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Currently, The USDA Estimates Corn Ending Stocks At 2.445 Billion Bushels
DR. AARON SMITH
KNOXVILLE, TENN.
Commodity markets continue to wait for fresh news on US average yields, trade negotiations with China, and ending stock estimates. On Monday, the USDA will release quarterly grain stock estimates for corn, soybean, and wheat. Corn and soybean stock estimates will provide revised stock and implied use estimates for the end of the 2018/19 marketing year and by extension the amount of reserves carried-over into the 2019/20 marketing year.
Currently, the USDA estimates corn ending stocks at 2.445 billion bushels and use at 14.14 billion bushels (2.060 billion bushels of exports and 12.08 billion bushels of domestic use). If realized this would be the largest ending stocks since 1987/88. Soybean stocks for the 2018/19 marketing year are currently estimated at 1.005 billion bushels (based on 1.745 billion bushels of exports and 2.249 billion bushels for domestic use). If realized it would be the largest ending stocks on record. The final corn and soybean ending stocks estimates for the 2018/19 marketing year are unlikely (baring a significant revision) to move prices for the 2019 crop.
For the 2019/20 marketing year, soybean stocks are currently estimated to decrease to 640 million bushels, down 365 million bushels. The decrease in ending stocks will largely be attributed to reduced production – 3.633 billion bushels compared to 4.544 billion bushels last year – rather than increased use (up 26 million bushels year-over-year). Similar to soybeans, corn ending stocks for the 2019/20 marketing year are estimated down 255 million bushels at 2.19 billion bushels. Year-over-year corn use is estimated down 35 million bushels (exports down 10 million bushels; domestic use down 25 million bushels) and production is estimated down 621 million bushels.
Corn
Ethanol production for the week ending September 20 was 0.943 million barrels per day, down 60,000 from the previous week. Ethanol stocks were 22.500 million barrels, down 0.738 million barrels compare to last week. Corn net sales reported by exporters for September 13-19 were down from last week with net sales of 19.4 million bushels for the 2019/20 marketing year. Exports for the same time period were down 39 percent from last week at 11.0 million bushels. Corn export sales and commitments were 18 percent of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31) compared to the previous 5-year average of 28 percent. Nationally, the Crop Progress report estimated corn condition at 57 percent good-to-excellent and 13 percent poor-to-very poor; corn dough at 96 percent compared to 93 percent last week, 100 percent last year, and a 5-year average 100 percent; corn dented at 79 percent compared to 68 percent last week, 96 percent last year, and a 5-year average of 94 percent; corn mature at 29 percent compared to 18 percent last week, 69 percent last year, and a 5-year average of 57; and corn harvested at 7 percent compared to 4 percent last week, 15 percent last year, and a 5-year average of 11 percent. In Tennessee, the Crop Progress report estimated corn condition at 84 percent good-to-excellent and 3 percent poor-to-very poor; corn dented at 98 percent compared to 97 percent last week, 100 percent last year, and a 5-year average of 99 percent; corn mature at 95 percent compared to 84 percent last week, 92 percent last year, and a 5-year average of 91 percent; and corn harvested at 58 percent compared to 38 percent last week, 57 percent last year, and a 5-year average of 54 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis and Northwest Barge Points and weakened at Upper-middle and Northwest Tennessee. Overall, basis for the week ranged from 35 under to 10 under with an average of 23 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.71, up 1 cent since last Friday. Downside price protection could be obtained by purchasing a $3.75 December 2019 Put Option costing 11 cents establishing a $3.64 futures floor. For the week, December 2019 corn futures traded between $3.68 and $3.77.
