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Corn, Soybeans, And Wheat Were Down; Cotton Was Mixed For The Week
DR. AARON SMITH
KNOXVILLE, TENN.
The average cash price for a bushel of soybeans, in Tennessee, fell to $8.94 on Thursday, June 22. This is the lowest average price since March 15, 2016. Similarly, harvest cash forward contracts (October/November delivery) dipped to an average of $9.01/bu, the lowest since March 18, 2016. For soybean prices to improve, it is likely that one (or both of the following will need to happen: 1) export sales will need to rebound – export sales for this marketing year have been strong, however recent weeks export sales commitments have been underwhelming (4.2 million bushels this past (reported) week for the 2016/17 and 2017/18 marketing years combined) and sales commitments for the 2017/18 marketing year are substantially lower than past years (3.4 MMT compared to 6.2, 6.0, and 10.3 MMT for the previous 3 years at the same time in the marketing year); and/or 2) adverse weather in a key production region in the US or South America – the drought affecting wheat in North and South Dakota has received the majority of the headlines, however if dry conditions persist, and move East, it could impact soybean and corn production (the prospective planting report indicated planted acreage of 5.4 and 6.9 million acres of soybeans in South and North Dakota, respectively – or 13.7 percent of estimated US production). Currently, the drought is more prevalent in the western portion of both states (extending into eastern Montana) however, if drought conditions move East soybean and corn acres would be adversely affected. In addition to the drought in the Dakotas, there are areas of dryness in Minnesota (8.25 million acres planted), Iowa (10.1 million acres planted), and Nebraska (5.7 million acres planted). Timely rains could bring relief this week, but weather will continue to be monitored closely as summer progresses.
Corn
July 2017 corn futures closed at $3.57 down 27 cents since last Friday. For the week, July 2017 corn futures traded between $3.56 and $3.81. Across Tennessee, average basis (cash price-nearby futures price) strengthened at Memphis, Northwest, and Lower-middle Tennessee and weakened at Northwest Barge Points and Upper-middle Tennessee. Overall, basis for the week ranged from 15 under to 35 over the July futures contract with an average of 4 over the July futures contract at the end of the week. Corn net sales reported by exporters from June 9-15 were within expectations with net sales of 20.8 million bushels for the 2016/17 marketing year and 4.9 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 47.7 million bushels. Corn export sales and commitments were 98 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 99 percent. Ethanol production for the week ending June 16 was 0.990 million barrels per day down 12,000 from last week. Ethanol stocks were 22.280 million barrels, down 262,000 barrels. Jul/Sep and Jul/Dec future spreads were 8 and 18 cents, respectively. September 2017 corn futures closed at $3.65 down 27 cents since last Friday.
Nationally, the Crop Progress report estimated corn emerged at 98 percent compared to 94 percent last week, 99 percent last year, and a 5-year average of 98 percent; and corn condition at 67 percent good-to-excellent and 8 percent poor-to-very poor. In Tennessee, the Crop Progress report estimated corn condition at 86 percent good-to-excellent 2 percent poor-to-very poor; and corn silking at 12 percent compared to1 percent last week, 1 percent last year, and a 5-year average of 12 percent. In Tennessee, September 2017 cash forward contracts averaged $3.68 with a range of $3.56 to $3.93. December 2017 corn futures closed at $3.75 down 27 cents since last Friday. Downside price protection could be obtained by purchasing a $3.80 December 2017 Put Option costing 24 cents establishing a $3.56 futures floor.
Soybeans
July 2017 soybean futures closed at $9.04 down 35 cents since last Friday. For the week, July 2017 soybean futures traded between $9.00 and $9.47. Average soybean basis weakened at Memphis and Northwest Barge Points and strengthened at Lower-middle, Upper-middle, and Northwest Tennessee. Basis ranged from 36 under to 7 over the July futures contract at elevators and barge points. Average basis at the end of the week was 11 under the July futures contract. Net sales reported by exporters were below expectations with net sales of 4.1 million bushels for the 2016/17 marketing year and 0.1 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 10.9 million bushels. Soybean export sales and commitments were 106 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 100 percent. July soybean-to-corn futures price ratio was 2.53 at the end of the week. Jul/Aug and Jul/Nov future spreads were 4 cents and 7 cents, respectively. August 2017 soybean futures closed at $9.08 down 35 cents since last Friday.
