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Corn Futures Closed Down For The 4th Consecutive Week
DR. AARON SMITH
KNOXVILLE, TENN.
Wheat and soybeans were down; cotton and corn were mixed for the week. Corn planting is almost complete. North Dakota, Wisconsin, and Minnesota made good progress this past week, however there still could be some acreage move to soybeans if weather does not cooperate. Harvest corn futures closed down for the 4th consecutive week, good weather and completion of planting in many areas were contributing factors. Nationally, soybean planting is ahead of the 5-year average as good conditions have allowed farmers to get in the fields in most areas. Old crop soybean supplies remain tight. Strong exports and limited cancelations of shipments have caused imports from South America to help fill demand domestically. Nearby soybean futures prices dropped almost a $1.00 from the high two weeks ago. The price spread between domestic soybeans and South American soybeans has narrowed substantially however there is still a premium for domestic soybeans. The June WASDE report will be released next week and many will be looking at how the USDA deals with ending stocks numbers. Cotton prices have appeared to establish a new futures trading range of 76 to 79 cents for harvest and 84 to 89 for the nearby. This is after the substantial drop in futures prices two weeks ago. We may still see a return to harvest futures prices above 80 cents this summer; however it will largely depend on weather conditions and Chinese policy. July wheat futures prices have declined over $1.10 in May. The situation in Russia and Ukraine has cooled substantially and there is little to no indication that any logistical or production problems have occurred on a large scale. The winter wheat crop in Tennessee is a week or two behind average but overall crop condition is excellent.
Corn
July 2014 corn futures closed at $4.59 down 6 cents from last week with support at $4.42 and resistance at $4.68. Across Tennessee basis (cash price- nearby future price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened in Upper-middle Tennessee. Overall basis for the week ranged from 6 under to 30 over the July futures contract with an average of 16 over at the end of the week. Corn net sales reported by exporters from May 23rd to 29th were above expectations at 21.7 million bushels for the 2013/14 marketing year and below expectations at 0.7 million bushels for the 2014/15 marketing year. Exports for the same time period were down from last week at 45.6 million bushels. Corn export sales and commitments are 96 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 95 percent. Ethanol production for the week ending May 30th was 938,000 barrels per day up 11,000 barrels per day. Ending ethanol stocks were 18.25 million barrels up 761,000 barrels. July/Sept and July/Dec future spreads were -3 cents and -2 cents, respectively.
September 2014 corn futures closed at $4.56 down 2 cents from last week with support at $4.37 and resistance at $4.66. December futures closed at $4.57. Nationally, the June 2nd Crop Progress report estimated corn planting at 95 percent compared to 88 percent last week, 90 percent last year, and a 5-year average of 94 percent; corn emerged at 80 percent compared to 60 percent last week, 71 percent last year and a 5-year average of 80 percent; and corn condition at 76 percent good to excellent 2 percent poor to very poor. In Tennessee, corn planted was estimated at 99 percent compared to 97 percent last week, 96 percent last year, and a 5-year average of 97 percent; corn emerged at 94 percent compared to 87 percent last week, 82 percent last year, and a 5-year average of 90 percent; and corn condition at 82 percent good to excellent and 2 percent poor to very poor. This week September and December 2014 corn futures prices traded between $4.42 and $4.61. September cash forward contracts at elevators and barge points for the week averaged $4.41 with a range of $4.12 to $4.79. Downside price protection could be obtained by purchasing a $4.60 September 2014 Put Option costing 26 cents establishing a $4.34 futures floor.
Soybeans
July 2014 soybean futures closed at $14.57 down 36 cents for the week with support at $14.42 and resistance at $14.96. Nearby soybean to corn price ratio was 3.17 at the end of the week. For the week, average soybean basis weakened at Memphis, Northwest Barge Points, and Northwest Tennessee and strengthened in Lower-middle and Upper-middle Tennessee. Basis ranged from 13 under to 40 over the July futures contract at elevators and barge points. Average basis at the end of the week was 11 over the July futures contract. Net sales reported by exporters from May 23rd to 29th were within expectations with net sales of 1.5 million bushels for the 2013/14 marketing year and below expectations for the 2014/15 marketing year with net sales of 8.4 million bushels. Exports for the same period were up from last week at 7.8 million bushels. Soybean export sales and commitments are 103 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 100 percent. August 2014 soybean futures were trading at $14.01. July/Aug and July/Nov future spreads were -56 cents and -239 cents.
