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USDA Estimates Corn Acres Up Compared To Last Year
DR. AARON SMITH
KNOXVILLE, TENN.
This week was capped off with the release of the USDA’s quarterly Grain Stocks report and Acreage report. The acreage report shocked most analysts as the USDA estimated corn acres planted at 91.7 million, up 2.571 million acres compared to last year. The estimate lowers corn planted acres by a modest 1.092 million acres compared to the Mach 2019 Prospective Plantings report. Most analysts were expecting a greater than 3 million acre decrease in corn acres planted, due to the well documented planting issues in many locations, particularly in the Eastern Corn Belt.
The surprises were not limited to corn, as estimated soybean planted acres were decreased to 80.04 million acres, down 9.156 million compared to last year and 4.577 million acres fewer than the estimate from the 2019 March Prospective Plantings report. Most analysts anticipated an increase or no change in soybean planted acres from the March estimate as conventional wisdom would support the assertion that acres that were unable to be planted to corn would switch to soybeans – in general, soybeans can be planted later than corn with smaller expected yield decreases. Additionally, with the 2019 MFP payments requiring acres to be planted to an eligible crop in order to receive MFP payments, it was anticipated this would also pull additional acres into soybeans.
Upland cotton acres were estimated at 13.445 million acres, down 405,000 acres compared to last year and down 80,000 compared to the 2019 March Prospective Planting report.
All wheat acres planted were estimated at 45.609 million acres, down 2.191 million acres compared to last year and 145,000 compared to the 2019 March Prospective Plantings report.
Overall, the report estimated principle crop area planted at 309.312 million acres, down 10.267 million acres compared to last year and down 6.04 million acres compared to the 2019 March Prospective Plantings report. There is still a tremendous amount of unknown regarding the final planted acres for both crops, so it is very likely the acreage guessing game will continue well into the summer. Additional analysis of the Grain Stocks and Acreage report will be released next week.
Corn
Ethanol production for the week ending June 21 was 1.072 million barrels per day, down 9,000 from the previous week. Ethanol stocks were 21.567 million barrels, down 46,000 barrels. Corn net sales reported by exporters for June 14-20 were up from last week with net sales of 11.6 million bushels for the 2018/19 marketing year and 4.3 million bushels for the 2019/20 marketing year. Exports for the same time period were up 9 percent from last week at 27.4 million bushels. Corn export sales and commitments were 87 percent of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to the previous 5-year average of 100 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis and Upper-middle Tennessee and weakened at Northwest Barge Points and Northwest Tennessee. Overall, basis for the week ranged from 2 under to 30 over with an average of 11 over the July futures at elevators and barge points. July 2019 corn futures closed at $4.20, down 22 cents since last Friday. For the week, July 2019 corn futures traded between $4.11 and $4.55. Jul/Sep and Jul/Dec future spreads were 4 and 11 cents.
Nationally, the Crop Progress report estimated corn condition at 56 percent good-to-excellent and 12 percent poor-to-very poor; corn planted at 96 percent compared to 92 percent last week, 100 percent last year, and a 5-year average of 100 percent; and corn emerged at 89 percent compared to 79 percent last week, 100 percent last year, and a 5-year average of 99 percent. In Tennessee, the Crop Progress report estimated corn condition at 74 percent good-to-excellent and 4 percent poor-to-very poor; corn emerged at 100 percent compared to 99 percent last week, 100 percent last year, and a 5-year average of 99 percent; and corn silking at 29 percent compared to 7 percent last week, 29 percent last year, and a 5-year average of 19 percent. In Tennessee, September 2019 corn cash forward contracts averaged $4.45 with a range of $4.14 to $4.60. September 2019 corn futures closed at $4.24, down 23 cents since last Friday. December 2019 corn futures closed at $4.31, down 22 cents since last Friday. Downside price protection could be obtained by purchasing a $4.40 December 2019 Put Option costing 35 cents establishing a $4.05 futures floor.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 6.2 million bushels for the 2018/19 marketing year and 11.7 million bushels for the 2019/20 marketing year. Exports for the same period were down 2 percent compared to last week at 26.6 million bushels. Soybean export sales and commitments were 103 percent of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31), compared to the previous 5-year average of 101 percent. Average soybean basis strengthened or remained unchanged at Memphis and Northwest Barge Points and weakened at North-west and Upper-middle Tennessee. Basis ranged from 48 under to 26 over the July futures contract at elevators and barge points. Average basis at the end of the week was 7 under the July futures contract. July 2019 soybean futures closed at $8.99, down 3 cents since last Friday. For the week, July 2019 soybean futures traded between $8.83 and $9.17. July soybean-to-corn price ratio was 2.14 at the end of the week. August 2019 soybean futures closed at $9.04, down 4 cents since last Friday. Jul/Aug and Jul/Nov future spreads were 5 and 24 cents.
