This Week Provided An Indication Prices May Have Found A Bottom

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Prices are down substantially year-over-year. Compared to August last year, corn, cotton, and soybean futures prices are down 19%, 20%, and 26%, respectively. Combined with drought reducing average corn yield in Tennessee to 160 bu/acre, compared to 173 bu/acre last year, gross revenue is estimated to be down 29% per acre for corn producers. Additionally, considering the reduction in harvested acres, from 890,000 in 2023 to an estimated 660,000 in 2024, results in gross cash receipts from corn sales in Tennessee projected down over 90% from $707 to $372 million. Cotton and soybean gross cash receipts are projected to fall 60% and 20%, respectively. This is despite an additional 230,000 acres of soybeans projected to be harvested in Tennessee compared to last year. At current prices, combined gross revenue for the three crops is projected to be $678 million lower than 2023 – a 33% decline. The decline in revenue will result in a lack of profitability across the crop sector in Tennessee and will reverberate across the rural economy. 

For producers with below APH yields, it is likely that a revenue protection crop insurance indemnity payment will be triggered, providing some financial protection, however for those producers with APH or above yields, indemnity payments are not likely to be triggered for most buyup coverages. The projected crop insurance prices were $4.66, $0.83 and $11.55 which provide a price only trigger of $3.73, $0.66, and $9.24 at 80% buyup coverage. 

This week provided an indication that prices may have found a bottom. The September corn contract set a new low at $3.60 1⁄2 before rallying to close the week at $3.78. On Friday, the September contract crossed over the 20-day moving average. The September contract will come off the board in two weeks and there is currently a 23-cent spread between the September and December contracts. This should assist in setting the price floor moving forward. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, West, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 56 under to 8 under, with an average of 14 under the September futures at elevators and barge points. Ethanol production for the week ending August 23 was 1.071 million barrels per day, down 27,000 from the previous week. Ethanol stocks were 23.572 million barrels, down 0.002 million barrels compared to last week. Corn net sales reported by exporters for August 16-22 were net sales of 0.6 million bushels for the 2023/24 marketing year – a marketing year low - and 58.8 million bushels for the 2024/25 marketing year. Exports for the same period were down 9% compared to last week at 41.3 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 103%. September 2024 corn futures closed at $3.78, up 11 cents since last Friday. Sep/Dec and Sep/Mar future spreads were 23 and 41 cents. For the week September 2024 corn futures traded between $3.60 and $3.78. 

The Crop Progress report estimated corn condition at 65% good-to-excellent and 13% poor-to-very poor; corn dough or beyond at 84% compared to 74% last week, 85% last year, and a 5-year average of 83%; corn dented at 46% compared to 30% last week, 46% last year, and a 5-year average of 42%; and corn mature at 11% compared to 5% last week, 8% last year, and a 5- year average of 6%. In Tennessee, corn condition was estimated at 49% good-to-excellent and 21% poor-to-very poor; corn dough at 93% compared to 88% last week, 96% last year, and a 5-year average of 96%; corn dented at 79% compared to 64% last week, 79% last year, and a 5-year average of 74%; corn mature at 36% compared to 17% last week, 27% last year, and a 5- year average of 19%; and corn harvested at 6% compared to 1% last year and a 5-year average of 1%. Cash prices ranged from $3.06 to $3.64 at elevators and barge points. December 2024 corn futures closed at $4.01, up 10 cents since last Friday. Down- side price protection could be obtained by purchasing a $4.10 December 2024 Put Option costing 13 cents establishing a $3.97 futures floor. March 2025 corn futures closed at $4.19, up 10 cents since last Friday. 

Soybeans

Across Tennessee the average soybean basis strengthened or remained unchanged at Northwest, West, West-Central, and Mississippi River elevators and barge points and weakened at North-Central elevators and barge points. Basis ranged from 23 under to 1 under the September futures contract, with an average basis at the end of the week of 10 under. Soybean net weekly sales reported by exporters were net sales cancellations of 5.3 million bushels for the 2023/24 marketing year and net sales of 96.1 million bushels for the 2024/25 marketing year. Exports for the same period were up 29% compared to last week at 19.9 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 104%. September 2024 soybean futures closed at $9.82, up 30 cents since last Friday. For the week September 2024 soybean futures traded between $9.39 and $9.87. September 2024 soybean-to-corn price ratio was 2.60 at the end of the week. Sep/Nov and Nov/Jan future spreads were 18 and 35 cents. 