November 2014 soybean futures closed at $12.18 down 15 cents from last week with support at $11.87 and resistance at $12.37. The Crop Progress report estimated soybean planting at 78 percent compared to 59 percent last week, 55 percent last year, and a 5-year average of 70 percent; and soybeans emerged at 50 percent compared to 25 percent last week, 29 percent last year, and a 5-year average of 45 percent. In Tennessee, soybeans planted were estimated at 54 percent compared to 39 percent last week, 34 percent last year, and a 5-year average of 47 percent; and soybeans emerged at 32 percent compared to 21 percent last week, 16 percent last year, and a 5-year average of 28 percent. This week November 2014 soybean futures traded between $12.01 and $12.34. Harvest soybean to corn price ratio was 2.67. November cash forward contracts averaged $12.18 with a range of $11.81 to $12.46. Downside price protection could be achieved by purchasing a $12.20 November 2014 Put Option which would cost 61 cents and set an $11.59 futures floor.
Cotton
July 2014 cotton futures closed at 84.78 down 1.49 cents for the week with support at 84.1 and resistance at 86.02. Cotton adjusted world price (AWP) increased 1.15 cents to 69.44 cents. Net sales reported by exporters from May 23rd to 29th were up from last week at 131,500 bales of upland cotton for the 2013/14 marketing year and 176,400 bales for the 2014/15 marketing year. Exports for the same period were up from last week at 168,200 bales. Cotton export sales and commitments are 104 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 105 percent. Oct 2014 cotton futures are trading at 77.5. July/Oct and July/Dec future spreads were -7.28 cents and -6.78 cents.
December 2014 cotton futures closed at 78 up 0.53 cents for the week with support at 76.57 and resistance at 78.91. The Crop Progress report estimated cotton planting at 74 percent compared to 62 percent last week, 79 percent last year, and a 5-year average of 81 percent; and cotton squaring at 5 percent compared to 4 percent last year and a 5-year average of 6 percent. In Tennessee, cotton planted was estimated at 91 percent compared to 76 percent last week, 71 percent last year, and a 5-year average of 82 percent; and cotton squaring at 1 percent compared to 0 percent last year and 0 percent for a 5-year average. December cotton futures traded between 77.28 and 78.74 cents this week. Downside price protection could be obtained by purchasing a 78 cent December 2014 Put Option costing 4.26 cents establishing a 73.74 cent futures floor.
Wheat
July 2014 wheat futures closed at $6.18 down 9 cents for the week with support at $5.97 and resistance at $6.30. Net sales reported by exporters from May 23rd to 29th were within expectations at 0.07 million bushels for the 2013/14 marketing year and within expectations at 12.5 million bushels for the 2014/15 marketing year. Exports for the same period were down from last week at 18.1 million bushels. Wheat export sales are 99 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 104 percent. The Crop Progress report estimated winter wheat condition at 30 percent good to excellent and 44 percent poor to very poor; and winter wheat headed was 79 percent compared to 70 percent last week, 71 percent last year, and a 5-year average of 78 percent. In Tennessee, winter wheat condition was estimated at 82 percent good to excellent and 2 percent poor to very poor; winter wheat headed was estimated at 98 percent compared to 97 percent last week, 100 percent last year, and a 5-year average of 100 percent. July wheat futures traded between $6.03 and $6.26 this week. July wheat to corn price ratio was 1.35. In Tennessee, June/July cash forward contracts averaged $6.00 with a range of $5.56 to $6.36 at elevators and barge points. July/Sept and July/Jul future spreads were 12 cents and 69 cents.
September 2014 wheat futures closed at $6.30 down 9 cents from last week with support at $6.07 and resistance at $6.42. The Crop Progress report estimated spring wheat planted at 88 percent compared to 74 percent last week, 80 percent last year, and a 5-year average of 88 percent; and spring wheat emerged was 67 percent compared to 43 percent last week, 58 percent last year, and a 5-year average of 72 percent. September wheat to corn price ratio was 1.38. July 2015 wheat futures closed at $6.87. Downside price protection could be obtained by purchasing a $6.90 July 2015 Put Option costing 70 cents establishing a $6.20 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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