Are We Entering A Sideways Market?

DR. AARON SMITH

KNOXVILLE, TENNESSEE

With the September corn, cotton, and soybean futures contracts falling off the board, focus will shift to the December and March corn and cotton contracts and the November and January soybean contracts. Deferred contracts carry a time risk or uncertainty premium. Since July 1, December and March corn contracts have traded in a 40 -cent range (December $3.85 to $4.25 and March $4.00 to $4.40). Both corn contracts closed on Friday September 6 near the center of the trading ranges. Since June 1, December and March cotton contracts have traded in a 10-cent range (December $0.66 to $0.76 and March $0.67 to $0.77). Both cotton contracts closed on Friday September 6 in the bottom third of the trading ranges. Since July 10, November and January soybean contracts have traded in a 130-cent range (November $9.55 to $10.85 and March $9.70 to $11.00). Both soybean contracts closed on Friday September 6 near the center of the trading ranges. Of the three commodities soybeans has the greatest chance for volatility due to the potential for substantial production changes in Brazil and Argentina as those countries enter their planting and production seasons. 

In the current low-price environment, large domestic and foreign stocks will limit the potential for substantial price movements in the short term. This can be used to guide price risk management decisions. Examining the potential for futures market sales at the top of the range or buying futures at the bottom of the range can be useful in guiding marketing decisions. This strategy does not come without risk, but it can provide guidance for when futures or options positions should be entered or exited. 

Factors that could move prices out of the current futures market ranges are South American weather, revisions to U.S. production/yield estimates, geopolitical events, and export demand. As such, it is important to remain informed about how markets are reacting to these factors before making a trading decision. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, North-Central, and West-Central elevators and barge points and weakened at West and Mississippi River elevators and barge points. Overall, basis for the week ranged from 55 under to 25 under, with an average of 37 under the December futures at elevators and barge points. Ethanol production for the week ending August 30 was 1.061 million barrels per day, down 10,000 from the previous week. Ethanol stocks were 23.354 million barrels, down 0.218 million barrels compared to last week. Corn net sales reported by exporters for August 23-29 were net sales reductions of 6.8 million bushels for the 2023/24 marketing year and net sales of 71.7 million bushels for the 2024/25 marketing year. Exports for the same period were up 1% compared to last week at 41.7 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%. The Crop Progress report estimated corn condition at 65% good-to-excellent and 12% poor-to-very poor; corn dough or beyond at 90% com- pared to 84% last week, 92% last year, and a 5-year average of 90%; corn dented at 60% compared to 46% last week, 62% last year, and a 5-year average of 58%; and corn mature at 19% compared to 11% last week, 15% last year, and a 5-year average of 13%. In Tennessee, corn condition was estimated at 44% good-to-excellent and 22% poor-to-very poor; corn dough at 95% compared to 93% last week, 98% last year, and a 5-year average of 98%; corn dented at 88% compared to 79% last week, 88% last year, and a 5-year average of 85%; corn mature at 59% compared to 36% last week, 41% last year, and a 5-year average of 36%; and corn harvested at 16% compared to 6% last week, 4% last year, and a 5-year average of 4%. Cash prices ranged from $3.54 to $3.88 at elevators and barge points. December 2024 corn futures closed at $4.06, up 5 cents since last Friday. For the week December 2024 corn futures traded between $3.98 and $4.16. Downside price protection could be obtained by purchasing a $4.10 December 2024 Put Option costing 17 cents establishing a $3.93 futures floor. 

Dec/Mar and Dec/Dec future spreads were 18 and 38 cents. March 2025 corn futures closed at $4.24, up 5 cents since last Fri- day. December 2025 corn futures closed at $4.44, up 6 cents since last Friday. 

