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Export Sales Boost Soybean Futures Prices
DR. AARON SMITH
KNOXVILLE, TENN.
Corn was up; soybeans, cotton, and wheat were mixed for the week. Weather forecasts continue to be favorable for crop production in most regions. This week September corn futures set a new five-month low at $4.31/bu before rebounding above $4.48/bu at the end of the week. Soybean futures prices received support on Thursday as export sales continue to remain strong. As we move closer to the 2014/15 marketing year many analysts will be watching to see if export demand can keep up with the estimated record domestic soybean crop. Cotton harvest futures tested the 76 cent level of support this week however were unable to drop below this threshold. February 3rd is the only date in 2014 that December 2014 cotton futures traded below 76 cents. Winter wheat harvest is well on its way in most regions. Most of the southern plains are experiencing low yields, while the majority of wheat in the mid-south and southeast is in good condition and should have above average yields. KC HRW wheat is trading at approximately $7.20/bu while Wheat is trading close to $5.85/bu or a spread of about $1.35/bu. Wheat harvest in Tennessee is 1 to 2 weeks behind average at this time, however overall crop condition is above average. Globally, large wheat supplies and estimated production will continue to provide downward price pressure and may serve as an indicator of things to come in corn and soybean markets should the estimated record 2014 production be realized. The USDA’s June 30th Acreage and Quarterly Grain Stocks reports will provide indications of domestic production and carry over into the next marketing year.
Corn
July 2014 corn futures closed at $4.53 up 6 cents from last week with support at $4.43 and resistance at $4.58. Across Tennessee basis (cash price- nearby future price) weakened or remained unchanged in all five regions. Overall basis for the week ranged from 1 under to 30 over the July futures contract with an average of 15 over at the end of the week. Corn net sales reported by exporters from June 6th to 12th were below expectations at 4.3 million bushels for the 2013/14 marketing year and within expectations at 3.1 million bushels for the 2014/15 marketing year. Exports for the same time period were up from last week at 44.2 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 97 percent. Ethanol production for the week ending June 13th was 972,000 barrels per day up 28,000 barrels per day. Ending ethanol stocks were 17.850 million barrels down 572,000 barrels. July/Sept and July/Dec future spreads were -5 cents and -1 cents, respectively.
September 2014 corn futures closed at $4.48 up 5 cents from last week with support at $4.31 and resistance at $4.50. December futures closed at $4.52. Nationally, the June 16th Crop Progress report estimated corn emerged at 97 percent compared to 92 percent last week, 91 percent last year and a 5-year average of 96 percent; and corn condition at 76 percent good to excellent 4 percent poor to very poor. In Tennessee, corn emerged at 99 percent compared to 98 percent last week, 97 percent last year, and a 5-year average of 98 percent; and corn condition at 76 percent good to excellent and 6 percent poor to very poor. This week September and December 2014 corn futures prices traded between $4.31 and $4.52. September cash forward contracts at elevators and barge points for the week averaged $4.29 with a range of $4.02 to $4.90. Downside price protection could be obtained by purchasing a $4.50 September 2014 Put Option costing 22 cents establishing a $4.28 futures floor.
Soybeans
July 2014 soybean futures closed at $14.15 down 10 cents for the week with support at $13.92 and resistance at $14.34. Nearby soybean to corn price ratio was 3.12 at the end of the week. For the week, average soybean basis strengthened or remained unchanged for all five regions. Basis ranged from 10 under to 55 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 were within expectations with net sales of 3.6 million bushels for the 2013/14 marketing year and below expectations for the 2014/15 marketing year with net sales of 10.5 million bushels. Exports for the same period were up from last week at 7.1 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 101 percent. August 2014 soybean futures were trading at $13.61. July/Aug and July/Nov future spreads were -54 cents and -184 cents.
November 2014 soybean futures closed at $12.31 up 10 cents from last week with support at $12.09 and resistance at $12.46. The Crop Progress report estimated soybean planting at 92 percent compared to 87 percent last week, 83 percent last year, and a 5-year average of 90 percent; soybeans emerged at 83 percent compared to 71 percent last week, 63 percent last year, and a 5-year average of 77 percent; and soybean condition at 74 percent good to excellent 4 percent poor to very poor. In Tennessee, soybeans planted were estimated at 70 percent compared to 63 percent last week, 60 percent last year, and a 5-year average of 75 percent; soybeans emerged at 52 percent compared to 43 percent last week, 38 percent last year, and a 5-year average of 56 percent; and soybean condition at 75 percent good to excellent 6 percent poor to very poor. This week November 2014 soybean futures traded between $12.02 and $12.35. Harvest soybean to corn price ratio was 2.75. November cash forward contracts averaged $12.16 with a range of $11.82 to $12.43. Downside price protection could be achieved by purchasing a $12.40 November 2014 Put Option which would cost 62 cents and set an $11.78 futures floor.
