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U.S. Corn Plantings Estimated Lower; Other Crops Higher
DR. AARON SMITH
KNOXVILLE, TENN.
Soybeans and wheat were up, corn was down, and cotton was mixed for the week. On March 31st the USDA released its Prospective Plantings and Quarterly Grain Stocks reports, highlights of the reports include: Nationally, 2015 planted acreage was estimated at: 89.2 million acres of corn, down 2 percent from 2014; 84.6 million acres of soybeans, up 1 percent from 2014; 55.4 million acres of wheat, down 3 percent; 9.5 million acres of cotton, down 13 percent; and 7.9 million acres of sorghum, up 11 percent. In Tennessee, planted acreage was estimated at: 840,000 acres of corn, down 9 percent from 2014; 1.8 million acres of soybeans, up 10 percent from 2014; 470,000 acres of wheat, down 11 percent from 2014; and 170,000 acres of cotton, down 38 percent from 2014. Sorghum acres were not included in the Tennessee survey. In general, planted acres were estimated higher for corn and lower for soybeans than many analysts anticipated. South Dakota had the greatest estimated decrease in corn acres at 600,000 acres, while Minnesota had the greatest estimated increase at 300,000. Minnesota, Wisconsin, and the Dakota’s will be keys in determining the final domestic corn and soybean acreage. Currently, according to the US Drought Monitor, most of this region is classified as abnormally dry to moderate drought. Planting intentions will change to accommodate regional weather conditions; however these four states will be watched particularly closely by many analysts.
Estimated March 1st ending stocks were up 11 percent for corn at 7.74 billion bushels; up 34 percent for soybeans at 1.33 billion bushels; and up 6 percent at 1.12 billion bushels. The rise in March 1st grain and oilseed stocks was a foregone conclusion due to back-to-back above average growing conditions in 2013 and 2014. For the remainder of the 2014/15 marketing year for corn and soybeans, currency exchange rates will play a major role in domestic exports, as will the severity of logistical/currency value changes/interest rate issues that may occur in South America.
Corn
May 2015 corn futures closed at $3.86 down 5 cents a bushel since last week. Across Tennessee average basis (cash price- nearby future price) weakened at Northwest Barge Points, Memphis, Northwest, Lower-middle, and Upper-middle Tennessee. Overall, average basis for the week ranged from 28 under to 23 over the May futures contract with an average of 5 under at the end of the week. Ethanol production for the week ending March 27th was 952,000 barrels per day down 1,000 barrels per day from last week. Ending ethanol stocks were 20.547 million barrels down 770,000 barrels from last week. This week May 2015 corn futures prices traded between $3.74 and $3.98. May/Jul and May/Sep future spreads were 8 cents and 15 cents, respectively.
July 2015 corn futures closed at $3.94 down 5 cents from last week. Corn net sales reported by exporters March 20th to 26th were within expectations with net sales of 16 million bushels for the 2014/15 marketing year and 1.0 million bushels for the 2015/16 marketing year. Exports for the same time period were down from last week at 26.9 million bushels. Corn export sales and commitments were 82 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 83 percent. September 2015 cash forward contracts averaged $3.92 with a range of $3.59 to $4.30. September 2015 futures closed at $4.01 down 5 cents from last week. Downside price protection could be obtained by purchasing a $4.10 September 2015 Put Option costing 32 cents establishing a $3.78 futures floor.
Soybeans
May 2015 soybean futures closed at $9.86 up 19 cents since last week. May soybean to corn price ratio was 2.55 at the end of the week. For the week, average soybean basis weakened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Upper-middle, and Lower-middle Tennessee. Basis ranged from 27 under to 35 over the May futures contract at elevators and barge points. Average basis at the end of the week was 15 over the May futures contract. This week May 2015 soybean futures traded between $9.51 and $9.93.
July 2015 soybean futures closed at $9.91 up 19 cents since last week. Net sales reported by exporters were above expectations with net sales of 1.0 million bushels for the 2014/15 marketing year and 20.9 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 24.4 million bushels. Soybean export sales and commitments were 100 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 96 percent. May/Jul and May/Nov future spreads were 5 cent and -12 cents. October/November 2015 cash forward contracts averaged $9.47 with a range of $9.19 to $9.77 at elevators and barge points. Nov/Sep 2015 soybean to corn price ratio was 2.43. November 2015 futures closed at $9.74 up 26 cents from last week. Downside price protection could be achieved by purchasing a $9.80 November 2015 Put Option which would cost 58 cents and set a $9.22 futures floor.
Cotton
May 2015 cotton futures closed at 63.69 up 0.14 cents since last week. May 2015 cotton futures traded between 62.17 and 64.18 cents this week.
July 2015 cotton futures closed at 63.80 down 0.07 cents since last week. Net sales reported by exporters were down from last week with net sales of 61,200 bales for the 2014/15 marketing year and net sales of 2,400 bales for the 2015/16 marketing year. Exports for the same period were up from last week at 325,300 bales. Upland cotton export sales were 100 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 97 percent. May/July and May/Dec futures spread were 0.11 cents and 0.85 cents. December 2015 cotton futures closed at 64.54 down 0.14 cents since last week. Downside price protection could be obtained by purchasing a 65 cent December 2015 Put Option costing 4.0 cents establishing a 61 cent futures floor.
Wheat
May 2015 wheat futures closed at $5.36 up 29 cents since last week. May wheat futures traded between $5.06 and $5.44 this week. May wheat to corn price ratio was 1.39. May/July and July/Sept future spreads were -1 cents and 9 cents, respectively. In Memphis, old crop cash wheat traded between $4.71 and $4.90 last week.
July 2015 wheat futures closed at $5.35 up 23 cents since last week. Net sales reported by exporters were within expectations at 6.0 million bushels for the 2014/15 marketing year and 4.8 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 12.4 million bushels. Wheat export sales were 94 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 99 percent. June/July 2015 cash forward contracts averaged $5.19 with a range of $4.54 to $5.48 at elevators and barge points. Downside price protection could be obtained by purchasing a $5.40 July 2015 Put Option costing 33 cents establishing a $5.07 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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