Dec/Mar and Dec/Dec future spreads were 12 and 32 cents. March 2020 corn futures closed at $3.83, up 2 cents since last Friday. In Tennessee, new crop corn cash contracts averaged $3.89 with a range of $3.85 to $3.92. December 2020 corn futures closed at $4.03, up 1 cent since last Friday.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 38.1 million bushels for the 2019/20 marketing year. Exports for the same period were up 35 percent compared to last week at 34.9 million bushels. Soybean export sales and commitments were 25 percent of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 43 percent. Nationally, the Crop Progress report estimated soybean condition at 54 percent good-to-excellent and 13 percent poor-to-very poor; and soybeans dropping leaves at 34 percent compared to 15 percent last week, 68 percent last year, and a 5-year average of 59 percent. In Tennessee, the Crop Progress report estimated soybean condition at 59 percent good-to-excellent and 10 percent poor-to-very poor; soybeans setting pods at 98 percent compared to 68 percent last week, 100 percent last year, and a 5-year average of 98 percent; soybeans dropping leaves at 57 percent compared to 39 percent last week, 57 percent last year, and a 5-year average of 53 percent; and soybeans harvested at 18 percent compared to 9 percent last week, 15 percent last year, and a 5-year average of 9 percent. Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, and Upper-middle Tennessee and weakened at Northwest Tennessee. Basis ranged from 76 under to 25 under the November futures contract at elevators and barge points. Average basis at the end of the week was 45 under the November futures contract. In Tennessee, October/November 2019 soybean cash contracts average $8.59 with a range of $8.52 to $8.72. November 2019 soybean futures closed at $8.83, up 1 cent since last Friday. Downside price protection could be achieved by purchasing an $8.90 November 2019 Put Option which would cost 18 cents and set an $8.72 futures floor. For the week, November 2019 soybean futures traded between $8.81 and $8.99. November/December soybean-to-corn price ratio was 2.38 at the end of the week.
Nov/Jan and Nov/Nov future spreads were 14 and 57 cents. Nov/Dec 2020 soybean-to-corn price ratio was 2.33 at the end of the week. January 2020 soybean futures closed at $8.97, up 1 cent since last Friday. November 2020 soybean futures closed at $9.40, unchanged since last Friday.
Cotton
Net sales reported by exporters were up compared to last week with net sales of 155,200 bales for the 2019/20 marketing year and 12,800 bales for the 2020/21 marketing year. Exports for the same time period were up 6 percent compared to last week at 175,900 bales. Upland cotton export sales were 56 percent of the USDA estimated total annual exports for the 2019/20 marketing year (August 1 to July 31), compared to the previous 5-year average of 48 percent. Nationally, the Crop Progress report estimated cotton condition at 39 percent good-to-excellent and 19 percent poor-to-very poor; cotton bolls opening at 64 percent compared to 54 percent last week, 57 percent last year, and a 5-year average of 57 percent; and cotton harvested at 11 percent compared to 9 percent last week, 16 percent last year, and a 5-year average of 11 percent. In Tennessee, the Crop Progress report estimated cotton condition at 60 percent good-to-excellent and 11 percent poor-to-very poor; cotton bolls opening at 69 percent compared to 47 percent last week, 91 percent last year, and a 5-year average of 70 percent; and cotton harvested at 6 percent compared to 0 percent last week, 9 percent last year, and a 5-year average of 4 percent. Delta upland cotton spot price quotes for September 26 were 60.28 cents/lb (41-4-34) and 62.53 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 1.43 cents to 53.19 cents. December 2019 cotton futures closed at 60.9, up 0.38 cents since last Friday. For the week, December 2019 cotton futures traded between 59.58 and 61.67 cents. Downside price protection could be obtained by purchasing a 61 cent December 2019 Put Option costing 2.28 cents establishing a 58.72 cent futures floor.
Dec/Mar and Dec/Dec cotton futures spreads were 0.73 cents and 2.91 cents. March 2020 cotton futures closed at 61.63, up 0.46 cents since last Friday. December 2020 cotton futures closed at 63.81, up 0.29 cents since last Friday.
Wheat
Nationally, the Crop Progress report estimated spring wheat harvested at 87 percent compared to 76 percent last week, 99 percent last year, and a 5-year average of 97 percent; and winter wheat planted at 22 percent compared to 8 percent last week, 26 percent last year, and a 5-year average of 24 percent. In Tennessee, winter wheat planted was estimated at 4 percent compared to 1 percent last week and 8 percent last year. Wheat net sales reported by exporters were down compared to last week with net sales of 10.4 million bushels for the 2019/20 marketing year. Exports for the same time period were down 2 percent from last week at 18.3 million bushels. Wheat export sales were 47 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 54 percent. In Tennessee, September 2019 wheat cash contracts ranged from $4.73 to $5.07 for the week. December 2019 wheat futures closed at $4.87, up 3 cents since last Friday. December 2019 wheat futures traded between $4.76 and $4.90 this week. December wheat-to-corn price ratio was 1.31.
Dec/Mar and Dec/Jul future spreads were 6 and 15 cents. March 2020 wheat futures closed at $4.93, up 2 cents since last Friday. In Memphis, June/July 2020 cash contracts ranged from $4.93 to $4.99. July 2020 wheat futures closed at $5.02, up 3 cents since last Friday. Downside price protection could be obtained by purchasing a $5.10 July 2020 Put Option costing 35 cents establishing a $4.75 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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