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Corn, Cotton, Soybeans, And Wheat Were Up For The Week
DR. AARON SMITH
KNOXVILLE, TENN.
Corn, soybean, and wheat futures prices rebound after the sharp declines last week due to the Prospective Plantings and Grain Stocks reports. Prices have not recovered to pre-report levels, but substantial gains were made this week as a result of good export sales numbers and continued concerns over flooding in many states. A great deal of uncertainty in planted acres remain in states that have been hard hit with flooding, such as Nebraska. There will likely be acreage that goes unplanted and acres that switch from corn to soybeans, however at this time it is difficult to speculate how many acres will be affected.
For March, December corn futures opened at $3.92 and closed at $3.84 ¾ (down 7 ¼ cents), with a trading range of $3.84 ¼ to $4.02 ½. November soybean futures opened at $9.43 ¼ and closed at $9.19 (down 24 ¼ cents), with a trading range of $9.18 to $9.57 ½. July Wheat futures opened at $4.66 and closed at $4.63 ½ (down 2 ½ cents), with a trading range of $4.35 ½ to $4.82 ½. December cotton opened at 73.16 and closed at 75.44 (up 2.28 cents), with a range of 72.77 to 75.97.
Cotton had strong gains in both the nearby and harvest contracts in March, lower planted acres compared to initial projections and strong export sales continue to assist in increasing cotton prices. With December futures prices now well over 76 cents securing a price (or protecting the downside) should be a strong consideration for many Tennessee producers. There still is upside potential in cotton markets but given trade and global economic uncertainty the bias (and risk to the producer) remains to the downside.
Corn
Ethanol production for the week ending March 29 was 0.999 million barrels per day, up 24,000 from the previous week. Ethanol stocks were 23.992 million barrels, down 456,000 barrels. Corn net sales reported by exporters from March 22-28 were down from last week at 21.2 million bushels for the 2018/19 marketing year and 3.7 million bushels for the 2019/20 marketing year. Exports for the same time period were up 32 percent from last week at 49.7 million bushels. Corn 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 82 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest and Upper-middle Tennessee and strengthened at Memphis and Northwest Barge Points. Overall, basis for the week ranged from 11 under to 15 over with an average of 5 over the May futures at the end of the week. May 2019 corn futures closed at $3.62, up 6 cents since last Friday. For the week, May 2019 corn futures traded between $3.56 and $3.66. July 2019 corn futures closed at $3.71, up 5 cents since last Friday. May/Jul and May/Dec future spreads were 9 and 28 cents.
In Tennessee, September 2019 corn cash forward contracts averaged $3.67 with a range of $3.44 to $3.78. December 2019 corn futures closed at $3.90, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2019 Put Option costing 23 cents establishing a $3.67 futures floor.
Soybeans
Net sales reported by exporters were up compared to last week at 72.4 million bushels for the 2018/19 marketing year and 0.8 million bushels for the 2019/20 marketing year. Exports for the same period were down 19 percent compared to last week at 28.1 million bushels. Soybean export sales and commitments were 86 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 94 percent. Average soybean basis weakened at Memphis, Northwest, and Upper-middle Tennessee and strengthened at Northwest Barge Points. Basis ranged from 57 under to 3 over the May futures contract at elevators and barge points. Average basis at the end of the week was 34 under the May futures contract. May 2019 soybean futures closed at $8.99, up 15 cents since last Friday. For the week, May 2019 soybean futures traded between $8.83 and $9.07. May soybean-to-corn price ratio was 2.48 at the end of the week. July 2019 soybean futures closed at $9.12, up 15 cents since last Friday. May/Jul and May/Nov future spreads were 13 and 33 cents.
In Tennessee, October/November 2019 soybean cash contracts average $8.92 with a range of $8.63 to $9.16. November 2019 soybean futures closed at $9.32, up 13 cents since last Friday. Downside price protection could be achieved by purchasing a $9.40 November 2019 Put Option which would cost 45 cents and set an $8.95 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.39 at the end of the week.
Cotton
Net sales reported by exporters were up compared to last week at 322,100 bales for the 2018/19 marketing year and 151,100 bales for the 2019/20 marketing year. Exports for the same time period were up 8 percent compared to last week at 410,900 bales. Up-land cotton export sales were 93 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 94 percent. Delta upland cotton spot price quotes for April 4 were 72.82 cents/lb (41-4-34) and 74.57 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.01 cents to 68.22 cents. May 2019 cotton futures closed at 78.25, up 0.64 cents since last Friday. For the week, May 2019 cotton futures traded between 76.47 and 78.48 cents. May/Jul and May/Dec cotton futures spreads were 0.34 cents and -1.36 cents. July 2019 cotton futures closed at 78.59, up 0.28 cents since last Friday.
December 2019 cotton futures closed at 76.89, up 1.45 cents since last Friday. Downside price protection could be obtained by purchasing a 77 cent December 2019 Put Option costing 4.36 cents establishing a 72.64 cent futures floor.
Wheat
Wheat net sales reported by exporters were up compared to last week at 25.9 million bushels for the 2018/19 marketing year and 11.5 million bushels for the 2019/20 marketing year. Exports for the same time period were down 2 percent from last week at 15.3 mil-lion bushels. Wheat export sales were 93 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 101 percent. May 2019 wheat futures closed at $4.67, up 10 cents since last Friday. May 2019 wheat futures traded between $4.56 and $4.77 this week. May wheat-to-corn price ratio was 1.29. May/Jul and May/Sep future spreads were 2 cents and 10 cents.
In Tennessee, June/July 2019 wheat cash contracts ranged from $4.53 to $5.00 for the week. July 2019 wheat futures closed at $4.69, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.70 July 2019 Put Option costing 18 cents establishing a $4.52 futures floor. September 2019 wheat futures closed at $4.77, up 6 cents since last Friday. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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