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Commodity Prices Mixed As Season Progresses
DR. AARON SMITH
KNOXVILLE, TENN.
Corn and wheat were down; soybeans and cotton were up for the week. For the month of June, December corn closed down 41 cents at $3.67/bu. The December contract high, in June, was $4.49/bu occurring on June 17th, the low was $3.65/bu occurring on June 30th. November soybeans had another strong month opening at $10.55/bu and closing at $11.53/bu, up 98 cents. The November contract high occurred on June 13th at $11.86/bu and the low was $10.45/bu on June 1st. December cotton moved sideways for the month opening at 63.55 cents/lb and closing at 64.17 cents/lb, up 0.62 cents/lb. The December contract high, in June, was 66.64 cents/lb occurring on the 17th and the low of 62.60 cents/lb occurred June 2nd. September wheat had an abysmal month closing down 31 cents, opening at $4.76/bu and closing at $4.45/bu. The September contract high occurred on June 8th at 5.33/bu and the contract low on June 30th at $4.36/bu.
The 2016 November/December corn-to-soybean price ratio closed on Friday at 3.10. This is a high for the 2016 November/December futures contracts which have traded from August 4, 2014 to July 1, 2016 (483 trading days). The average ratio over this time has been 2.35 with a minimum of 2.11 and a maximum of 3.10. Strong demand for soybeans should keep the ratio well above average for the next few months; however look for the soybean/corn ratio to get back closer to 2.5:1 as we move into 2017.
Eligible cotton producers are reminded that registration for the USDA Cotton Ginning Cost-Share (CGCS) program is now underway at your local Farm Service Agency (FSA). Producers have until August 5 to register for a one-time payment.
Corn
September 2016 corn futures closed at $3.60 down 29 cents since last Friday. September 2016 corn futures traded between $3.58 and $4.02 for the week. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, Memphis, Lower-middle, and Upper-middle Tennessee and weakened at Northwest Barge Points. Overall, basis for the week ranged from 5 under to 47 over the July futures contract with an average of 15 over at the end of the week. July futures closed at $3.53. Ethanol production for the week ending June 24 was 1,003,000 barrels per day up 41,000 from last week. Ethanol stocks were 21.167 million barrels, up 57,000 barrels. Corn net sales reported by exporters from June 17-23 were within expectations with net sales of 18.4 million bushels for the 2015/16 marketing year and 21.1 million bushels for the 2016/17 marketing year. Exports for the same time period were up from last week at 58.9 million bushels. Corn export sales and commitments were 101 percent of the USDA estimated total annual exports for the 2015/16 marketing year (September 1 to August 31) compared to a 5-year average of 100 percent.
Sep/Dec and Sep/Mar future spreads were 7 and 16 cents, respectively. This week’s Crop Progress report estimated corn condition at 75 percent good-to-excellent and 5 percent poor-to-very poor; and corn silking at 6 percent compared to 3 percent last year and a 5-year average of 5 percent. In Tennessee, this week’s Crop Progress report indicated corn condition at 70 percent good-to-excellent and 7 percent poor-to-very poor; and corn silking at 24 percent compared to 19 percent last year and a 5-year average of 32 percent. In Tennessee, September 2016 cash forward contracts averaged $3.79 with a range of $3.50 to $4.04. December 2016 corn futures closed at $3.67 down 27 cents since last Friday. Downside price protection could be obtained by purchasing a $3.70 December 2016 Put Option costing 25 cents establishing a $3.45 futures floor. March 2017 corn futures closed at $3.76 down 25 cents since last Friday.
Soybeans
August 2016 soybean futures closed at $11.64 up 63 cents since last Friday. August 2016 soybean futures traded between $11.00 and $11.81. For the week, average soybean basis strengthened at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Basis ranged from 35 under to 30 over the July futures contract at elevators and barge points. Average basis at the end of the week was 7 under the July futures contract. July soybeans closed at $11.68. Net sales reported by exporters were above expectations with net sales of 26.9 million bushels for the 2015/16 marketing year and net sales of 29.3 million bushels for the 2016/17 marketing year. Exports for the same period were up from last week at 14.3 million bushels. Soybean export sales and commitments were 106 percent of the USDA estimated total annual exports for the 2015/16 marketing year (September 1 to August 31), compared to a 5-year average of 102 percent. August/September soybean-to-corn price ratio was 3.23 at the end of the week.
