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Corn, Soybean Prices Rise, Cotton, Wheat Neutral
DR. AARON SMITH
KNOXVILLE, TENN.
On Thursday, the USDA released the October Crop Production and WASDE reports. After the report corn and soybean prices were up cotton and wheat were neutral to slightly down.
U.S. corn production was projected at 14.8 billion bushels, up 1 percent compared to last year. National average yield was projected at an all-time record of 180.7 bu/acre, down 0.6 bu/acre compared to the September estimate. Tennessee corn yield was projected at 174 bu/acre unchanged compared to last month.
U.S. soybean production was projected at 4.7 billion bushels, up 6 percent compared to last year. National average yield was projected at an all-time record of 53.1 bu/acre, up 0.3 bu/acre compared to the September estimate. Tennessee soybean yield was projected at 50 bu/acre, down 1 bu/acre compared to last month.
U.S. upland cotton production was projected at 18.992 million bales, down 6 percent compared to last year. National average yield was projected at 887 lbs/acre, up 7 lbs/acre compared to the September estimate. Tennessee cotton yield was projected at 1,034 lbs/acre, down 48 lbs/acre compared to last month.
A summary of the WASDE report for corn, cotton, soybeans, and wheat is available on line at: https://ag.tennessee.edu/arec/Pages/MonthlyCropComments.aspx.
Cotton prices rallied at the end of the week due to anticipated production losses in Georgia, Florida, and the Carolinas due to hurricane Michael.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest, Upper-middle, and Lower-middle Tennessee and weakened at Northwest Barge Points. Overall, basis for the week ranged from 31 under to 2 over the December futures contract with an average of 22 under at the end of the week. December 2018 corn futures closed at $3.73, up 5 cents since last Friday. For the week, December 2018 corn futures traded between $3.60 and $3.74. Corn net sales reported by exporters from September 28 to October 4 were within expectations with net sales of 39.6 million bushels for the 2018/19 marketing year. Exports for the same time period were up 14 percent compared to last week at 63.2 million bushels. Corn export sales and commitments were 33 percent of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to a 5-year average of 31 percent. Ethanol production for the week ending October 5 was 1.040 million barrels per day, up 25,000 from the previous week. Ethanol stocks were 24.021 million barrels, up 576,000 barrels. Dec/Mar and Dec/Dec future spreads were 12 and 31 cents, respectively.
The Crop Progress report estimated corn condition at 68 percent good-to-excellent and 12 percent poor-to-very poor; corn mature at 93 percent compared to 86 percent last week, 80 percent last year, and a 5-year average of 83 percent; and corn harvested at 34 percent compared to 26 percent last week, 21 percent last year, and a 5-year average of 26 percent. In Tennessee, corn condition was estimated at 80 percent good-to-excellent and 2 percent poor-to-very poor; corn mature at 98 percent compared to 97 percent last week, 97 percent last year, and a 5-year average of 97 percent; and corn harvested at 79 percent compared to 64 percent last week, 83 percent last year, and a 5-year average of 78 percent. In Tennessee, January 2019 corn cash forward contracts averaged $3.80 with a range of $3.64 to $3.97. March 2019 corn futures closed at $3.85, up 5 cents since last Friday. December 2019 corn futures closed at $4.04, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2019 Put Option costing 29 cents establishing a $3.81 futures floor.
Soybeans
Average soybean basis strengthened or remained unchanged at Memphis, Lower-middle, Upper-middle, and Northwest Tennessee and weakened at Northwest Barge Points. Basis ranged from 81 under to 28 under the November futures contract at elevators and barge points. Average basis at the end of the week was 56 under the November futures contract. November 2018 soybean futures closed at $8.67, down 2 cents since last Friday. For the week, November 2018 soybean futures traded between $8.47 and $8.74. Net sales reported by exporters were below expectations with net sales of 16.2 million bushels for the 2018/19 marketing year and 0.2 million bushels for the 2019/20 marketing year. Exports for the same period were up 23 percent compared to last week at 32.5 million bushels. Soybean export sales and commitments were 37 percent of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31), compared to a 5-year average of 52 percent. Nov/Dec 2018 soybean-to-corn price ratio was 2.32 at the end of the week.
