New Contract Lows Were Set This Friday

DR. AARON SMITH

KNOXVILLE, TENNESSEE

New contract lows were set this Friday for November soybeans, December corn, and December cotton. November soybeans set a low at $10.04 1⁄2, December corn at $3.94, and December cotton at 66.55 cents. Nearby futures prices are now at lows not seen since 2020, when COVID-19 adversely affected commodity markets. Further price weakness may occur; however, futures markets are likely near a bottom. Prices are substantially below the cost of production for most producers in Tennessee and the US. 

Global soybean stocks will provide significant resistance for substantial price improvements. The USDA Foreign Agricultural Service projects 2024/25 global soybean ending stocks at 127.762 million metric tons (MMT), an all-time high. Soybean consumption is also projected at an all-time high of 401.539 MMT. Growth in global soybean demand has averaged 6.1 MMT per year since 1964/65. However, the global stocks-to-use ratio is the second highest ever at 31.8%. Since 2006/07 global stocks-to-use ratio has averaged 26.6%. Increased stocks relative to use will continue to weigh heavily on global soybean prices. 

September wheat futures price increased 23 1⁄4 cents from the contract low of $5.14 1⁄4 on July 29. World wheat stocks are projected at the lowest level since 2015/16. Estimates for the spring wheat harvest and large projected corn stocks will potentially limit further advances in wheat prices. 

The USDA will release the August WASDE report on Monday. It is widely expected that national average corn and soybean yields will be increased from the current estimates of 181 bu/acre and 52 bu/acre. Additionally, USDA will release the FSA Crop Acreage report. Participation in FSA programs require producers to submit an annual report regarding all cropland on their farms. The report will shed light on planted, prevented planted, and failed acres for principal crops in the US. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest, West, West-Central, and Mississippi River elevators and barge points and strengthened at North-Central elevators and barge points. Overall, basis for the week ranged from 70 under to 14 over, with an average of 24 under the September futures at elevators and barge points. Ethanol production for the week ending August 2 was 1.067 million barrels per day, down 42,000 from the previous week. Ethanol stocks were 23.767 million barrels, down 0.206 million barrels compared to last week. Corn net sales reported by exporters for July 26-August 1 were net sales of 19.1 million bushels for the 2023/24 marketing year and 9.8 million bushels for the 2024/25 marketing year. Exports for the same period were up 26% compared to last week at 51.3 million bushels. Corn export sales and commitments were 99% 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 $3.76, down 10 cents since last Friday. Sep/Dec and Sep/Mar future spreads were 19 and 36 cents. For the week September 2024 corn futures traded between $3.75 and $3.93. 

The Crop Progress report estimated corn condition at 67% good-to-excellent and 10% poor-to-very poor; corn silking at 88% compared to 77% last week, 90% last year, and a 5-year average of 88%; corn dough or beyond at 46% compared to 30% last week, 42% last year, and a 5-year average of 38%; and corn dented at 7% compared to 7% last year and a 5-year average of 5%. In Tennessee, corn condition was estimated at 57% good-to-excellent and 16% poor-to-very poor; corn silking at 96% compared to 92% last week, 96% last year, and a 5-year average of 96%; corn dough at 72% compared to 61% last week, 78% last year, and a 5-year average of 73%; and corn dented at 29% compared to 11% last week, 29% last year, and a 5-year average of 21%. New crop cash prices ranged from $3.17 to $3.96 at elevators and barge points. December 2024 corn futures closed at $3.95, down 8 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2024 Put Option costing 20 cents establishing a $3.80 futures floor. March 2025 corn futures closed at $4.12, down 8 cents since last Friday. 

Soybeans

Across Tennessee the average soybean basis weakened or remained unchanged at Northwest, West, North-Central, West- Central, and Mississippi River elevators and barge points. Basis ranged from 11 under to 25 over the September futures contract, with an average basis at the end of the week of 6 over. Soybean net weekly sales reported by exporters were net sales of 12.0 million bushels for the 2023/24 marketing year and 36.2 million bushels for the 2024/25 marketing year. Exports for the same period were down 38% compared to last week at 12.9 million bushels. Soybean export sales and commitments were 99% 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%. September 2024 soybean futures closed at $9.88, down 30 cents since last Friday. For the week August 2024 soybean futures traded between $9.87 and $10.32. September 2024 soybean-to-corn price ratio was 2.63 at the end of the week. Sep/Nov and Nov/Jan future spreads were 14 and 31 cents. 

