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USDA: Corn, Cotton Plantings Rise, Soybean Acreage Falls In 2019
DR. AARON SMITH
KNOXVILLE, TENN.
On Friday morning, USDA released marketing year supply and demand estimates for the 2019/20 marketing year (2019 crop). The estimates released were provided at the annual USDA Outlook Conference in Arlington, VA. USDA outlook for cotton, dairy, grains and oilseeds, livestock and poultry and sugar are available online at:
https://www.usda.gov/oce/forum/2019/Outlooks.htm.
Corn Estimates: 92 million planted acres, up 2.9 million from last year; yield down 0.4 bu/acre at 176 bu/acre; exports 2.475 billion bushels, up 25 million bushels; ending stocks 1.65 billion bushels, down 85 million bushels; and season average farm price at $3.65/bu, up 5 cents.
Soybean Estimates: 85 million planted acres, down 4.2 million from last year; yield down 2.1 bu/acre at 49.5 bu/acre; exports 2.025 billion bushels, up 150 million bushels; ending stocks 845 million bushels, down 65 million; and season average farm price at $8.80/bu, up 20 cents from the current marketing year.
Cotton Estimates: 14.25 million planted acres, up 150,000 from last year; yield down 3 lb/acre at 835 lb/acre; production 22.5 million bales, up 4.11 million bales; ending stocks 6.3 million bales, up 2 million bales; and season average farm price at $0.67/lb, down 5 cents.
Wheat Estimates: 47 million planted acres, down 800,000 from last year; yield up 0.2 bushels per acre at 47.8 bu/acre; exports 975 million bushels, down 25 million bushels; ending stocks 944 million bushels, down 66 million bushels; season average farm price .20/bu, up 5 cents.Market reaction to the report was limited as corn, soybeans, and wheat closed flat for the day and cotton closed down.
Corn
Ethanol production for the week ending February 15 was 996 million barrels per day, down 33,000 from the previous week. Ethanol stocks were 23.466 million barrels, up 447,000 barrels. Corn net sales reported by exporters from January 4 to February 14 were 238.4 million bushels (39.7 million bushels per week average) for the 2018/19 marketing year and 1.1 million bushels (0.2 million bushels per week average) for the 2019/20 marketing year. Exports for the same time period were 217.2 million bushels (36.2 million bushels per week average). The export sales data represents six weeks’ worth of sales and exports. Weekly export data will resume next week. Corn export sales and commitments were 62 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 69 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Over-all, basis for the week ranged from 4 under to 18 over the March futures contract with an average of 6 over the March futures at the end of the week. March 2019 corn futures closed at $3.75 up 1 cent since last Friday. For the week, March 2019 corn futures traded between $3.68 and $3.78. May 2019 corn futures closed at $3.84, up 2 cents since last Friday. Mar/May and Mar/Dec future spreads were 9 and 26 cents.
In Tennessee, September 2019 corn cash forward contracts averaged $3.82 with a range of $3.60 to $3.96. December 2019 corn futures closed at $4.01, up 2 cents 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
Net sales reported by exporters were 240 million bushels (40 million bushels per week average) for the 2018/19 marketing year and 13.9 million bushels (2.3 million bushels per week average) for the 2019/20 marketing year. Exports for the same period were 205.4 million bushels (34.2 million bushels per week average). Soybean export sales and commitments were 72 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 88 percent.
Average soybean basis strengthened or remained unchanged at Northwest Barge Points, Northwest, and Upper-middle Tennessee and weakened at Memphis. Basis ranged from 51 under to 8 under the March futures contract at elevators and barge points. Average basis at the end of the week was 30 under the March futures contract. March 2019 soybean futures closed at $9.10, up 3 cents since last Friday. For the week, March 2019 soybean futures traded between $8.93 and $9.16. March soybean-to-corn price ratio was 2.43 at the end of the week. May 2019 soybean futures closed at $9.23, up 2 cents since last Friday. Mar/May and Mar/Nov future spreads were 13 and 44 cents.
In Tennessee, October/November 2019 soybean cash contracts average $9.07 with a range of $8.78 to $9.26. November 2019 soybean futures closed at $9.54, up 2 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2019 Put Option which would cost 51 cents and set a $9.09 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 977,100 bales (162,850 bales per week average) for the 2018/19 marketing year and 161,400 bales (26,900 bales per week average) for the 2019/20 marketing year. Exports for the same time period were 1.43 million bales (238,583 bales per week average). Upland cotton export sales were 85 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 83 percent. Delta upland cotton spot price quotes for February 21 were 69.51 cents/lb (41-4-34) and 71.26 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.47 cents to 61.8 cents. March 2019 cotton futures closed at 71.84, up 1.62 cents since last Friday. For the week, March 2019 cotton futures traded between 70.05 and 72.99 cents. Mar/May and Mar/Dec cotton futures spreads were 1.17 cents and 1.67 cents. May 2019 cotton futures closed at 73.01, up 1.15 cents since last Friday.
December 2019 cotton futures closed at 73.51, up 0.71 cents since last Friday. Downside price protection could be obtained by purchasing a 74 cent December 2019 Put Option costing 4.29 cents establishing a 69.71 cent futures floor.
Wheat
Wheat net sales reported by exporters were 131.4 million bushels (21.9 million bushels per week average) for the 2018/19 marketing year and 9.0 million bushels (1.5 million bushels per week average) for the 2019/20 marketing year. Exports for were 93.3 million bushels (15.6 million bushels per week average). Wheat export sales were 79 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 92 percent. March 2019 wheat futures closed at $4.86, down 18 cents since last Friday. March 2019 wheat futures traded between $4.75 and $5.05 this week. March wheat-to-corn price ratio was 1.3. Mar/May and Mar/Jul future spreads were 5 cents and 9 cents. May 2019 wheat futures closed at $4.91, down 16 cents since last Friday.
In Tennessee, June/July 2019 wheat cash contracts ranged from $4.73 to $5.23 for the week. July 2019 wheat futures closed at $4.95, down 14 cents since last Friday. Downside price protection could be obtained by purchasing a $5.00 July 2019 Put Option costing 28 cents establishing a $4.75 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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