Soybeans

Across Tennessee the average soybean basis weakened or remained unchanged at Northwest, West, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 40 under to 22 under the November futures contract, with an average basis at the end of the week of 30 under. Soybean net weekly sales reported by exporters were net sales cancellations of 8.4 million bushels for the 2023/24 marketing year and net sales of 60.9 million bushels for the 2024/25 marketing year. Exports for the same period were down 9% compared to last week at 18.0 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 104%. The Crop Progress report estimated soybean condition at 65% good-to-excellent and 10% poor-to-very poor; soybeans setting pods at 94% compared to 89% last week, 94% last year, and a 5 -year average of 93%; and soybeans dropping leaves at 13% compared to 6% last week, 13% last year, and a 5-year average of 10%. In Tennessee, soybean condition was estimated at 42% good-to-excellent and 26% poor-to-very poor; soybeans setting pods at 95% compared to 92% last week, 91% last year, and a 5-year average of 92%; and soybeans dropping leaves at 29% compared to 18% last week, 16% last year, and a 5-year average of 13%. Cash soybean prices at elevators and barge points ranged from $9.33 to $10.02. November 2024 soybean futures closed at $10.05, up 5 cents since last Friday. For the week November 2024 soybean futures traded between $9.95 and $10.31. November/December 2024 soybean-to-corn price ratio was 2.48 at the end of the week. Downside price protection could be achieved by purchasing a $10.10 November 2024 Put Option which would cost 31 cents and set a $9.79 futures floor.

Nov/Jan and Nov/Nov future spreads were 17 and 45 cents. January 2025 soybean futures closed at $10.22, up 5 cents since last Friday. November 2025 soybean futures closed at $10.50, up 3 cents since last Friday. Nov/Dec 2025 soybean-to-corn price ratio was 2.36 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for September 5 were 64.99 cents/lb (41-4-34) and 66.99 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.29 cents to 57.27 cents. Cotton net weekly sales reported by exporters were net sales of 207,500 bales for the 2024/25 marketing year and 8,400 bales for the 2025/26 marketing year. Exports for the same period were up 14% compared to last week at 164,100 bales. Upland cotton export sales were 41% 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 52%. The Crop Progress report estimated cotton condition at 44% good-to-excellent and 24% poor-to-very poor; cotton setting bolls at 95% compared to 89% last week, 93% last year, and a 5-year average of 94%; and cotton bolls opening at 37% compared to 25% last week, 30% last year, and a 5-year average of 31%. In Tennessee, cotton condition was estimated at 32% good-to-excellent and 31% poor-to-very poor; cotton setting bolls at 100% compared, 96% last week, 99% last year, and a 5-year average of 99%; and cotton bolls opening at 37% compared to 22% last week, 17% last year, and a 5-year average of 13%. December 2024 cotton futures closed at 67.88 cents, down 2.11 cents since last Friday. For the week December 2024 cotton futures traded between 67.8 and 71.18 cents. Downside price protection could be obtained by purchasing a 68 cent December 2024 Put Option costing 2.4 cents establishing a 65.6 cent futures floor. 

Dec/Mar and Dec/May cotton futures spreads were 1.81 cents and 3.14 cents. March 2025 cotton futures closed at 69.69 cents, down 1.96 cents since last Friday. May 2025 cotton futures closed at 71.02 cents, down 1.85 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 12.5 million bushels for the 2024/25 marketing year and net sales reductions of 0.4 million bushels for the 2025/26 marketing year. Exports for the same period were up 11% compared to last week at 23.4 million bushels. Wheat export sales were 46% 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 49%. Wheat cash prices at elevators and barge points ranged from $5.01 to $5.26. December 2024 wheat futures closed at $5.67, up 16 cents since last Friday. December wheat-to-corn price ratio was 1.40. December 2024 wheat futures traded between $5.44 and $5.82 this week. March 2025 wheat futures closed at $5.86, up 14 cents since last Friday. 

Dec/Mar and Dec/Jul future spreads were 19 and 36 cents. The Crop Progress report estimated winter wheat planted at 2% compared to 1% last year and a 5-year average of 2%; and spring wheat harvested at 70% compared to 51% last week, 68% last year, and a 5-year average of 70%. July cash contracts ranged from $5.65 to $5.98. July 2025 wheat futures closed at $6.03, up 14 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2025 Put Option costing 56 cents establishing a $5.54 futures floor.   ∆

DR. AARON SMITH: University of Tennessee