity, and local cash prices. Storage can help avoid seasonally low prices as harvest occurs. Price improvements typically occur in futures markets and in basis offerings in Tennessee after harvest. When considering storage, it is important to consider the interest cost of storing corn and soybeans. For example, storing corn will cost 2.5-3.5 cents per bushel per month depending on the operating loan interest rate. 

Macro-economic data released this week was weaker than anticipated. Earlier this week, the Federal Reserve held interest rates unchanged, citing inflation remaining above the target of 2.0%. The unemployment rate increased 4.3%, up 0.2% compared to June, and the Department of Labor reported employers added 114,000 jobs in July, substantially lower than the 175,000 that was forecast. The Dow Jones Industrial Average was down 1,000 points and the S&P 500 was down nearly 150 points for the week. Signs of weakness in the economy increase the likelihood of interest rate reductions in September and subsequent Federal Reserve meetings, which would be beneficial to farmers. However, weakness in the economy could reduce personal expenditures and purchases of discretionary or higher priced goods which could adversely affect prices for some agricultural commodities. 

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 24 under the September futures at elevators and barge points. Ethanol production for the week ending July 26 was 1.109 million barrels per day, up 14,000 from the previous week. Ethanol stocks were 23.973 million barrels, up 0.250 million barrels compared to last week. Corn net sales reported by exporters for July 19-25 were net sales of 6.6 million bushels for the 2023/24 marketing year and 28.0 million bushels for the 2024/25 marketing year. Exports for the same period were down 14% compared to last week at 40.8 million bushels. Corn 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 average of 102%. September 2024 corn futures closed at $3.86, down 8 cents since last Friday. Sep/Dec and Sep/Mar future spreads were 17 and 34 cents. For the week September 2024 corn futures traded between $3.78 and $3.97. 

The Crop Progress report estimated corn condition at 68% good-to-excellent and 9% poor-to-very poor; corn silking at 77% compared to 61% last week, 79% last year, and a 5-year average of 76%; and corn dough or beyond at 30% compared to 17% last week, 25% last year, and a 5-year average of 22%. In Tennessee, corn condition was estimated at 55% good-to-excellent and 19% poor-to-very poor; corn silking at 92% compared to 87% last week, 94% last year, and a 5-year average of 93%; corn dough at 61% compared to 48% last week, 66% last year, and a 5-year average of 59%; and corn dented at 11% compared to 7% last year and a 5-year average of 4%. New crop cash prices ranged from $3.08 to $4.02 at elevators and barge points. December 2024 corn futures closed at $4.03, down 7 cents since last Friday. Downside price protection could be obtained by pur- chasing a $4.10 December 2024 Put Option costing 22 cents establishing a $3.88 futures floor. March 2025 corn futures closed at $4.20, down 4 cents since last Friday. 

Soybeans

Across Tennessee the average soybean basis strengthened or remained unchanged at Northwest, West, North-Central, West- Central, and Mississippi River elevators and barge points. Basis ranged from 12 under to 46 over the September futures con- tract, with an average basis at the end of the week of 18 over. Soybean net weekly sales reported by exporters were net sales of 13.8 million bushels for the 2023/24 marketing year and 23.2 million bushels for the 2024/25 marketing year. Exports for the same period were up 53% compared to last week at 20.8 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 average of 103%. August 2024 soybean futures closed at $10.29, down 48 cents since last Friday. For the week Au- gust 2024 soybean futures traded between $10.19 and $10.73. September 2024 soybean-to-corn price ratio was 2.64 at the end of the week. Aug/Sep and Aug/Nov future spreads were -11 and -2 cents. September 2024 soybean futures closed at $10.18, down 24 cents since last Friday. 

The Crop Progress report estimated soybean condition at 67% good-to-excellent and 8% poor-to-very poor; soybeans blooming at 77% compared to 65% last week, 79% last year, and a 5-year average of 74%; and soybeans setting pods at 44% compared to 29% last week, 46% last year, and a 5-year average of 40%. In Tennessee, soybean condition was estimated at 60% good-to- excellent and 15% poor-to-very poor; soybean blooming at 78% compared to 70% last week, 75% last year, and a 5-year aver- age of 71%; and soybeans setting pods at 57% compared to 41% last week, 52% last year, and a 5-year average of 43%. New crop cash soybean prices at elevators and barge points ranged from $9.66 to $10.35. November 2024 soybean futures closed at $10.27, down 21 cents since last Friday. Downside price protection could be achieved by purchasing a $10.30 November 2024 Put Option which would cost 36 cents and set a $9.94 futures floor. Nov/Dec soybean-to-corn price ratio was 2.55 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for August 1 were 62.38 cents/lb (41-4-34) and 64.38 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 1.08 cents to 53.94 cents. Cotton net weekly sales reported by exporters were net cancellations of 1,085,800 bales for the 2023/24 marketing year and net sales of 1,355,700 bales for the 2024/25 marketing year. Exports for the same period were down 1% compared to last week at 129,900 bales. Upland cotton export sales were 109% 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 117%. 

The Crop Progress report estimated cotton condition at 49% good-to-excellent and 23% poor-to-very poor; cotton squaring at 87% compared to 81% last week, 84% last year, and a 5-year average of 84%; and cotton setting bolls at 54% compared to 42% last week, 44% last year, and a 5-year average of 46%. In Tennessee, cotton condition was estimated at 53% good-to-excellent and 24% poor-to-very poor; cotton squaring at 94% compared to 87% last week, 92% last year, and a 5-year average of 88%; cotton setting bolls at 64% compared, 52% last week, 58% last year, and a 5-year average of 51%; and cotton bolls opening at 1% compared to 1% last year and a 5-year average of 0%. December 2024 cotton futures closed at 68.25 cents, up 0.26 cents since last Friday. For the week December 2024 cotton futures traded between 67.8 and 70.2 cents. Dec/Mar and Dec/May cotton futures spreads were 1.62 cents and 2.89 cents. Downside price protection could be obtained by purchasing a 69 cent December 2024 Put Option costing 3.31 cents establishing a 65.69 cent futures floor. March 2025 cotton futures closed at 69.87 cents, up 0.11 cents since last Friday. May 2025 cotton futures closed at 71.14 cents, up 0.01 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 10.5 million bushels for the 2024/25 marketing year. Exports for the same period were up 67% compared to last week at 16.7 million bushels. Wheat export sales were 37% 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 39%. The Crop Progress report estimated winter wheat harvested at 82% compared to 76% last week, 77% last year, and a 5 -year average of 80%; spring wheat condition at 74% good-to-excellent compared to 4% poor-to-very poor; spring wheat headed at 94% compared to 89% last week, 96% last year, and a 5-year average of 96%; and spring wheat harvested at 1% compared to 2% last year and a 5-year average of 3%. Wheat cash prices at elevators and barge points ranged from $4.40 to $4.87. September 2024 wheat futures closed at $5.39, up 16 cents since last Friday. September wheat-to-corn price ratio was 1.40. Sep/Mar and Sep/Jul future spreads were 44 and 59 cents. September 2024 wheat futures traded between $5.14 and $5.40 this week. March 2025 wheat futures closed at $5.83, up 14 cents since last Friday. 

July cash contracts ranged from $5.50 to $5.84. July 2025 wheat futures closed at $5.98, up 12 cents since last Friday. Down- side price protection could be obtained by purchasing a $6.00 July 2025 Put Option costing 58 cents establishing a $5.42 futures floor.   ∆

DR. AARON SMITH: University of Tennessee