Nationally, the Crop Progress report estimated soybeans planted at 96 percent compared to 92 percent last week, 95 percent last year, and a 5-year average of 93 percent; soybeans emerged at 89 percent compared to 77 percent last week, 88 percent last year, and a 5-year average of 84 percent; and soybean condition at 67 percent good-to-excellent and 7 percent poor-to-very poor. In Tennessee, the Crop Progress report estimated soybean condition at 86 percent good-to-excellent and 2 percent poor-to-very poor; soybeans planted at 86 percent compared to 74 percent last week, 83 percent last year, and a 5-year average of 79 percent; and soybeans emerged at 69% compared to 59 percent last week, 69 percent last year, and a 5-year average of 62 percent. In Tennessee, October / November 2017 soybean cash contracts average $9.22 with a range of $8.73 to $9.55. November/December 2017 soybean-to-corn price ratio was 2.43 at the end of the week. November 2017 soybean futures closed at $9.11 down 39 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 November 2017 Put Option which would cost 42 cents and set a $8.78 futures floor.
Cotton
July 2017 cotton futures closed at 73.09 cents up 1.21 cents since last Friday. For the week, July 2017 cotton futures traded between 70.68 and 73.4 cents. Delta upland cotton spot price quotes for June 22 were 66.53 cents/lb (41-4-34) and 67.78 cents/lb (31-3-35). Adjusted world price (AWP) decreased 2.71 cents to 64.6 cents per pound. Net sales reported by exporters were up from last week with net sales of 167,500 bales for the 2016/17 marketing year and 426,800 bales for the 2017/18 marketing year. Exports for the same period were up from last week at 233,300 bales. Upland cotton export sales were 105 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 106%. October 2017 cotton futures closed at 68 down 2.86 cents since last Friday. Jul/Oct and Jul/Dec cotton futures spreads were -5.09 cents and -5.83 cents, respectively.
Nationally, the Crop Progress report estimated cotton planted at 94 percent compared to 92 percent last week, 94 percent last year, and a 5-year average of 96 percent; cotton squaring at 22 percent compared to 15 percent last week, 21 percent last year, and a 5-year average of 20 percent; and cotton condition at 61 percent good-to-excellent and 6 percent poor-to-very poor. In Tennessee, cotton condition was estimated at 86 percent good-to-excellent and 5 percent poor-to-very poor; and cotton squaring at 23 percent compared to 18 percent last week, 23 percent last year, and a 5-year average of 21 percent. December 2017 cotton futures closed at 67.26 down 2.1 cents since last Friday. Downside price protection could be obtained by purchasing a 68 cent December 2017 Put Option costing 3.85 cents establishing a 64.15 cent futures floor.
Wheat
July 2017 wheat futures closed at $4.59 down 6 cents since last Friday. July 2017 wheat futures traded between $4.55 and $4.74 this week. July wheat-to-corn price ratio was 1.29.Wheat net sales reported by exporters were above expectations with net sales of 19.9 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 26.4 million bushels. Wheat export sales were 28 percent of the USDA estimated total annual exports for the 2017/18 marketing year (June 1 to May 31), compared to a 5-year average of 27 percent. Jul/Sep and Jul/Dec future spreads were 14 cents and 36 cents, respectively. In Tennessee, June/July 2017 cash wheat ranged from $4.42 to $5.03.
Nationally, the Crop Progress report estimated winter wheat condition at 49 percent good-to-excellent and 16 percent poor-to-very-poor; winter wheat headed at 97 percent compared to 92 percent last week, 99 percent last year, and a 5-year average of 95 percent; winter wheat harvested at 28 percent compared to 17 percent last week, 23 percent last year, and a 5-year average of 25 percent; spring wheat headed at 15 percent compared to 25 percent last year and a 5-year average of 17 percent; and spring wheat condition at 41 percent good-to-excellent and 27 percent poor-to-very poor. In Tennessee, winter wheat condition was reported at 71 percent good-to-excellent and 8 percent poor-to-very poor; winter wheat mature at 95 percent compared to 87 percent last week; and winter wheat harvested at 75 percent compared to 32 percent last week, 46 percent last year, and a 5-year average of 43 percent. September 2017 wheat futures closed at $4.73 down 8 cents from last Friday. July 2018 wheat futures closed at $5.28 down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $5.30 July 2018 Put Option costing 42 cents establishing a $4.88 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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