Farmers Are Planning For The Upcoming 2025 Crop Production Year

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Tennessee corn, soybean, and cotton farmers are managing a disappointing 2024 crop year and planning for the upcoming 2025 crop production year. A few points to consider during the planning process. 

1) Commodity prices are low and there is currently nothing on the radar that would indicate substantial improvement will occur in 2025. Drought, production disruptions abroad, and geopolitics could improve price prospects, but at this point in time this is highly uncertain and mostly hopeful thinking. 

2) Trade / retaliatory tariffs are a concern and provide the potential for substantial downside price risk in commodities that are heavily reliant on export sales like soybeans and cotton. Protecting against downside price movements should be considered. 

3) Producers need to distinguish between cash costs versus non-cash cost (capital recovery) in the short term. We can farm in the short-term covering cash costs, but in the long term we need to cover total economic costs. 

4) Input costs and profit margin need to be managed effectively - do not cut costs at the expense of yield. Approximately 90% of the cash costs are in five cost categories. Land, seed, chemical, fertilizer, and operating expenses for equipment (fuel, labor, repairs and maintenance). Farmers should evaluate the efficiency of these five costs to assist in managing profit margin. 

5) Secure financing early. It will be a challenging year for many farmers to secure operating credit for 2025. Obtaining financing needs to occur as early as possible. Understand your financial position and how lenders evaluate credit applications. There are five main factors lenders consider (repayment, liquidity, solvency, collateral, and relationship). Which factors lenders emphasize, and the ratio or measure to evaluate the factor, will depend on the agricultural lender or credit provider. 

6) Develop a marketing and risk management plan. Crop insurance, storage analysis, contracts, futures, and options. Do not use the same marketing and risk management strategy in the current market environment as when we had higher prices and higher volatility two years ago. 

7) There is the potential for payments from the federal government (FARM Act? Or other Ad Hoc legislation) and a New Farm Bill is likely. I would not incorporate these potential payments into the 2025 financial plan. If realized they are bonus. 

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 29 under to 25 over, with an average of 5 over the March futures at elevators and barge points. Ethanol production for the week ending November 29 was 1.073 million barrels per day, down 46,000 from the previous week. Ethanol stocks were 23.003 million barrels, up 0.134 million barrels compared to last week. Corn net sales reported by exporters for November 22-28 were net sales of 68.2 million bushels for the 2024/25 marketing year and 0.9 million bushels for the 2025/26 marketing year. Exports for the same period were up 3% compared to last week at 31.2 million bushels. Corn export sales and commitments were 58% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31) compared to the previous 5-year average of 50%. Cash prices ranged from $4.02 to $4.63 at elevators and barge points. March 2025 corn futures closed at $4.40, up 7 cents since last Friday. For the week, March 2025 corn futures traded between $4.28 and $4.40. May 2025 corn futures closed at $4.45, up 11 cents since last Friday. 

Mar/May and Mar/Dec future spreads were 5 and -3 cents. December 2025 corn futures closed at $4.37, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.40 December 2025 Put Option costing 37 cents establishing a $4.03 futures floor. 

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 20 under to 34 over the January futures contract, with an average basis at the end of the week of 16 over. Soybean net weekly sales reported by exporters were net sales of 85 million bushels for the 2024/25 marketing year and 0.007 million bushels for the 2025/26 marketing year. Exports for the same period were up 17% compared to last week at 89.2 million bushels. Soybean export sales and commitments were 73% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31), compared to the previous 5- year average of 72%. Cash soybean prices at elevators and barge points ranged from $9.59 to $10.28. January 2025 soybean futures closed at $9.93, up 4 cents since last Friday. For the week, January 2025 soybean futures traded between $9.77 and $9.99. March soybean-to-corn price ratio was 2.27 at the end of the week. March 2025 soybean futures closed at $9.99, up 3 cents since last Friday. 

Jan/Mar and Jan/Nov future spreads were 6 and 12 cents. November 2025 soybean futures closed at $10.05, down 5 cents since last Friday. Downside price protection could be achieved by purchasing a $10.20 November 2025 Put Option which would cost 72 cents and set a $9.48 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.30 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for December 5 were 67.6 cents/lb (41-4-34) and 69.6 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.21 cents to 57.74 cents. Cotton net weekly sales reported by exporters were net sales of 170,700 bales for the 2024/25 marketing year. Exports for the same period were up 21% compared to last week at 157,500 bales. Upland cotton export sales were 65% 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 71%. March 2025 cotton futures closed at 70.11 cents, down 2.04 cents since last Friday. For the week, March 2025 cotton futures traded between 70.06 and 72.06 cents. May 2025 cotton futures closed at 71.35 cents, down 1.63 cents since last Friday. 

Mar/May and Mar/Dec cotton futures spreads were 1.24 cents and 1.18 cents. December 2025 cotton futures closed at 71.29 cents, down 1.29 cents since last Friday. Downside price protection could be obtained by purchasing a 72 cent December 2025 Put Option costing 4.3 cents establishing a 67.7 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 13.9 million bushels for the 2024/25 marketing year. Exports for the same period were down 26% compared to last week at 11.8 million bushels. Wheat export sales were 70% 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 73%. Wheat cash prices at elevators and barge points ranged from $4.92 to $5.44. March 2025 wheat futures closed at $5.57, up 9 cents since last Friday. The March wheat-to-corn price ratio was 1.27. March 2025 wheat futures traded between $5.40 and $5.60 this week. May 2025 wheat futures closed at $5.65, up 8 cents since last Friday. 

Mar/May and Mar/Jul future spreads were 8 and 14 cents. July cash contracts at elevators and barge points ranged from $5.07 to $5.51. July 2025 wheat futures closed at $5.71, up 8 cents since last Friday. Downside price protection could be obtained by purchasing a $5.80 July 2025 Put Option costing 54 cents establishing a $5.26 futures floor.  ∆

DR. AARON SMITH: University of Tennessee