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Weather Dominates Markets Through Planting Season
DR. AARON SMITH
KNOXVILLE, TENN.
Corn and wheat were up; cotton was mixed; and soybeans were down for the week. December corn opened April at $3.89 ¾ and closed at $3.85, down 4 ¾ cents for the month. The trading range for April was $3.79 ¼ to $3.95 ¾. In March, the December contract decreased 4 ¾ cents. Corn has traded mostly between $3.75 and $4.00 for the past 7 months.
November soybeans opened April at $9.54 ¾ and closed at $9.53 ¼, down 1 ½ cents for the month. The trading range for April was $9.41 ½ to $9.68 ½. This was after the major price declines in March when the November contract decreased 64 ¼ cents.
December cotton opened April at 74.05 and closed at 74.62, up 0.57 cents for the month. The trading range for April was 72.19 to 75.16 cents. Harvest cotton futures are now at a 5 cent discount compared to the nearby contract.
July wheat opened April at $4.42 ¼ and closed at $4.32 ¼, down 10 cents for the month. The trading range for April was $4.49 ½ to $4.16.
Weather will be the dominant influence in markets as we move through the planting and early growing periods. Producers should remain patient and look for marketing opportunities to increase pricing. For example, in each of the past two years the December contract has had short lived rallies above $4.25/bu (July 2015 and June 2016). These marketing opportunities have been brief but it is reasonable to expect we will see a rally during this production season, so producers need to remain vigilant for opportunities to secure profitable prices.
Corn
May 2017 corn futures closed at $3.58 up 1cent since last Friday. For the week, May 2017 corn futures traded between $3.55 and $3.68. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened at Memphis and Upper-middle Tennessee. Overall, basis for the week ranged from 5 under to 30 over the May futures contract with an average of 7 over at the end of the week. Corn net sales reported by exporters from April 14-20 were above expectations with net sales of 38.9 million bushels for the 2016/17 marketing year and 0.4 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 54.1 million bushels. Corn export sales and commitments were 90 percent of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31) compared to a 5-year average of 88 percent. Ethanol production for the week ending April 21 was 0.987 million barrels per day down 6,000 from last week. Ethanol stocks were 23.269 million barrels, up 235,000 barrels. May/Jul and May/Dec future spreads were 8 and 27 cents, respectively. July 2017 corn futures closed at $3.66 up 3 cents since last Friday.
Nationally, the Crop Progress report estimated corn planted at 17 percent compared to 6 percent last week, 28 percent last year, and a 5-year average of 18 percent; and corn emerged at 4 percent compared to 4 percent last year and a 5-year average of 4 percent. In Tennessee, the Crop Progress report estimated corn planted at 45 percent compared to 24 percent last week, 61 percent last year, and a 5-year average of 46 percent; and corn emerged at 21 percent compared to 13 percent last week and 18 percent last year. In Tennessee, September 2017 cash forward contracts averaged $3.65 with a range of $3.38 to $3.88. December 2017 corn futures closed at $3.85 up 3 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2017 Put Option costing 30 cents establishing a $3.60 futures floor.
Soybeans
May 2017 soybean futures closed at $9.45 down 6 cents since last Friday. For the week, May 2017 soybean futures traded between $9.41 and $9.62. Average soybean basis strengthened or remained unchanged at Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened at Memphis and Upper-middle Tennessee. Basis ranged from 37 under to 11 over the May futures contract at elevators and barge points. Average basis at the end of the week was 12 under the May futures contract. Net sales reported by exporters were above expectations with net sales of 29.7 million bushels for the 2016/17 marketing year and 2.7 million bushels for the 2017/18 marketing year. Exports for the same period were up from last week at 28.7 million bushels. Soybean export sales and commitments were 102 percent of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31), compared to a 5-year average of 96 percent. May soybean-to-corn futures price ratio was 2.64 at the end of the week. May/Jul and May/Nov future spreads were 11 cents and 8 cents, respectively. July 2017 soybean futures closed at $9.56 down 4 cents since last Friday.
