|
Soybean Stocks Are At An All-Time High
DR. AARON SMITH
KNOXVILLE, TENN.
On Monday, the USDA released the quarterly Grain Stocks report. The report resulted in nearby corn, wheat, and soybean futures increasing 16 ½, 8 ½, and 23 cents for the day.
Corn stocks as of September 1 were estimated at 2.114 billion bushels, down 1 percent from last year. The estimate was 331 million bushels lower than the September WASDE report. Corn carryover stocks into the 2019 crop year remain near recent highs, however uncertainty remains as to the size of the current US crop.
Soybean stocks were estimated at 913 million bushels, up 108 percent compared to last year. Stocks were down 92 million bushels from the September WASDE estimate. Soybean stocks are at an all-time high due to reductions in export sales to China, increased competition from South America, and increased domestic production in the past five years.
Wheat stocks were estimated at 2.385 billion bushels compared to 2.390 billion bushels compared to September 1, 2018.
While corn, soybean, and wheat stocks were revised down this week it is important to note that there remains an abundance of all three commodities, so dramatic price increases remain unlikely. The carry-over into the 2019 crop marketing year will partially mitigate lower anticipated production.
December cotton futures have rebounded off the August 26 contract low of 56.59 on August 6, closing this week over 61 cents. Prices below 65 cents remain probable due to increased US production in 2019 and the continuation of the trade dispute with China.
Data presented below are from the close of business Thursday.
Corn
Ethanol production for the week ending September 27 was 0.958 million barrels per day, up 15,000 from the previous week. Ethanol stocks were 23.219 million barrels, up 0.719 million barrels compare to last week. Corn net sales reported by exporters for September 20-26 were up from last week with net sales of 22.1 million bushels for the 2019/20 marketing year and 0.1 million bushels for the 2020/21 marketing year. Exports for the same time period were up 64 percent from last week at 18.0 million bushels. Corn export sales and commitments were 19 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 30 percent. Nationally, the Crop Progress report estimated corn condition at 57 percent good-to-excellent and 14 percent poor-to-very poor; corn dented at 88 percent compared to 79 percent last week, 100 percent last year, and a 5-year average of 98 percent; corn mature at 43 percent compared to 29 percent last week, 84 percent last year, and a 5-year average of 73 percent; and corn harvested at 11 percent compared to 7 percent last week, 25 percent last year, and a 5-year average of 19 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 100 percent compared to 98 percent last week, 100 percent last year, and a 5-year average of 100 percent; corn mature at 98 percent compared to 95 percent last week, 96 percent last year, and a 5-year average of 96 percent; and corn harvested at 74 percent compared to 58 percent last week, 63 percent last year, and a 5-year average of 69 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee. Overall, basis for the week ranged from 51 under to 12 under with an average of 27 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.88, up 17 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2019 Put Option costing 11 cents establishing a $3.79 futures floor. For the week, December 2019 corn futures traded between $3.71 and $3.92.
Dec/Mar and Dec/Dec future spreads were 12 and 17 cents. In Tennessee, January corn cash contracts averaged $4.00 with a range of $3.84 to $4.10. March 2020 corn futures closed at $4.00, up 17 cents since last Friday. December 2020 corn futures closed at $4.05, up 2 cents since last Friday.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 76.3 million bushels for the 2019/20 marketing year. Exports for the same period were down 4 percent compared to last week at 33.7 million bushels. Soybean export sales and commitments were 30 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 46 percent. Nationally, the Crop Progress report estimated soybean condition at 55 percent good-to-excellent and 13 percent poor-to-very poor; soybeans dropping leaves at 55 percent compared to 34 percent last week, 81 percent last year, and a 5-year average of 76 percent; and soybeans harvested at 7 percent compared to 22 percent last year and a 5-year average of 20 percent. In Tennessee, the Crop Progress report estimated soybean condition at 59 percent good-to-excellent and 10 percent poor-to-very poor; soybeans dropping leaves at 71 percent compared to 57 percent last week, 66 percent last year, and a 5-year average of 67 percent; and soybeans harvested at 27 percent compared to 18 percent last week, 18 percent last year, and a 5-year average of 16 percent. Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee. Basis ranged from 92 under to 13 under the November futures contract at elevators and barge points. Average basis at the end of the week was 40 under the November futures contract. November 2019 soybean futures closed at $9.11, up 28 cents since last Friday. For the week, November 2019 soybean futures traded between $8.83 and $9.20. November/December 2019 soybean-to-corn price ratio was 2.35 at the end of the week.