Nov/Jan and Nov/Nov future spreads were 14 and 65 cents, respectively. The Crop Progress report estimated soybean condition at 68 percent good-to-excellent and 10 percent poor-to-very poor; soybeans dropping leaves at 91 percent compared to 83 percent last week, 88 percent last year, and a 5-year average of 85 percent; and soybeans harvested at 32 percent compared to 23 percent last week, 34 percent last year, and a 5-year average of 36 percent. In Tennessee, soybean condition was estimated at 72 percent good-to-excellent and 5 percent poor-to-very poor; soybeans dropping leaves at 83 percent compared to 67 percent last week, 81 percent last year, and a 5-year average of 76 percent; and soybeans harvested at 30 percent compared to 18 percent last week, 27 percent last year, and a 5-year average of 26 percent. In Tennessee, January 2019 soybean cash contracts average $8.43 with a range of $8.32 to $8.52. January 2019 soybean futures closed at $8.81, down 1 cent since last Friday. November 2019 soybean futures closed at $9.32, down 3 cents since last Friday. Downside price protection could be achieved by purchasing a $9.40 November 2019 Put Option which would cost 59 cents and set an $8.81 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.31 at the end of the week.
Cotton
Delta upland cotton spot price quotes for October 11 were 75.56 cents/lb (41-4-34) and 77.31 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.14 cents to 67.73 cents. Net sales reported by exporters were up from last week at 98,000 bales for the 2018/19 marketing year and 142,900 for the 2019/20 marketing year. Exports for the same time period were 208,400 bales, up 16 percent from last week. Upland cotton export sales were 63 percent of the USDA estimated total annual exports for the 2018/19 marketing year (August 1 to July 31), compared to a 5-year average of 45 percent.
The Crop Progress report estimated cotton condition at 42 percent good-to-excellent and 25 percent poor-to-very poor; cotton opening bolls at 78 percent compared to 67 percent last week, 71 percent last year, and a 5-year average of 74 percent; and cotton harvested at 25 percent compared to 19 percent last week, 24 percent last year, and a 5-year average of 18 percent. In Tennessee, cotton condition was estimated at 73 percent good-to-excellent and 8 percent poor-to-very poor; cotton bolls opening at 96 percent compared to 95 percent last week, 91 percent last year, and a 5-year average of 80 percent; and cotton harvested at 33 percent compared to 14 percent last week, 21 percent last year, and a 5-year average of 13 percent. December 2018 cotton futures closed at 78.37, up 2.27 cents since last Friday. For the week, December 2018 cotton futures traded between 76.15 and 78.88 cents. Dec/Mar and Dec/Dec cotton futures spreads were 1.18 cents and -1.38 cents, respectively. March 2019 cotton futures closed at 79.55, up 2.41 cents since last Friday. December 2019 cotton futures closed at 76.99, up 1.24 cents since last Friday. Downside price protection could be obtained by purchasing a 77 cent December 2019 Put Option costing 4.84 cents establishing a 72.16 cent futures floor.
Wheat
Wheat net sales reported by exporters were within expectations with net sales of 12.4 million bushels for the 2018/19 marketing year. Exports for the week were up 58 percent compared to last week at 18.4 million bushels. Wheat export sales were 42 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 61 percent. The Crop Progress report estimated winter wheat planted at 57 percent compared to 43 percent last week, 46 percent last year, and a 5-year average of 54 percent; and winter wheat emerged at 30 percent compared to 14 percent last week, 23 percent last year, and a 5-year average of 28 percent. In Tennessee, winter wheat planted was estimated at 17 percent compared to 11 percent last week, 16 percent last year, and a 5-year average of 13 percent; and winter wheat emerged at 9 percent compared to 6 percent last week, 3 percent last year, and a 5-year average of 2 percent.
December 2018 wheat futures closed at $5.17, up 4 cents since last Friday. December 2018 wheat futures traded between $5.06 and $5.25 this week. December wheat-to-corn price ratio was 1.39. Dec/Mar and Dec/Jul future spreads were 20 cents and 38 cents, respectively. March 2019 wheat futures closed at $5.37, down 3 cents since last Friday. In Tennessee, June/July 2019 wheat cash contracts ranged from $5.28 to $5.62 for the week. July 2019 wheat futures closed at $5.55, unchanged since last Friday. Downside price protection could be obtained by purchasing a $5.60 July 2019 Put Option costing 39 cents establishing a $5.21 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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