September 2016 soybean futures closed at $11.48 up 62 cents since last Friday. Aug/Sep and Aug/Nov future spreads were -16 cents and -27 cents, respectively. This week’s Crop Progress report estimated soybean condition at 72 percent good-to-excellent and 5 percent poor-to-very-poor; soybeans emerged at 95 percent compared to 89 percent last week, 88 percent last year, and a 5-year average of 91 percent; and soybeans blooming at 9 percent compared to 7 percent last year and a 5-year average of 7 percent. In Tennessee, this week’s Crop Progress report indicated soybean condition at 72 percent good-to-excellent and 5 percent poor-to-very poor; soybeans emerged at 78 percent compared to 70 percent last week, 71 percent last year, and a 5-year average of 73 percent; and soybeans blooming at 6 percent compared to 4 percent last year and a 5-year average of 6 percent. November/December 2016 soybean-to-corn price ratio was 3.10 at the end of the week. In Tennessee, October/November 2016 cash forward contracts averaged $11.20 with a range of $10.70 to $11.78 at elevators and barge points. November 2016 soybean futures closed at $11.37 up 59 cents since last Friday. Downside price protection could be achieved by purchasing an $11.40 November 2016 Put Option which would cost 65 cents and set a $10.75 futures floor.
Cotton
October 2016 cotton futures closed at 65.11 up 0.28 cents since last Friday. Adjusted world price (AWP) increased 0.63 cents to 56.11 cents per pound. Delta upland cotton spot price quotes for June 30 were 64.12 cents/lb (41-4-34) and 66.87 cents/lb (31-3-35). Net sales reported by exporters were down from last week with net sales of 58,700 bales for the 2015/16 marketing year and 138,300 bales for the 2016/17 marketing year. Exports for the same period were up from last week at 229,700 bales. Upland cotton export sales were 105 percent of the USDA estimated total annual exports for the 2015/16 marketing year (August 1 to July 31), compared to a 5-year average of 106 percent.
This week’s Crop Progress report estimated cotton condition at 56 percent good-to-excellent and 8 percent poor-to-very poor; cotton squaring at 29 percent compared to 22 percent last week, 31 percent last year, and a 5-year average of 33 percent; and cotton setting bolls at 6 percent compared to 4 percent last year and a 5-year average of 6 percent. In Tennessee, this week’s Crop Progress report indicated cotton condition at 76 percent good-to-excellent and 5 percent poor-to-very poor; cotton squaring at 40 percent compared to 24 percent last week, 29 percent last year, and a 5-year average of 35 percent; and cotton setting bolls at 1 percent compared to 0 percent last week, 0 percent last year, and a 5-year average of 1 percent. December 2016 cotton futures closed at 64.99 up 0.57 cents since last Friday. Dec/Oct and Dec/Mar cotton futures spreads were 0.12 cents and 0.25 cents, respectively. December 2016 cotton futures traded between 64.15 and 66.42 cents this week. Downside price protection could be obtained by purchasing a 65 cent December 2016 Put Option costing 3 cents establishing a 62 cent futures floor. March 2017 cotton futures closed at 65.24 up 0.23 cents since last Friday.
Wheat
In Tennessee, June cash prices averaged $4.31 with a range of $4.00 to $4.57, for the week. Nationally, winter wheat condition was estimated at 62 percent good-to-excellent and 9 percent poor-to-very poor; winter wheat harvested at 45 percent compared to 25 percent last week, 33 percent last year, and a 5-year average of 41 percent; spring wheat condition at 72 percent good-to-excellent and 5 percent poor-to-very poor; and spring wheat headed at 56 percent compared to 28 percent last week, 42 percent last year, and a 5-year average of 14 percent. In Tennessee, winter wheat condition was reported as 83 percent good-to-excellent and 2 percent poor-to-very poor; winter wheat mature at 97 percent compared to 80 percent last week, 95 percent last year, and a 5-year average of 96 percent; and winter wheat harvested at 84 percent compared to 50 percent last week, 76 percent last year, and a 5-year average 74 percent.
September 2016 wheat futures closed at $4.30 down 35 cents since last Friday. September 2016 wheat futures traded between $4.28 and $4.70 this week. September wheat-to-corn price ratio was 1.19. Net sales reported by exporters were above expectations with net sales of 23.7 million bushels for the 2016/17 marketing year. Exports for the week were down from last week at 19.5 million bushels. Wheat export sales were 31 percent of the USDA estimated total annual exports for the 2016/17 marketing year (June 1 to May 31), compared to a 5-year average of 30 percent. Sep/Dec and Sep/Jul future spreads were 20 cents and 58 cents, respectively. December 2016 wheat futures closed at $4.50 down 34 cents since last Friday. December wheat-to-corn price ratio was 1.23. July 2017 wheat futures closed at $4.88 down 32 cents since last Friday. Downside price protection could be obtained by purchasing a $4.90 July 2017 Put Option costing 45 cents establishing a $4.45 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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