Nationally, the Crop Progress report estimated soybean condition at 54 percent good-to-excellent and 10 percent poor-to-very poor; soybeans planted at 85 percent compared to 70 percent last week, 100 percent last year, and a 5-year average of 97 percent; and soybeans emerged at 71 percent compared to 55 percent last week, 94 percent last year, and a 5-year average of 91 percent. In Tennessee, the Crop Progress report estimated soybean condition at 75 percent good-to-excellent and 4 percent poor-to-very poor; soybeans planted at 90 percent compared to 85 percent last week, 92 percent last year, and a 5-year average of 86 percent; soybeans emerged at 79 percent compared to 72 percent last week, 80 percent last year, and a 5-year average of 72 percent; and soybeans blooming at 5 percent compared to 0 percent last week, 12 percent last year, and a 5-year average of 5 percent. In Tennessee, October/November 2019 soybean cash contracts average $8.87 with a range of $8.46 to $9.18. November 2019 soybean futures closed at $9.23, down 4 cents since last Friday. Downside price protection could be achieved by purchasing a $9.40 November 2019 Put Option which would cost 48 cents and set an $8.92 futures floor. Nov/Dec 2019 soy-bean-to-corn price ratio was 2.14 at the end of the week.
Cotton
Net sales reported by exporters were up compared to last week with net sales of 72,000 bales for the 2018/19 marketing year and 45,300 bales for the 2019/20 marketing year. Exports for the same time period were up 1 percent compared to last week at 322,600 bales. Upland cotton export sales were 110 percent of the USDA estimated total annual exports for the 2018/19 marketing year (August 1 to July 31), compared to the previous 5-year average of 105 percent. Delta upland cotton spot price quotes for June 27 were 61.74 cents/lb (41-4-34) and 63.99 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.82 cents to 58.32 cents. July 2019 cotton futures closed at 63.15, up 1.96 cents since last Friday. For the week, July 2019 cotton futures traded between 61.75 and 64.46 cents. Jul/Dec and Jul/Mar cotton futures spreads were 2.93 cents and 3.54 cents.
Nationally, the Crop Progress report estimated cotton condition at 50 percent good-to-excellent and 17 percent poor-to-very poor; cotton planted at 96 percent compared to 89 percent last week, 99 percent last year, and a 5-year average of 98 percent; cotton squaring at 30 percent compared to 19 percent last week, 31 percent last year, and a 5-year average of 28 percent; and cotton setting bolls at 3 percent compared to 6 percent last year and a 5-year average of 5 percent. In Tennessee, the Crop Progress report estimated cotton condition at 63 percent good-to-excellent and 12 percent poor-to-very poor; cotton planted at 100 percent compared to 99 percent last week, 100 percent last year, and a 5-year average of 99 percent; cotton squaring at 36 percent compared to 27 percent last week, 51 percent last year, and a 5-year average of 36 percent; and cotton setting bolls at 0 percent compared to 1 percent last year and a 5-year average of 1 percent. December 2019 cotton futures closed at 66.08, up 0.52 cents since last Friday. Downside price protection could be obtained by purchasing a 67 cent December 2019 Put Option costing 3.56 cents establishing a 63.44 cent futures floor. March 2020 cotton futures closed at 66.69, up 0.3 cents since last Friday.
Wheat
Nationally, the Crop Progress report estimated winter wheat condition at 61 percent good-to-excellent and 11 percent poor-to-very-poor; winter wheat headed at 94 percent compared to 89 percent last week, 98 percent last year, and a 5-year average of 99 percent; winter wheat harvested at 15 percent compared to 8 percent last week, 39 percent last year, and a 5-year average of 34 percent; spring wheat condition at 75 percent good-to-excellent and 3 percent poor-to-very poor; and spring wheat headed at 7 percent compared to 2 percent last week, 30 percent last year, and a 5-year average of 29 percent. In Tennessee, winter wheat condition was estimated at 67 percent good-to-excellent and 5 percent poor-to-very poor; winter wheat mature at 97 percent compared to 89 percent last week; 97 percent last year, and a 5-year average of 93 percent; and winter wheat harvested at 80 percent compared to 43 percent last week, 82 percent last year, and a 5-year average of 68 percent. In Tennessee, June/July 2019 wheat cash contracts ranged from $5.26 to $5.82 for the week. July 2019 wheat futures closed at $5.28, up 2 cents since last Friday. July 2019 wheat futures traded between $5.22 and $5.58 this week. July wheat-to-corn price ratio was 1.26. Jul/Sep and Jul/Jul future spreads were -1 and 18 cents.
Wheat net sales reported by exporters were up compared to last week with net sales of 22.5 million bushels for the 2019/20 marketing year. Exports for the same time period were down 3 percent from last week at 15.4 million bushels. Wheat export sales were 28 percent of the USDA estimated total annual exports for the 2019/20 marketing year (June 1 to May 31), compared to the previous 5-year average of 29 percent. September 2019 wheat futures closed at $5.27, down 3 cents since last Friday. July 2020 wheat futures closed at $5.46, down 4 cents since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2020 Put Option costing 42 cents establishing a $5.08 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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