|
December Corn Futures Show Slight Rise
DR. AARON SMITH
KNOXVILLE, TENN.
Corn, soybeans, cotton, and wheat were up for the week. Today the USDA released their monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE). U.S. corn yields were increased 2.5 bpa to 174.2 bpa. Partially offsetting the yield increase was a 700,000 acre decrease in harvested area. The net result was a modest increase in total domestic production from the September report of 80 million bushels. Domestic ending stocks were revised up 79 million bushels; only minor changes in corn use were recorded. Foreign ending stocks were decreased 52 million bushels to 5.422 billion bushels. Combining the net domestic change and foreign change in ending stocks resulted in a global increase in ending stocks of approximately 27 million bushels from the September estimate. In Tennessee, average corn yield was increased 8 bpa to 160 bpa. U.S. soybean yields were increased 0.5 bpa to 47.1 bpa. Like corn, harvested area decreased 700,000 acres partially offsetting yield increases. The net production change was estimated to be an increase of 14 million bushels. Ending stock estimates shrank 25 million bushels to 450 million largely due to a revision in ending domestic stocks that was presented in the September 30th Quarterly Grain Stocks report. Foreign soybean stocks were increased 43 million bushels resulting in a net global change of 18 million bushels from the September estimates. In Tennessee, average soybean yield was increased 2 bpa to 49 bpa. U.S. upland cotton yields were decreased 14 lbs/acre to an average of 776 lbs/acre. Total domestic cotton production fell 280,000 bales to 16.26 million bales. Estimated harvested acreage was unchanged from the September report. Domestic ending stocks decreased to 4.9 million bales as use was left unchanged at 13.8 million bales. Foreign ending stocks were increased 1.12 million bales, resulting in a net global ending stocks increase of approximately 820,000 from the September report. In Tennessee, average yield was decreased 18 lbs/acre to 915 lbs/acre. U.S. wheat yields were decreased 0.1 bpa to 43.8 bpa and acreage was increased 300,000 acres. This resulted in a net increase in production from the September report of 5 million bushels. Wheat, feed and residual use and exports were increased by 25 million bushels each resulting in a decrease in domestic ending stocks of 44 million bushels. Foreign ending stocks dropped 95 million bushels. As a result, global stocks were down 139 million bushels from September’s estimates. Overall the report was bearish and futures markets gave back most of the price gains from earlier in the week, however given where many analysts’ yield and production expectations were, prior to the report, the estimates could have been much more bearish. The start of next week will be key in determining if the rally from earlier in this week can resume or if the markets continue off Friday’s declines and seek new contract lows in corn and soybeans.
Corn
December 2014 corn futures closed at $3.34 up 11 cents a bushel since last week with support at $3.22 and resistance at $3.54. Across Tennessee average basis (cash price- nearby future price) weakened in Northwest and Upper-middle Tennessee and strengthened in Memphis, Northwest Barge Points, and Lower-middle Tennessee. Overall basis for the week ranged from 64 under to 21 over the December futures contract with an average of 36 under at the end of the week. Ethanol production for the week ending October 3rd was 901,000 barrels per day up 20,000 barrels per day from last week. Ending ethanol stocks were 18.651 million barrels down 177,000 barrels from last week. Nationally, the October 6th Crop Progress report estimated corn mature at 77 percent compared to 60 percent last week and a 5-year average of 81 percent; corn harvested at 17 percent compared to 12 percent last week and a 5-year average of 32 percent; and corn condition at 74 percent good to excellent 7 percent poor to very poor. In Tennessee, the Crop Progress report estimated, corn mature at 97 percent compared to 93 percent last week, and a 5-year average of 97 percent; corn harvested at 71 percent compared to 56 percent last week and a 5-year average of 74 percent; and corn condition at 86 percent good to excellent and 2 percent poor to very poor. This week December 2014 corn futures prices traded between $3.23 and $3.48. Dec/Mar and Dec/Sep future spreads were 12 cents and 37 cents, respectively.
January cash forward contracts at elevators and barge points for the week averaged $3.28 with a range of $2.77 to $3.53. March 2015 corn futures closed at $3.46 up 10 cents from last week with support at $3.35 and resistance at $3.67. Corn net sales reported by exporters from September 26th to October 2nd were above expectations with net sales of 30.9 million bushels for the 2014/15 marketing year and net sales reductions of 0.03 million bushels for the 2015/16 marketing year. Exports for the same time period were up from last week at 38.5 million bushels. Corn export sales and commitments were 34 percent of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31) compared to a 5-year average of 39 percent. September 2015 futures closed at $3.71. Downside price protection could be obtained by purchasing a $3.80 September 2015 Put Option costing 36 cents establishing a $3.44 futures floor.
