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Corn, Soybean Acres Estimated Down, Wheat Acres Up
DR. AARON SMITH
KNOXVILLE, TENN.
For one day, weather and trade took a temporarily back seat for corn, soybean, cotton, and wheat markets as today’s focus was the release of two USDA reports – the Acreage and Grain Stocks. Markets reacted quickly with cotton, wheat, and corn up for the day and soybeans down. Highlights of the reports included:
Corn acres planted in 2018 were estimated at 89.128 million acres, down 1.039 million from 2017 and up 1.102 million acres from the March 2018 Prospective Planting report. The increase from the Prospective Planting report was expected as strong corn prices and good weather during the planting season brought in additional corn acres.
Soybean acres planted were estimated at 89.557 million acres, down 585,000 from 2017 and up 575,000 acres from the March 2018 Prospective Planting report. Similar to corn good planting conditions and strong prices from March to May added acreage compared to the projection provided in the March Prospective Plantings report.
Wheat acres planted were estimated at 47.821 million acres, up 1.809 million acres from 2017 and up 482,000 acres from the March 2018 Prospective Planting report. Markets reacted favorably to the lower stocks with wheat futures finishing the day up 16 to 18 cents.
All cotton acres planted were estimated at 13.518 million acres, up 906,000 from 2017 and up 49,000 acres from the March 2018 Prospective Planting report. As usual, abandonment in Texas will greatly influence the final acres harvested.
Compared to last year the Grain Stocks report indicated that corn stocks were up 1 percent, soybean stocks were up 26 percent, and wheat stocks were down 7 percent compared to July 2017.
A full review of the two reports will be posted on Monday.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Overall, basis for the week ranged from 17 under to 31 over the July futures contract with an average of 5 over at the end of the week. July 2018 corn futures closed at $3.50, down 7 cents since last Friday. For the week, July 2018 corn futures traded between $3.44 and $3.59. Corn net sales reported by exporters from June 15-21 were above expectations with net sales of 33.5 million bushels for the 2017/18 marketing year and 25.1 million bushels for the 2018/19 marketing year. Exports for the same time period were down 16 percent compared to last week at 58.3 million bushels. Corn export sales and commitments were 98 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 100 percent. Ethanol production for the week ending June 22 was 1.072 million barrels per day, up 8,000 from the previous week. Ethanol stocks were 21.674 million barrels, down 27,000 barrels. Jul/Sept and Jul/Dec future spreads were 9 and 21 cents, respectively.
The Crop Progress report estimated corn condition at 77 percent good-to-excellent and 5 percent poor-to-very poor; and corn silking at 5 percent compared to 4 percent last year and a 5-year average of 3 percent. In Tennessee, corn condition was estimated at 77 percent good-to-excellent and 2 percent poor-to-very poor; and corn silking at 33 percent compared 8 percent last week, 34 percent last year, and a 5-year average of 18 percent. In Tennessee, September 2018 corn cash forward contracts averaged $3.55 with a range of $3.39 to $3.81. September 2018 corn futures closed at $3.59, down 7 cents since last Friday. December 2018 corn futures closed at $3.77, down 7 cents since last Friday. Downside price protection could be obtained by purchasing a $3.80 December 2018 Put Option costing 26 cents establishing a $3.54 futures floor.
Soybeans
Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Basis ranged from 42 under to 17 over the July futures contract at elevators and barge points. Average basis at the end of the week was 3 under the July futures contract. July 2018 soybean futures closed at $8.58, down 36 cents since last Friday. For the week, July 2018 soybean futures traded between $8.57 and $8.99. Net sales reported by exporters were above expectations with net sales of 13.2 million bushels for the 2017/18 marketing year and 23.6 million bushels for the 2018/19 marketing year. Exports for the same period were down 50 percent compared to last week at 18.4 million bushels. Soybean export sales and commitments were 101 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 101 percent. July soybean-to-corn price ratio was 2.45 at the end of the week.
