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Corn, Cotton, And Soybeans Were Up; Wheat Was Mixed
DR. AARON SMITH
KNOXVILLE, TENN.
On Thursday, positive comments from President Trump regarding trade negotiations with China sparked a 30 cent rally in soybean futures, ending a three week slide in soybean futures that saw January futures prices decline from $9.00 to below $8.50. While the market reacted positively, there is still a long way to go before a long term resolution with the Chinese is likely. Moving forward volatility is likely to remain in soybean markets as positive/negative trade news is released.
In October, December corn futures opened the month at $3.56 ¾ and closed at $3.63 ¼, up 6 ½ cents for the month with a trading range of $3.56 ½ to $3.78 ½; November soybean futures opened the month at $8.45 ½ and closed at $8.39, down 6 ½ cents for the month with a trading range of $8.31 ¾ to $8.92; December cotton futures opened the month at 76.25 cents and closed at 76.86 cents, up 0.61 cents for the month with a trading range of 75.37 to 80.14 cents; and July wheat futures opened the month at $5.44 ½ and closed at $5.34, down 10 ½ cents for the month with a trading range of $5.26 ½ to $5.62.
December cotton future have moved toward the upper end of the current trading range of 75-80 cents.
As we wrap up 2018 harvest in Tennessee, producers may want to consider starting to price a portion of the 2019 crop. As of Friday, December 2019 corn futures closed at $4.03. At this time of year you do not want to get to aggressive with pricing next year’s crop, however setting an initial target price to enter the market is strongly advised. $4.20/bu on the December 2019 contract may be a good place to start pricing a small amount (up to 10 percent) of the 2019 corn crop.
Corn
Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Upper-middle, and Lower-middle Tennessee. Overall, basis for the week ranged from 27 under to 5 over the December futures contract with an average of 11 under at the end of the week. December 2018 corn futures closed at $3.71, up 4 cents since last Friday. For the week, December 2018 corn futures traded between $3.62 and $3.73. Corn net sales reported by exporters from October 19-25 were below expectations with net sales of 15.5 million bushels for the 2018/19 marketing year and 0.2 million bushels for the 2019/20 marketing year. Exports for the same time period were down 38 percent compared to last week at 29.7 million bushels. Corn export sales and commitments were 35 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 37 percent. Ethanol production for the week ending October 26 was 1.059 million barrels per day, up 35,000 from the previous week. Ethanol stocks were 22.746 million barrels, down 1.151 million barrels. Dec/Mar and Dec/Dec future spreads were 12 and 32 cents, respectively.
The Crop Progress report estimated corn harvested at 63 percent compared to 49 percent last week, 52 percent last year, and a 5-year average of 63 percent. In Tennessee, corn harvested was estimated at 95 percent compared to 92 percent last week, 97 percent last year, and a 5-year average of 94 percent. In Tennessee, January 2019 corn cash forward contracts averaged $3.77 with a range of $3.61 to $3.95. March 2019 corn futures closed at $3.83, up 3 cents since last Friday. December 2019 corn futures closed at $4.03, up 1 cent since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2019 Put Option costing 30 cents establishing a $3.80 futures floor.
Soybeans
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 71 under to 22 under the November futures contract at elevators and barge points. Average basis at the end of the week was 41 under the November futures contract. January 2019 soybean futures closed at $8.87, up 30 cents since last Friday. For the week, January 2019 soybean futures traded between $8.44 and $9.00. Net sales reported by exporters were within expectations with net sales of 14.5 million bushels for the 2018/19 marketing year and 2.2 million bushels for the 2019/20 marketing year. Exports for the same period were up 18 percent compared to last week at 48.3 million bushels. Soybean export sales and commitments were 38 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 62 percent.