Soybeans
November 2014 soybean futures closed at $9.22 up 10 cents for the week with support at $9.17 and resistance at $9.52. Nov/Dec soybean to corn price ratio was 2.76 at the end of the week. For the week, average soybean basis weakened in Lower-middle Tennessee and strengthened at Northwest Barge Points, Memphis, Northwest, and Upper-middle Tennessee. Basis ranged from 48 under to 40 over the November futures contract at elevators and barge points. Average basis at the end of the week was 1 under the November futures contract. The Crop Progress report estimated soybeans dropping leaves at 83 percent compared to 69 percent last week and a 5-year average of 84 percent; soybeans harvested at 20 percent compared to 10 percent last week and a 5-year average of 35 percent; and soybean condition at 73 percent good to excellent 6 percent poor to very poor. In Tennessee, the Crop Progress report estimated soybeans dropping leaves at 71 percent compared to 58 percent last week and a 5-year average of 74 percent; soybeans harvested at 6 percent compared to 2 percent last week and a 5-year average of 23 percent; and soybean condition at 83 percent good to excellent 3 percent poor to very poor. This week November 2014 soybean futures traded between $9.12 and $9.55. January cash forward contracts averaged $9.55 with a range of $9.10 to $9.80.
January 2015 soybean futures closed at $9.30 up 10 cents from last week with support at $9.25 and resistance at $9.60. Net sales reported by exporters were above expectations with net sales of 33.9 million bushels for the 2014/15 marketing year and net sales reductions of 0.8 million bushels for the 2015/16 marketing year. Exports for the same period were up from last week at 35.7 million bushels. Soybean export sales and commitments were 64 percent of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31), compared to a 5-year average of 56 percent. Nov/Jan and Nov/Nov future spreads were 8 cents and 22 cents. November 2015 futures closed at $9.44. Downside price protection could be achieved by purchasing a $9.60 November 2015 Put Option which would cost 64 cents and set an $8.96 futures floor.
Cotton
December 2014 cotton futures closed at 64.10 up 1.63 cents for the week with support at 62.5 and resistance at 6.30. Cotton adjusted world price (AWP) increased 0.44 cents to 49.71 cents. The Crop Progress report estimated cotton bolls opening at 73 percent compared to 64 percent last week and a 5-year average of 79 percent; cotton harvested at 15 percent compared to 10 percent last week and a 5-year average of 18 percent; and cotton condition at 47 percent good to excellent 20 percent poor to very poor. In Tennessee, the Crop Progress report estimated cotton bolls opening at 85 percent compared to 75 percent last week and a 5-year average of 81 percent; cotton harvested at 6 percent compared to 2 percent last week and a 5-year average of 22 percent; and cotton condition at 71 percent good to excellent 5 percent poor to very poor. December cotton futures traded between 62.32 and 65.5 cents this week. Downside price protection could be obtained by purchasing a 65 cent December 2014 Put Option costing 2.03 cents establishing a 62.97 cent futures floor.
March 2014 cotton futures closed at 61.84 up 0.74 cents for the week with support at 60.63 and resistance at 63.57. Net sales reported by exporters were down from last week at 68,500 bales for the 2014/15 marketing year and net sales of 44,500 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 81,300 bales. Cotton export sales were 60 percent of the USDA estimated total annual exports for the 2014/15 marketing year (August 1 to July 31), compared to a 5-year average of 51 percent. Dec/Mar future spread was -2.26 cents.
Wheat
December 2014 wheat futures closed at $4.98 up 13 cents from last week with support at $4.81 and resistance at $5.14. In Memphis, old crop cash wheat traded between $4.46 and $4.62 for the week. The Crop Progress report estimated spring wheat harvested at 96 percent compared to 94 percent last week and a 5-year average of 99 percent. December wheat futures traded between $4.84 and $5.11 this week. December wheat to corn price ratio was 1.49. Dec/Mar and Dec/July future spreads were 11 cents and 24 cents.
March 2015 wheat futures closed at $5.09 up 12 cents from last week with support at $4.94 and resistance at $5.25. Net sales reported by exporters were below expectations at 13.7 million bushels for the 2014/15 marketing year. Exports for the same period were down from last week at 24.6 million bushels. Wheat export sales were 57 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 55 percent. The Crop Progress report estimated winter wheat planted at 56 percent compared to 43 percent last week and a 5-year average of 53 percent; and winter wheat emerged at 28 percent compared to 14 percent last year and a 5-year average of 24 percent. In Tennessee, winter wheat planting was estimated at 13 percent compared to 6 percent last week and a 5-year average of 9 percent; and winter wheat emerged at 2 percent compared to 0 percent last year and a 5-year average 0f 0 percent. June/July 2015 cash forward contracts averaged $4.97 with a range of $4.60 to $5.24 at elevators and barge points. July 2015 wheat futures closed at $5.22. Downside price protection could be obtained by purchasing a $5.30 July 2015 Put Option costing 41 cents establishing a $4.89 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
|
|