Jul/Aug and Jul/Nov future spreads were 5 and 22 cents, respectively. August 2018 soybean futures closed at $8.63, down 37 cents since last Friday. The Crop Progress report estimated soybean condition at 73 percent good-to-excellent and 5 percent poor-to-very poor; soybeans emerged at 95 percent compared to 90 percent last week, 93 percent last year, and a 5-year average of 89 percent; and soybeans blooming at 12 percent compared to 8 percent last year and a 5-year average of 5 percent. In Tennessee, soybean condition was estimated at 82 percent good-to-excellent and 2 percent poor-to-very poor; soybeans planted at 93 percent compared to 87 percent last week, 89 percent last year, and a 5-year average of 83 percent; soybeans emerged at 81 percent compared to 71 percent last week, 78 percent last year, and a 5-year average of 69 percent; and soybeans blooming at 13 percent compared to 3 percent last week, 5 percent last year, and a 5-year average of 3 percent. In Tennessee, Oct/Nov 2018 soybean cash contracts average $8.71 with a range of $8.53 to $8.96. November 2018 soybean futures closed at $8.80, down 36 cents since last Friday. Downside price protection could be achieved by purchasing an $8.80 November 2018 Put Option which would cost 44 cents and set an $8.36 futures floor. Nov/Dec 2018 soybean-to-corn price ratio was 2.37 at the end of the week.
Cotton
Delta upland cotton spot price quotes for June 28 were 83.07 cents/lb (41-4-34) and 84.82 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 2.57 cents to 75.66 cents. July 2018 cotton futures closed at 85.38 cents, down 0.05 cents since last Friday. For the week, July 2018 cotton futures traded between 84.09 and 86.48 cents. Net sales reported by exporters were down from last week with net sales cancelations of 18,900 bales for the 2017/18 marketing year and net sales of 196,200 bales for the 2018/19 marketing year. Exports for the same period were up 18 percent compared to last week at 367,800 bales. Upland cotton export sales were 108 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 104 percent. Jul/Dec and Jul/Mar cotton futures spreads were -1.46 cents and -1.72 cents, respectively.
The Crop Progress report estimated cotton condition at 42 percent good-to-excellent and 19 percent poor-to-very poor; cotton squaring at 32 percent compared to 22 percent last week, 32 percent last year, and a 5-year average of 28 percent; and cotton setting bolls at 6 percent compared to 7 percent last year and a 5-year average of 5 percent. In Tennessee, cotton condition was estimated at 81 percent good-to-excellent and 6 percent poor-to-very poor; cotton squaring at 54 percent compared to 33 percent last week, 34 percent last year, and a 5-year average of 31 percent; and cotton setting bolls at 1 percent compared to 0 percent last week, 2 percent last year, and a 5-year average of 1 percent. December 2018 cotton futures closed at 83.92, down 1.38 cents since last Friday. Downside price protection could be obtained by purchasing an 84 cent December 2018 Put Option costing 4.26 cents establishing a 79.74 cent futures floor. Mar 2019 cotton futures closed at 83.66, down 1.23 cents since last Friday.
Wheat
In Tennessee, June/July 2018 wheat cash contracts ranged from $4.55 to $5.10 for the week. July 2018 wheat futures closed at $4.97, up 6 cents since last Friday. July 2018 wheat futures traded between $4.66 and $5.04 this week. July wheat-to-corn price ratio was 1.42. Wheat net sales reported by exporters were above expectations with net sales of 20.7 million bushels for the 2018/19 marketing year. Exports for the week were down 16 percent compared to last week at 13.1 million bushels. Wheat export sales were 22 percent of the USDA estimated total annual exports for the 2018/19 marketing year (June 1 to May 31), compared to a 5-year average of 30 percent. The Crop Progress report estimated winter wheat condition at 37 percent good-to-excellent and 34 percent poor-to-very poor; winter wheat harvested at 41 percent compared to 27 percent last week, 39 percent last year, and a 5-year average of 33 percent; spring wheat condition at 78 percent good-to-excellent and 3 percent poor-to-very poor; and spring wheat headed at 34 percent compared to 9 percent last week, 33 percent last year and a 5-year average of 27 percent. In Tennessee, winter wheat condition was estimated at 59 percent good-to-excellent and 4 percent poor-to-very poor; winter wheat mature at 98 percent compared to 94 percent last week, 97 percent last year, and a 5-year average of 93 percent; and winter wheat harvested at 86 percent compared to 60 percent last week, 88 percent last year, and a 5-year average of 63 percent.
Jul/Sep and Jul/Jul future spreads were 4 cents and 51 cents, respectively. September 2018 wheat futures closed at $5.01, down 3 cents since last Friday. July 2019 wheat futures closed at $5.48, down 6 cents since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2019 Put Option costing 43 cents establishing a $5.07 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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