The Crop Progress report estimated soybean condition at 68% good-to-excellent and 8% poor-to-very poor; soybeans blooming at 86% compared to 77% last week, 88% last year, and a 5-year average of 84%; and soybeans setting pods at 59% compared to 44% last week, 61% last year, and a 5-year average of 56%. In Tennessee, soybean condition was estimated at 64% good-to-excellent and 13% poor-to-very poor; soybean blooming at 84% compared to 78% last week, 83% last year, and a 5-year average of 80%; and soybeans setting pods at 66% compared to 57% last week, 61% last year, and a 5-year average of 54%. November cash soybean prices at elevators and barge points ranged from $9.58 to $10.36. November 2024 soybean futures closed at $10.02, down 25 cents since last Friday. Downside price protection could be achieved by purchasing a $10.10 November 2024 Put Option which would cost 39 cents and set a $9.71 futures floor. Nov/Dec soybean-to-corn price ratio was 2.54 at the end of the week. January 2025 soybean futures closed at $10.19, down 25 cents since last Friday. 

Cotton

North Delta upland cotton spot price quotes for August 8 were 61.29 cents/lb (41-4-34) and 63.29 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.3 cents to 55.24 cents. Cotton net weekly sales reported by exporters were net cancellations of 949,600 bales for the 2024/25 marketing year and net sales of 11,500 bales for the 2025/26 marketing year. Exports for the same period were up 485% compared to last week at 759,700 bales. Accumulated exports for the 2023/24 marketing year, which ended July 31, were 11,070,400 bales, down 6 percent from the prior years’ total of 11,777,500. Upland cotton export sales were 38% of the USDA estimated total annual exports for the 2024/25 marketing year (August 1 to July 31), compared to the previous 5-year average of 48%. 

The Crop Progress report estimated cotton condition at 45% good-to-excellent and 27% poor-to-very poor; cotton squaring at 91% compared to 87% last week, 90% last year, and a 5-year average of 91%; cotton setting bolls at 60% compared to 54% last week, 58% last year, and a 5-year average of 59%; and cotton bolls opening at 8% compared to 7% last year and a 5-year average of 7%. In Tennessee, cotton condition was estimated at 61% good-to-excellent and 12% poor-to-very poor; cotton squaring at 97% compared to 94% last week, 94% last year, and a 5-year average of 94%; cotton setting bolls at 74% compared, 64% last week, 70% last year, and a 5-year average of 68%; and cotton bolls opening at 2% compared to 1% last week, 2% last year, and a 5-year average of 1%. December 2024 cotton futures closed at 68.34 cents, up 0.09 cents since last Friday. For the week December 2024 cotton futures traded between 66.55 and 68.79 cents. Dec/Mar and Dec/May cotton futures spreads were 1.34 cents and 2.57 cents. Downside price protection could be obtained by purchasing a 68 cent December 2024 Put Option costing 2.91 cents establishing a 65.09 cent futures floor. March 2025 cotton futures closed at 69.68 cents, down 0.19 cents since last Friday. May 2025 cotton futures closed at 70.91 cents, down 0.23 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 10.1 million bushels for the 2024/25 marketing year and 4.1 million bushels for the 2025/26 marketing year. Exports for the same period were down 9% compared to last week at 18.2 million bushels. Wheat export sales were 39% 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 41%. The Crop Progress report estimated winter wheat harvested at 88% compared to 82% last week, 85% last year, and a 5-year average of 86%; spring wheat condition at 74% good-to- excellent compared to 4% poor-to-very poor; spring wheat headed at 97% compared to 94% last week, 98% last year, and a 5- year average of 99%; and spring wheat harvested at 6% compared to 1% last week, 8% last year, and a 5-year average of 10%. Wheat cash prices at elevators and barge points ranged from $4.52 to $5.00. September 2024 wheat futures closed at $5.42, up 3 cents since last Friday. September wheat-to-corn price ratio was 1.44. Sep/Mar and Sep/Jul future spreads were 42 and 60 cents. September 2024 wheat futures traded between $5.19 and $5.52 this week. December 2024 wheat futures closed at $5.65, up 2 cents since last Friday. 

July cash contracts ranged from $5.64 to $5.95. July 2025 wheat futures closed at $6.02, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2025 Put Option costing 57 cents establishing a $5.53 futures floor.   ∆

DR. AARON SMITH: University of Tennessee