Jan/Mar and Jan/Nov future spreads were 13 and 46 cents, respectively. The Crop Progress report estimated soybeans harvested at 72 percent compared to 53 percent last week, 81 percent last year, and a 5-year average of 81 percent. In Tennessee, soybean condition was estimated at 70 percent good-to-excellent and 9 percent poor-to-very poor; and soybeans harvested at 60 percent compared to 52 percent last week, 61 percent last year, and a 5-year average of 61 percent. In Tennessee, January 2019 soybean cash contracts average $8.32 with a range of $8.11 to $8.62. March 2019 soybean futures closed at $9.00, up 29 cents since last Friday. November 2019 soybean futures closed at $9.33, up 24 cents since last Friday. Downside price protection could be achieved by purchasing a $9.40 November 2019 Put Option which would cost 61 cents and set an $8.79 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.32 at the end of the week.
Cotton
Delta upland cotton spot price quotes for November 1 were 77.28 cents/lb (41-4-34) and 79.03 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.85 cents to 68.56 cents. Net sales reported by exporters were down from last week with net sales cancellations of 49,000 bales for the 2018/19 marketing year and net sales of 92,900 for the 2019/20 marketing year. Exports for the same time period were 109,800 bales, down 21 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 49 percent.
The Crop Progress report estimated cotton condition at 35 percent good-to-excellent and 34 percent poor-to-very poor; cotton opening bolls at 91 percent compared to 88 percent last week, 92 percent last year, and a 5-year average of 94 percent; and cotton harvested at 44 percent compared to 39 percent last week, 45 percent last year, and a 5-year average of 43 percent. In Tennessee, cotton condition was estimated at 64 percent good-to-excellent and 14 percent poor-to-very poor; cotton bolls opening at 100 percent compared to 99 percent last week, 100 percent last year, and a 5-year average of 96 percent; and cotton harvested at 68 percent compared to 60 percent last week, 64 percent last year, and a 5-year average of 48 percent. December 2018 cotton futures closed at 78.79, up 0.26 cents since last Friday. For the week, December 2018 cotton futures traded between 76.49 and 79.78 cents. Dec/Mar and Dec/Dec cotton futures spreads were 1.52 cents and -0.48 cents, respectively. March 2019 cotton futures closed at 80.31, up 0.49 cents since last Friday. December 2019 cotton futures closed at 78.31, up 0.98 cents since last Friday. Downside price protection could be obtained by purchasing a 79 cent December 2019 Put Option costing 5.23 cents establishing a 73.77 cent futures floor.
Wheat
Wheat net sales reported by exporters were above expectations with net sales of 21.4 million bushels for the 2018/19 marketing year and 0.2 million bushels for the 2019/20 marketing year. Exports for the week were up 3 percent compared to last week at 15.2 million bushels. Wheat export sales were 47 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 66 percent. The Crop Progress report estimated winter wheat condition at 53 percent good-to-excellent and 14 percent poor-to-very poor; wheat planted at 78% compared to 72 percent last week, 83 percent last year, and a 5-year average of 85 percent; and winter wheat emerged at 63 percent compared to 53 percent last week, 63 percent last year, and a 5-year average of 67 percent. In Tennessee, winter wheat condition was estimated 71 percent good-to-excellent and 7 percent poor-to-very poor; winter wheat planted at 51 percent compared to 36 percent last week, 53 percent last year, and a 5-year average of 50 percent; and winter wheat emerged at 32 percent compared to 20 percent last week, 26 percent last year, and a 5-year average of 24 percent.
December 2018 wheat futures closed at $5.08, up 3 cents since last Friday. December 2018 wheat futures traded between $4.90 and $5.15 this week. December wheat-to-corn price ratio was 1.37. Dec/Mar and Dec/Jul future spreads were 16 cents and 34 cents, respectively. March 2019 wheat futures closed at $5.24, unchanged since last Friday. In Tennessee, June/July 2019 wheat cash contracts ranged from $5.13 to $5.55 for the week. July 2019 wheat futures closed at $5.42, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2019 Put Option costing 38 cents establishing a $5.12 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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