Nov/Jan and Nov/Nov future spreads were 15 and 50 cents. January 2020 soybean futures closed at $9.26, up 29 cents since last Friday. In Tennessee, January 2020 cash contracts ranged from $8.51 to $9.32. Nov/Dec 2020 soybean-to-corn price ratio was 2.37 at the end of the week. November 2020 soybean futures closed at $9.61, up 21 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2020 Put Option which would cost 64 cents and set a $9.16 futures floor.
Cotton
Net sales reported by exporters were up compared to last week with net sales of 177,800 bales for the 2019/20 marketing year and 7,500 bales for the 2020/21 marketing year. Exports for the same time period were down 12 percent compared to last week at 154,700 bales. Upland cotton export sales were 57 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 50 percent. Nationally, the Crop Progress report estimated cotton condition at 40 percent good-to-excellent and 20 percent poor-to-very poor; cotton bolls opening at 77 percent compared to 64 percent last week, 66 percent last year, and a 5-year average of 67 percent; and cotton harvested at 16 percent compared to 11 percent last week, 19 percent last year, and a 5-year average of 14 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 82 percent compared to 69 percent last week, 95 percent last year, and a 5-year average of 80 percent; and cotton harvested at 12 percent compared to 6 percent last week, 13 percent last year, and a 5-year average of 7 percent. Delta upland cotton spot price quotes for October 3 were 61.1 cents/lb (41-4-34) and 63.35 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.17 cents to 53.36 cents. December 2019 cotton futures closed at 61.6, up 0.70 cents since last Friday. For the week, December 2019 cotton futures traded between 60.08 and 62.91 cents. Downside price protection could be obtained by purchasing a 62 cent December 2019 Put Option costing 1.95 cents establishing a 60.05 cent futures floor.
Dec/Mar and Dec/Dec cotton futures spreads were 0.76 cents and 3.03 cents. March 2020 cotton futures closed at 62.36, up 0.73 cents since last Friday. December 2020 cotton futures closed at 64.63, up 0.82 cents since last Friday.
Wheat
Nationally, the Crop Progress report estimated spring wheat harvested at 90 percent compared to 87 percent last week, 100 percent last year, and a 5-year average of 99 percent; winter wheat planted at 39 percent compared to 22 percent last week, 41 percent last year, and a 5-year average of 38 percent; and winter wheat emerged at 11 percent compared to 12 percent last year and a 5-year average of 13 percent. In Tennessee, winter wheat planted was estimated at 10 percent compared to 4 percent last week, 11 percent last year, and a 5-year average of 6 percent; and winter wheat emerged at 2 percent compared to 0 percent last week, 5 percent last year, and a 5-year average of 1 percent. Wheat net sales reported by exporters were up compared to last week with net sales of 12.1 million bushels for the 2019/20 marketing year. Exports for the same time period were up 14 percent from last week at 20.9 million bushels. Wheat export sales were 49 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 56 percent. In Tennessee, September 2019 wheat cash con-tracts ranged from $4.84 to $5.22 for the week. December 2019 wheat futures closed at $4.88, up 1 cent since last Friday. Decem-ber 2019 wheat futures traded between $4.83 and $4.95 this week. December wheat-to-corn price ratio was 1.26.
Dec/Mar and Dec/Jul future spreads were 8 and 18 cents. March 2020 wheat futures closed at $4.96, up 3 cents since last Friday. In Memphis, June/July 2020 cash contracts ranged from $5.06 to $5.14. July 2020 wheat futures closed at $5.06, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $5.10 July 2020 Put Option costing 33 cents establishing a $4.77 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
|
|