Nationally, the Crop Progress report estimated soybeans planted at 6 percent compared to 3 percent last year and a 5-year average of 3 percent. In Tennessee, the Crop Progress report estimated soybeans planted at 4 percent compared to 2 percent last year, and a 5-year average of 1 percent. In Tennessee, October / November 2017 soybean cash contracts average $9.46 with a range of $9.14 to $9.71. November/December 2017 soybean-to-corn price ratio was 2.48 at the end of the week. November 2017 soybean futures closed at $9.53 down 6 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2017 Put Option which would cost 51 cents and set a $9.09 futures floor.
Cotton
May 2017 cotton futures closed at 80.23 cents up 1.24 cents since last Friday. For the week, May 2017 cotton futures traded between 79 and 81.2 cents. Delta upland cotton spot price quotes for April 27 were 76.46 cents/lb (41-4-34) and 77.71 cents/lb (31-3-35). Adjusted world price (AWP) increased 0.88 cents to 69.85 cents per pound. Net sales reported by exporters were down from last week with net sales of 115,500 bales for the 2016/17 marketing year and 65,300 bales for the 2017/18 marketing year. Exports for the same period were down from last week at 302,400 bales. Upland cotton export sales were 102 percent of the USDA estimated total annual exports for the 2016/17 marketing year (August 1 to July 31), compared to a 5-year average of 96 percent. July 2017 cotton futures closed at 78.87 down 0.46 cents since last Friday. May/Jul and May/Dec cotton futures spreads were -1.36 cents and -5.61 cents, respectively.
Nationally, the Crop Progress report estimated cotton planted at 11 percent compared to 8 percent last week, 10 percent last year, and a 5-year average of 12 percent. In Tennessee, cotton planted was estimated at 3 percent compared to 1 percent last year and a 5-year average of 1 percent. December 2017 cotton futures closed at 74.62 down 0.34 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2017 Put Option costing 4.14 cents establishing a 70.86 cent futures floor.
Wheat
May 2017 wheat futures closed at $4.18 up 13 cents since last Friday. May 2017 wheat futures traded between $3.98 and $4.18 this week. May wheat-to-corn price ratio was 1.17.Wheat net sales reported by exporters were within expectations with net sales of 2.3 million bushels for the 2016/17 marketing year and 11.2 million bushels for the 2017/18 marketing year. Exports for the week were down from last week at 22.5 million bushels. Wheat export sales were 100 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 102 percent. In Memphis, old crop cash wheat ranged from $4.09 to $4.28. May/Jul and May/Sep future spreads were 14 cents and 27 cents, respectively.
Nationally, the Crop Progress report estimated winter wheat condition at 54 percent good-to-excellent and 13 percent poor-to-very-poor; winter wheat headed at 32 percent compared to 19 percent last week, 24 percent last year, and a 5-year average of 23 percent; spring wheat planted at 22 percent compared to 13 percent last week, 40 percent last year, and a 5-year average of 34 percent; and spring wheat emerged at 5 percent compared to 7 percent last year and a 5-year average of 8 percent. In Tennessee, winter wheat condition was reported at 63 percent good-to-excellent and 11 percent poor-to-very poor; winter wheat jointed at 94 percent compared to 88 percent last week, 86 percent last year, and a 5-year average of 82 percent; and winter wheat headed at 60 percent compared to 34 percent last week, 22 percent last year, and a 5-year average of 28 percent. In Tennessee, June/July 2017 cash wheat ranged from $3.99 to $4.56. July 2017 wheat futures closed at $4.32 up 11 cents from last Friday. Downside price protection could be obtained by purchasing a $4.35 July 2017 Put Option costing 18 cents establishing a $4.17 futures floor. July 2017 wheat-to-corn price ratio was 1.18. September 2017 wheat futures closed at $4.45 up 10 cents since last Friday. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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