Cotton
July 2014 cotton futures closed at 88.16 up 1.18 cents for the week with support at 86.29 and resistance at 89.71. Cotton adjusted world price (AWP) increased 1.81 cents to 70.38 cents. Net sales reported by exporters were up from last week at 153,100 bales of upland cotton for the 2013/14 marketing year and 103,300 bales for the 2014/15 marketing year. Exports for the same period were up from last week at 119,800 bales. Cotton export sales and commitments are 105 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 108 percent. Oct 2014 cotton futures are trading at 77.49. July/Oct and July/Dec future spreads were -10.67 cents and -11.08 cents.
December 2014 cotton futures closed at 77.08 down 0.67 cents for the week with support at 76.03 and resistance at 77.83. The Crop Progress report estimated cotton planting at 95 percent compared to 89 percent last week, 94 percent last year, and a 5-year average of 96 percent; cotton squaring at 14 percent compared to 8 percent last week, 9 percent last year, and a 5-year average of 16 percent; and cotton condition at 51 percent good to excellent 12 percent poor to very poor. In Tennessee, cotton planted was estimated at 97 percent compared to 96 percent last week, 96 percent last year, and a 5-year average of 98 percent; cotton squaring at 22 percent compared to 8 percent last week, 0 percent last year and 10 percent for a 5-year average; and cotton condition at 74 percent good to excellent 5 percent poor to very poor. December cotton futures traded between 76.10 and 77.95 cents this week. Downside price protection could be obtained by purchasing a 78 cent December 2014 Put Option costing 3.95 cents establishing a 74.05 cent futures floor.
Wheat
July 2014 wheat futures closed at $5.85 down 1 cent for the week with support at $5.75 and resistance at $5.99. Net sales reported by exporters were within expectations at 13.7 million bushels for the 2014/15 marketing year and 0.3 million bushels for 2015/16 marketing year. Exports for the same period were up from last week at 19.2 million bushels. Wheat export sales are 27 percent of the USDA estimated total annual exports for the 2014/15 marketing year (June 1 to May 31), compared to a 5-year average of 22 percent. The Crop Progress report estimated winter wheat condition at 30 percent good to excellent and 44 percent poor to very poor; winter wheat headed was 92 percent compared to 86 percent last week, 88 percent last year, and a 5-year average of 95 percent; and wheat harvested at 16 percent compared to 9 percent last week, 10 percent last year and a 5-year average of 20 percent. In Tennessee, winter wheat condition was estimated at 75 percent good to excellent and 3 percent poor to very poor; winter wheat headed was estimated at 100 percent compared to 99 percent last week, 100 percent last year, and a 5-year average of 100 percent; wheat turning color at 93 percent compared to 81 percent last week, 97 percent last year, and a 5-year average of 99 percent; wheat mature at 39 percent compared to 29 percent last week, 57 percent last year, and a 5-year average of 81 percent; and wheat harvested at 5 percent compared to 1 percent last week, 9 percent last year, and a 5-year average of 39 percent. July wheat futures traded between $5.76 and $5.98 this week. July wheat to corn price ratio was 1.29. In Tennessee, June/July cash forward contracts averaged $5.68 with a range of $5.00 to $5.99 at elevators and barge points. July/Sept and July/July future spreads were 8 cents and 67 cents.
September 2014 wheat futures closed at $5.93 down 3 cents from last week with support at $5.84 and resistance at $6.07. The Crop Progress report estimated spring wheat emerged at 91 percent compared to 80 percent last week, 82 percent last year, and a 5-year average of 90 percent; and spring wheat condition at 71 percent good to excellent 4 percent poor to very poor. September wheat to corn price ratio was 1.32. July 2015 wheat futures closed at $6.52. Downside price protection could be obtained by purchasing a $6.60 July 2015 Put Option costing 59 cents establishing a $6.01 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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