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Corn Planting Progress Helped By Warm Temperatures
DR. AARON SMITH
KNOXVILLE, TENN.
Wheat, cotton, and corn were up; soybeans were mixed for the week. Corn planting progress will continue to be watched closely as temperatures warm, however rain over the next 5 days could bring planting to a halt in much of the Corn Belt and Mid-South. Soybean exports have slowed substantially, experiencing a marketing year low this past week. This decrease in soybean export sales is typical for this time of year and exports for the marketing year are still well ahead of USDA projections. December cotton futures are trading in the low to mid 80 cent range this represents a good opportunity to price some 2014 production prior to planting. Excessive global stocks, primarily held in China, will limit the potential for any rallies in deferred future prices above the mid 80 cent range. If the Ukraine and Russia situation continues to escalate over the weekend there may be some additional volatility in the grain markets Sunday night and Monday morning. Next week the wheat quality tour will begin in Kansas. With persistent to intensifying drought conditions in much of the southern plains it is expected that the majority of the winter wheat crop in the region will be in poor or very poor condition. Stats Canada estimated Canadian spring wheat planting acreage down 4.8 percent from 2013 at 24.8 million acres, this decrease was less than many were anticipating.
Corn
May 2014 corn futures closed at $5.07 up 13 cents from last week with support at $4.96 and resistance at $5.16. Across Tennessee basis (cash price- nearby future price) remained unchanged at Memphis, northwest barge points, and upper-middle Tennessee and weakened at northwest and lower-middle Tennessee. Overall basis for the week ranged from 5 under to 36 over the May futures contract with an average of 16 over at the end of the week. Corn net sales reported by exporters from April 11th to 17th were within expectations at 24.4 million bushels for the 2013/14 marketing year and above expectations at 15.1 million bushels for the 2014/15 marketing year. Exports for the same time period were 63.8 million bushels. Corn export sales and commitments are 97 percent of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31) compared to a 5-year average of 86 percent. Ethanol production for the week ending April 18th was 910,000 barrels per day down 29,000 barrels per day. Ending ethanol stocks were 16.518 million barrels up 566,000 barrels. July 2014 corn futures were trading at $5.12. May/July and May/Sep future spreads were 5 cents and 2 cents.
September 2014 corn futures closed at $5.09 up 11 cents from last week with support at $5.00 and resistance at $5.17. Nationally, the April 21st Crop Progress report estimated corn planting at 6 percent compared to 3 percent last week, 4 percent last year, and a 5-year average of 14 percent. In Tennessee, corn planted was estimated at 19 percent compared to 7 percent last week, 28 percent last year, and a 5-year average of 44 percent. This week September and December 2014 corn futures prices traded between $4.88 and $5.13. September cash forward contracts at elevators and barge points for the week averaged $4.88 with a range of $4.62 to $5.10. Downside price protection could be obtained by purchasing a $5.10 September 2014 Put Option costing 35 cents establishing a $4.75 futures floor.
Soybeans
May 2014 soybean futures closed at $14.98 down 16 cents for the week with support at $14.62 and resistance at $15.18. Nearby soybean to corn price ratio was 2.95 at the end of the week. For the week, average soybean basis strengthened or remained unchanged in all five regions. Basis ranged from 16 under to 40 over the May futures contract at elevators and barge points. Average basis at the end of the week was 5 over the May futures contract. Net sales reported by exporters from April 11th to 17th were within expectations at 0.02 million bushels for the 2013/14 marketing year and below expectations for the 2014/15 marketing year at 4.3 million bushels. Exports for the same period were 6.7 million bushels. Soybean export sales and commitments are 104 percent of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31), compared to a 5-year average of 96 percent. July 2014 soybean futures were trading at $14.94. May/July and May/Nov future spreads were -4 cents and -259 cents.
November 2014 soybean futures closed at $12.39 no change from last week with support at $12.22 and resistance at $12.49. This week November 2014 soybean futures traded between $12.08 and $12.44. Harvest soybean to corn price ratio was 2.43. November cash forward contracts averaged $12.22 with a range of $11.86 to $12.41. Downside price protection could be achieved by purchasing a $12.40 November 2014 Put Option which would cost 73 cents and set an $11.67 futures floor.
Cotton
May 2014 cotton futures closed at 92.95 up 2.78 cents for the week with support at 92.38 and resistance at 93.40. Cotton adjusted world price (AWP) increased 0.89 cents to 70.69 cents. Net sales reported by exporters from April 11th to April 17th were down from last week at 124,100 bales of upland cotton for the 2013/14 marketing year and 16,400 bales for the 2014/15 marketing year. Exports for the same period were up from last week at 218,900 bales. Cotton export sales and commitments are 94 percent of the USDA estimated total annual exports for the 2013/14 marketing year (August 1 to July 31), compared to a 5-year average of 99 percent. July 2014 cotton futures are trading at 93.25. May/July and May/Dec future spreads were 0.3 cents and -10.24 cents.
December 2014 cotton futures closed at 82.71 up 0.77 cents for the week with support at 81.64 and resistance at 83.32. Nationally, the April 21st Crop Progress report estimated cotton planting at 9 percent compared to 8 percent last week, 10 percent last year, and a 5-year average of 12 percent. December cotton futures traded between 80.97 and 82.82 cents this week. Downside price protection could be obtained by purchasing an 83 cent December 2014 Put Option costing 4.88 cents establishing a 78.12 cent futures floor.
Wheat
May 2014 wheat futures closed at $7.00 up 9 cents for the week with support at $6.82 and resistance at $7.10. Net sales reported by exporters from April 11th to 17th were above expectations at 12.5 million bushels for the 2013/14 marketing year and within expectations at 10 million bushels for the 2014/15 marketing year. Exports for the same period were 19.1 million bushels. Wheat export sales are 97 percent of the USDA estimated total annual exports for the 2013/14 marketing year (June 1 to May 31), compared to a 5-year average of 101 percent. May wheat to corn price ratio was 1.38. In Tennessee, old crop wheat was trading between $6.83 and $7.15. May/July and May/September future spreads were 8 cents and 16 cents.
July 2014 wheat futures closed at $7.08 up 9 cents from last week with support at $6.89 and resistance at $7.19. Nationally, the April 21st Crop Progress report estimated winter wheat condition at 34 percent good to excellent and 33 percent poor to very poor; and winter wheat headed was 9 percent compared to 5 percent last week, 7 percent last year, and a 5-year average of 17 percent. In Tennessee, winter wheat condition was estimated at 77 percent good to excellent and 3 percent poor to very poor; winter wheat jointed was estimated at 55 percent compared to 35 percent last week, 80 percent last year, and a 5-year average of 83 percent; and winter wheat headed was 2 percent compared to 1 percent last week, 3 percent last year, and a 5-year average of 25 percent. July wheat futures traded between $6.69 and $7.09 this week. July/September wheat to corn price ratio was 1.39. In Tennessee, June/July cash forward contracts averaged $6.67 with a range of $6.26 to $6.93 at elevators and barge points. Downside price protection could be obtained by purchasing a $7.10 July 2014 Put Option costing 35 cents establishing a $6.75 futures floor.∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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