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USDA Releases Several Delayed Reports
DR. AARON SMITH
KNOXVILLE, TENN.
On Friday, the USDA released several reports that were delayed due to the partial government shut down. Highlights of key reports are presented below. Additional WASDE report details and analysis can be found at: https://ag.tennessee.edu/arec/Pages/MonthlyCropComments.aspx.
Winter Wheat and Canola Seedings
Nationally, winter wheat planted acres were estimated at 31.29 million acres, down 3.8 percent compared to 2018. U.S. winter wheat acres planted were estimated to be the lowest since 1909. In Tennessee, winter wheat planted was estimated at 330,000 acres, down 50,000 from 2018. Lower planted acres in Tennessee was largely due to wet conditions that delayed soybean harvest and limited fall/winter field work.
Grain Stocks
U.S. corn stocks as of December 1, 2018 were estimated at 12 billion bushels, down 5 percent from the previous year. Soybean stocks were estimated at 3.74 billion bushels, up 18 percent compared to the previous year. All wheat stocks were estimated at 2 billion bushels, up 7 percent from the previous year.
World Agriculture Supply and Demand Estimates (WASDE)
U.S. corn yields were estimated down 2.5 bu/acre at 176.4 bu/acre. Ethanol and feed & residual use were reduced 25 and 125 million bushels. Exports were unchanged from the December estimate at 2.45 million bushels. Overall, domestic stocks were reduced 46 million bushels to 1.735 billion bushels.
U.S. soybean yields were estimated down 0.5 bu/acre at 51.6 bu/acre. Harvested acres were decreased 0.2 million acres. Crushings were up 10 million bushels exports were down 25 million bushels. Marketing year ending Stocks were down 45 million bushels at 910 million. Soybean stocks are estimated up 472 million bushels year-over-year.
U.S. cotton yield was estimated down 22 lb/acre at 838 lb/acre. Harvested acres were estimated up 0.16 million at 10.53 million acres. U.S. ending stocks were estimated down 0.1 million bales at 4.3 million bales.
U.S. wheat production and beginning stocks were left unchanged from the December report at 1.099 and 1.884 billion bushels. Feed and seed use was decreased 30 and 6 million bushels. Exports were left unchanged despite current sales being well behind the pace required to meet the USDA marketing year total. This hints at USDA expecting greater wheat export demand as we move further into 2019. Domestic ending stocks are projected at 1.01 billion bushels, up 36 million.
Corn
Ethanol production for the week ending February 1 was 967 million barrels per day, down 45,000 from the previous week. Ethanol stocks were 23.947 million barrels, down 33,000 barrels. Corn net sales reported by exporters from December 21-27 were down from the previous week with net sales of 19.8 million bushels for the 2018/19 marketing year. Exports for the same time period were up 12 percent compared to the previous week at 39.6 million bushels. Corn export sales and commitments were 51 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 54 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Northwest Barge Points, Northwest, and Upper-middle Tennessee and weakened at Memphis. Overall, basis for the week ranged from 15 under to 16 over the March futures contract with an average of 5 over the March futures at the end of the week. March 2019 corn futures closed at $3.74 down 4 cents since last Friday. For the week, March 2019 corn futures traded between $3.74 and $3.81. May 2019 corn futures closed at $3.82, down 5 cents since last Friday. Mar/May and Mar/Dec future spreads were 8 and 25 cents.
In Tennessee, September 2019 corn cash forward contracts averaged $3.88 with a range of $3.79 to $4.01. December 2019 corn futures closed at $3.99, down 3 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2019 Put Option costing 24 cents establishing a $3.76 futures floor.
Soybeans
Net sales reported by exporters were down from the previous week with net sales of 38.6 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 50 percent compared to the previous week at 33.8 million bushels. Soybean export sales and commitments were 60 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 81 percent. Average soybean basis strengthened at Northwest Barge Points, Memphis, and Upper-middle Tennessee and weakened at Northwest Tennessee. Basis ranged from 54 under to 14 under the March futures contract at elevators and barge points. Average basis at the end of the week was 32 under the March futures contract. March 2019 soybean futures closed at $9.14, down 3 cents since last Friday. For the week, March 2019 soybean futures traded between $9.08 and $9.23. March soybean-to-corn price ratio was 2.44 at the end of the week. May 2019 soybean futures closed at $9.31, down 8 cents since last Friday. Mar/May and Mar/Nov future spreads were 14 and 43 cents.
In Tennessee, October/November 2019 soybean cash contracts average $9.19 with a range of $8.95 to $9.41. November 2019 soybean futures closed at $9.57, unchanged since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2019 Put Option which would cost 52 cents and set a $9.08 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.40 at the end of the week.
Cotton
Net sales reported by exporters were down from last week with net sales of 228,200 bales for the 2018/19 marketing year and 32,200 bales for the 2019/20 marketing year. Exports for the same time period were 189,800 bales, down 8 percent from last week. Upland cotton export sales were 76 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 67 percent. Delta upland cotton spot price quotes for February 7 were 69.56 cents/lb (41-4-34) and 71.31 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.46 cents to 64.61 cents. March 2019 cotton futures closed at 72.55, down 1.09 cents since last Friday. For the week, March 2019 cotton futures traded between 72.45 and 74.11 cents. Mar/May and Mar/Dec cotton futures spreads were 1.14 cents and 1.38 cents. May 2019 cotton futures closed at 73.69, down 1.24 cents since last Friday.
December 2019 cotton futures closed at 73.93, down 0.19 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2019 Put Option costing 4.25 cents establishing a 69.75 cent futures floor.
Wheat
Wheat net sales reported by exporters were up from the previous week with net sales of 21.8 million bushels for the 2018/19 marketing year. Exports for the week were down 22 percent compared to the previous week at 15.9 million bushels. Wheat export sales were 66 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 82 percent. March 2019 wheat futures closed at $5.17, down 7 cents since last Friday. March 2019 wheat futures traded between $5.12 and $5.31 this week. March wheat-to-corn price ratio was 1.38. Mar/May and Mar/Jul future spreads were 2 cents and 5 cents. May 2019 wheat futures closed at $5.19, down 9 cents since last Friday.
In Tennessee, June/July 2019 wheat cash contracts ranged from $5.15 to $5.53 for the week. July 2019 wheat futures closed at $5.22, down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $5.30 July 2019 Put Option costing 30 cents establishing a $5.00 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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