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Corn, Soybean, Cotton Futures Rise In November
DR. AARON SMITH
KNOXVILLE, TENN.
For the month of November, March 2019 corn futures were up 2 cents (opened at $3.75 ¾ and closed at $3.77 ¾) with a trading range of $3.67 ¼ to $3.90; December 2019 corn futures were up 1 ¾ cents (opened at $3.98 and closed at $3.99 ¾) with a trading range of $3.91 ¼ to $4.06 ¾; January 2019 soybean futures were up 44 ½ cents (opened at $8.50 ¼ and closed at $8.94 ¾) with a trading range of $8.45 ¾ to $9.00 ¾; November 2019 soybean futures were up 37 cents (opened at $9.02 ¼ and closed at $9.39 ¼) with a trading range of $8.98 to $9.48; March 2019 wheat futures were unchanged for the month (opened and closed at $5.15 ¾) with a trading range of $5.03 ¼ to $5.29; July 2019 wheat futures were down 6 ¼ cents (opened at $5.33 ½ and closed at $5.27 ¼) with a trading range of $5.17 to $5.47 ¾; March 2019 cotton futures were up 0.61 cents (opened at 78.3 and closed at 78.91) with a trading range of 77.18 to 82; and December 2019 cotton futures were up 0.08 cents (opened at 76.95 and closed at 77.03) with a trading range of 76.24 to 79.
Commodities were up across the board this week. Looking toward to the 2019 crop, producers may want to consider pricing some production with December corn futures currently above $4 and November soybean futures above $9.50. This early in the 2019 production season it is not advisable to get too aggressive with pricing but starting to consider price offering when futures prices are near these level is warranted. Pricing 10-20 percent should be considered given the large amount of trade, political, and global economic uncertainty.
Corn
Ethanol production for the week ending November 30 was 1.069 million barrels per day, up 21,000 from the previous week. Ethanol stocks were 23.03 million barrels, up 100,000 barrels. Corn net sales reported by exporters from November 23-29 were above expectations with net sales of 46.4 million bushels for the 2018/19 marketing year. Exports for the same time period were up 11 percent compared to last week at 45.9 million bushels. Corn export sales and commitments were 43 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 47 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Overall, basis for the week ranged from 26 under to 6 over the March futures contract with an average of 2 under at the end of the week. March 2019 corn futures closed at $3.85 up 8 cents since last Friday. For the week, March 2019 corn futures traded between $3.80 and $3.86. May 2019 corn futures closed at $3.92, up 7 cents since last Friday. Mar/May and Mar/Dec future spreads were 7 and 18 cents.
In Tennessee, September 2019 corn cash forward contracts averaged $3.88 with a range of $3.76 to $4.03. December 2019 corn futures closed at $4.03, 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
Net sales reported by exporters were within expectations with net sales of 32.7 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 22 percent compared to last week at 37.6 million bushels. Soybean export sales and commitments were 47 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 73 percent. Average soybean basis weakened at Northwest Tennessee and strengthened or remained unchanged at Memphis, Northwest Barge Points, and Upper-middle Tennessee. Basis ranged from 61 under to 22 under the January futures contract at elevators and barge points. Average basis at the end of the week was 38 under the January futures contract. January 2019 soybean futures closed at $9.16, up 22 cents since last Friday. For the week, January 2019 soybean futures traded between $8.97 and $9.23. March 2019 soybean futures closed at $9.29, up 22 cents since last Friday. Jan/Mar and Jan/Nov future spreads were 13 and 45 cents, respectively.
In Tennessee, October/November 2019 soybean cash contracts average $9.19 with a range of $8.65 to $9.36. November 2019 soybean futures closed at $9.61, up 22 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2019 Put Option which would cost 66 cents and set a $9.14 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.38 at the end of the week.
Cotton
Net sales reported by exporters were down from last week with net sales of 94,900 bales for the 2018/19 marketing year and 80,500 bales for the 2019/20 marketing year. Exports for the same time period were 158,600 bales, up 26 percent from last week. Upland cotton export sales were 70 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 60 percent. Delta upland cotton spot price quotes for December 6 were 76.33 cents/lb (41-4-34) and 78.08 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.42 cents to 69.34 cents. March 2019 cotton futures closed at 80.23, up 1.32 cents since last Friday. For the week, March 2019 cotton futures traded between 78.6 and 81.85 cents. Mar/May and Mar/Dec cotton futures spreads were 0.94 cents and -2.2 cents. May 2019 cotton futures closed at 81.17, up 1.22 cents since last Friday.
December 2019 cotton futures closed at 78.03, up 1 cent since last Friday. Downside price protection could be obtained by purchasing a 79 cent December 2019 Put Option costing 5.78 cents establishing a 73.22 cent futures floor.
Wheat
Wheat net sales reported by exporters were above expectations with net sales of 26.2 million bushels for the 2018/19 marketing year. Exports for the week were up 93 percent compared to last week at 17.7 million bushels. Wheat export sales were 56 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 75 percent. March 2019 wheat futures closed at $5.31, up 16 cents since last Friday. March 2019 wheat futures traded between $5.10 and $5.32 this week. March wheat-to-corn price ratio was 1.38. Mar/May and Mar/Jul future spreads were 5 cents and 9 cents. May 2019 wheat futures closed at $5.36, up 15 cents since last Friday.
In Tennessee, June/July 2019 wheat cash contracts ranged from $5.10 to $5.49 for the week. July 2019 wheat futures closed at $5.40, up 13 cents since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2019 Put Option costing 37 cents establishing a $5.13 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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