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USDA Annual Outlook Conference Offers Early Projections For Year
DR. AARON SMITH
KNOXVILLE, TENN.
On Thursday and Friday, the USDA held its 94th annual Outlook Conference. The conference provides USDA’s initial estimates for the forth coming marketing year (2018/19).
The USDA currently projects corn acres planted at 90.0 million acres and harvested acres at 82.7 million acres. Yield is a trend line estimate of 174 bu/acre. Total production is projected at 14.39 billion bushels, down 1.5 percent from 2017. Total use is projected at 14.52 billion bushels resulting in a decrease in ending stocks from 2.352 to 2.272 billion bushels.
Soybean acres planted are projected at 90.0 million acres and harvested acres at 89.1 million acres. Yield is a trend line estimate of 48.5 bu/acre. Total production is projected at 4.32 billion bushels, down 1.7 percent from 2017. Total use is projected at 4.415 billion bushels resulting in a decrease in ending stocks from 530 to 460 million bushels.
Cotton acres planted are projected at 13.3 million acres and harvested acres at 11.3 million acres. Yield is a trend line estimate of 828 lbs/acre. Total production is projected at 19.5 million bales, down 8.3 percent from 2017. Total use is projected at 19.4 million bales leaving ending stocks unchanged from the previous year.
Wheat acres planted are projected at 46.5 million acres and harvested acres at 38.8 million acres. Yield is a trend line estimate of 47.4 bu/acre. Total production is projected at 1.839 billion bushels, down 5.6 percent from 2017. Total use is projected at 2.052 billion bushels resulting in a decrease in ending stocks from 1.009 billion to 931 million bushels.
The projections provided are estimates and will be revised each month as we move through the marketing year and new information is made available.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest Barge Points, Memphis, Northwest, and Upper-middle, and weakened at Lower-middle Tennessee. Overall, basis for the week ranged from 11 under to 30 over the March futures contract with an average of 10 over at the end of the week. March 2018 corn futures closed at $3.66, down 1 cent since last Friday. For the week, March 2018 corn futures traded between $3.64 and $3.70. Corn net sales reported by exporters from February 9-15 were above expectations with net sales of 61.2 million bushels for the 2017/18 marketing year and 2.6 million bushels for the 2018/19 marketing year. Exports for the same time period were down from last week at 33.5 million bushels. Corn export sales and commitments were 72 percent of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31) compared to a 5-year average of 72 percent. Ethanol production for the week ending February 16 was 1.068 million barrels per day, up 52,000 from the previous week. Ethanol stocks were 22.753 million barrels, down 132,000 barrels. Mar/May and Mar/Dec future spreads were 8 and 31 cents, respectively.
May 2018 corn futures closed at $3.74, down 1 cent since last Friday. In Tennessee, September 2018 corn cash forward contracts averaged $3.77 with a range of $3.68 to $3.99. December 2018 corn futures closed at $3.97, unchanged since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2018 Put Option costing 26 cents establishing a $3.74 futures floor.
Soybeans
Average soybean basis weakened or remained unchanged at Northwest Barge Points, Memphis, Northwest, Upper-middle, and Lower-middle Tennessee. Basis ranged from 40 under to 6 over the March futures contract at elevators and barge points. Average basis at the end of the week was 12 under the March futures contract. March 2018 soybean futures closed at $10.36, up 15 cents since last Friday. For the week, March 2018 soybean futures traded between $10.19 and $10.39. Net sales reported by exporters were below expectations with net sales of 4.0 million bushels for the 2017/18 marketing year and 8.2 million bushels for the 2018/19 marketing year. Exports for the same period were down from last week at 32.8 million bushels. Soybean export sales and commitments were 78% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31), compared to a 5-year average of 91 percent. March soybean-to-corn price ratio was 2.83 at the end of the week.
Mar/May and Mar/Nov future spreads were 11 and 8 cents, respectively. May 2018 soybean futures closed at $10.47, up 15 cents since last Friday. In Tennessee, Oct/Nov 2018 soybean cash contracts average $10.09 with a range of $9.85 to $10.31. November 2018 soybean futures closed at $10.28, up 6 cents since last Friday. Downside price protection could be achieved by purchasing a $10.40 November 2018 Put Option which would cost 64 cents and set a $9.76 futures floor. November/December 2018 soybean-to-corn price ratio was 2.59 at the end of the week.
Cotton
Delta upland cotton spot price quotes for February 22 were 77.47 cents/lb (41-4-34) and 79.22 cents/lb (31-3-35). Adjusted world price (AWP) increased 0.54 cents to 69.69 cents per pound. March 2018 cotton futures closed at 81.45 cents, up 5.73 cents since last Friday. For the week, March 2018 cotton futures traded between 75.60 and 81.5 cents. Net sales reported by exporters were down from last week with net sales of 399,100 bales for the 2017/18 marketing year and 177,200 bales for the 2018/19 marketing year. Exports for the same period were down from last week at 333,500 bales. Upland cotton export sales were 96 percent of the USDA estimated total annual exports for the 2017/18 marketing year (August 1 to July 31), compared to a 5-year average of 83 percent. Mar/May and Mar/Dec cotton futures spreads were -0.11 cents and -4.85 cents, respectively.
May 2018 cotton futures closed at 81.34, up 4.18 cents since last Friday. December 2018 cotton futures closed at 76.6, up 0.98 cents since last Friday. Downside price protection could be obtained by purchasing a 77 cent December 2018 Put Option costing 4.56 cents establishing a 72.44 cent futures floor.
Wheat
Memphis, old crop cash wheat ranged from $4.62 to $4.66. March 2018 wheat futures closed at $4.52, down 5 cents since last Friday. March 2018 wheat futures traded between $4.44 and $4.63 this week. March wheat-to-corn price ratio was 1.23. Wheat net sales reported by exporters were within expectations with net sales of 12.1 million bushels for the 2017/18 marketing year and 2.0 million bushels for the 2018/19 marketing year. Exports for the week were down from last week at 15.3 million bushels. Wheat export sales were 83 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 91 percent. Mar/May and Mar/Jul future spreads were 12 cents and 27 cents, respectively.
May 2018 wheat futures closed at $4.64, down 7 cents since last Friday. In Tennessee, June/July 2018 cash forward contracts ranged from $4.55 to $5.04 for the week. July 2018 wheat futures closed at $4.79, down 7 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 July 2018 Put Option costing 25 cents establishing a $4.55 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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