The Crop Progress report estimated soybean condition at 67% good-to-excellent and 9% poor-to-very poor; soybeans setting pods at 89% compared to 81% last week, 90% last year, and a 5-year average of 88%; and soybeans dropping leaves at 6% compared to 4% last year and a 5-year average of 4%. In Tennessee, soybean condition was estimated at 51% good-to-excellent and 20% poor-to-very poor; soybeans setting pods at 92% compared to 82% last week, 87% last year, and a 5-year average of 85%; and soybeans dropping leaves at 18% compared to 5% last week, 8% last year, and a 5-year average of 5%. Cash soybean prices at elevators and barge points ranged from $8.95 to $9.73. November 2024 soybean futures closed at $10.00, up 27 cents since last Friday. Downside price protection could be achieved by purchasing a $10.00 November 2024 Put Option which would cost 27 cents and set a $9.73 futures floor. Nov/Dec soybean-to-corn price ratio was 2.49 at the end of the week. January 2025 soybean futures closed at $10.17, up 27 cents since last Friday. 

Cotton

North Delta upland cotton spot price quotes for August 29 were 65.63 cents/lb (41-4-34) and 67.63 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.08 cents to 56.98 cents. Cotton net weekly sales reported by exporters were net sales of 135,200 bales for the 2024/25 marketing year and 700 bales for the 2025/26 marketing year. Exports for the same period were down 15% compared to last week at 144,200 bales. Upland cotton export sales were 39% 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 51%. 

The Crop Progress report estimated cotton condition at 40% good-to-excellent and 28% poor-to-very poor; cotton setting bolls at 89% compared to 84% last week, 87% last year, and a 5-year average of 88%; and cotton bolls opening at 25% compared to 19% last week, 23% last year, and a 5-year average of 23%. In Tennessee, cotton condition was estimated at 51% good-to- excellent and 22% poor-to-very poor; cotton setting bolls at 96% compared, 94% last week, 97% last year, and a 5-year average of 96%; and cotton bolls opening at 22% compared to 8% last week, 12% last year, and a 5-year average of 8%. December 2024 cotton futures closed at 69.99 cents, down 0.92 cents since last Friday. For the week December 2024 cotton futures traded between 68.27 and 71.36 cents. Dec/Mar and Dec/May cotton futures spreads were 1.66 cents and 2.88 cents. Downside price protection could be obtained by purchasing a 70 cent December 2024 Put Option costing 3.21 cents establishing a 66.79 cent futures floor. March 2025 cotton futures closed at 71.65 cents, down 0.63 cents since last Friday. May 2025 cotton futures closed at 72.87 cents, down 0.51 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 19.6 million bushels for the 2024/25 marketing year and 1.3 million bushels for the 2025/26 marketing year. Exports for the same period were up 23% compared to last week at 21.2 million bushels. Wheat export sales were 45% 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 47%. The Crop Progress report estimated spring wheat condition at 69% good-to- excellent compared to 10% poor-to-very poor; and spring wheat harvested at 51% compared to 31% last week, 50% last year, and a 5-year average of 53%. Wheat cash prices at elevators and barge points ranged from $4.63 to $5.12. September 2024 wheat futures closed at $5.32, up 30 cents since last Friday. September wheat-to-corn price ratio was 1.41. Sep/Mar and Sep/Jul future spreads were 19 and 57 cents. September 2024 wheat futures traded between $4.93 and $5.34 this week. December 2024 wheat futures closed at $5.51, up 23 cents since last Friday. 

July cash contracts ranged from $5.19 to $5.66. July 2025 wheat futures closed at $5.89, up 22 cents since last Friday. Down- side price protection could be obtained by purchasing a $5.90 July 2025 Put Option costing 50 cents establishing a $5.40 futures floor.   ∆

DR. AARON SMITH: University of Tennessee