|
Second Week Of Futures Markets Upward Trend
DR. AARON SMITH
KNOXVILLE, TENN.
Futures markets continued their upward trend, closing up across the board for the second consecutive week.
On Thursday, the USDA released the October WASDE report. Compared to last month’s report, average corn yield was revised up 0.2 bu/acre, to 168.4 bu/acre; harvested acres were decreased 200,000 acres; production was up 20 million bushels; exports were down 150 million bushels; and ending stocks were down 261 million. Beginning stocks, for the 2019/20 marketing year were decreased 331 million bushels based on the September 30 Grain Stocks report. Foreign corn stocks were increased 114 million bushels. December corn futures dropped by 14 cents as most analysts expected reductions in production. On Friday, corn futures rallied based on positive trade news with China and weather concerns.
For soybeans, US average yield was decreased 1 bu/acre, to 46.9 bu/acre; harvested acres were decreased by 300,000 acres; pro-duction was decreased 83 million bushels; and endings stocks were decreased 180 million bushels to 460 million bushels. November soybean futures are at its highest level since July 15 closing at $9.36/bu.
For cotton, US average yield was decreased 6 lb/acre to 833 lb/acre; production was decreased 150,000 bales; and ending stocks were decreased 200,000 bales to 7 million bales. Foreign cotton stocks were increased 140,000 bales. December cotton futures closed at 63.88 cents per lb up over 7 cents from the contract low of 56.59 cents per lb on August 26.
For wheat, harvested acres were decreased 300,000 to 38.1 million acres; feed use was decreased 30 million bushels; exports were decreased 25 million bushels; and ending stocks were increased 29 million bushels. Foreign ending stocks were increased 18 million bushels. July 2020 wheat futures are at its highest point since July 25.
Corn
Ethanol production for the week ending October 4 was 0.963 million barrels per day, up 5,000 from the previous week. Ethanol stocks were 21.224 million barrels, down 1.995 million barrels compare to last week. Corn net sales reported by exporters for September 27-October 3 were down from last week with net sales of 11.2 million bushels for the 2019/20 marketing year. Exports for the same time period were up 4 percent from last week at 18.7 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 32 percent. Nationally, the Crop Progress report estimated corn condition at 56 percent good-to-excellent and 14 percent poor-to-very poor; corn dented at 93 percent compared to 88 percent last week, 100 percent last year, and a 5-year average of 99 percent; corn mature at 58 percent compared to 43 percent last week, 92 percent last year, and a 5-year average of 85 percent; and corn harvested at 15 percent compared to 11 percent last week, 33 percent last year, and a 5-year average of 27 percent. In Tennessee, the Crop Progress report estimated corn condition at 85 percent good-to-excellent and 4 percent poor-to-very poor; corn mature at 100 percent compared to 98 percent last week, 98 percent last year, and a 5-year average of 98 percent; and corn harvested at 88 percent compared to 74 percent last week, 77 percent last year, and a 5-year average of 80 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee. Overall, basis for the week ranged from 43 under to 9 under with an average of 23 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.97, up 9 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2019 Put Option costing 12 cents establishing a $3.88 futures floor. For the week, December 2019 corn futures traded between $3.78 and $3.98.
Dec/Mar and Dec/Dec future spreads were 10 and 13 cents. In Tennessee, January corn cash contracts averaged $4.03 with a range of $3.87 to $4.14. March 2020 corn futures closed at $4.07, up 7 cents since last Friday. December 2020 corn futures closed at $4.10, up 5 cents since last Friday.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 76.9 million bushels for the 2019/20 marketing year and 0.1 million bushels 2020/21 marketing year. Exports for the same period were up 13 percent compared to last week at 38.2 million bushels. Soybean export sales and commitments were 34 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 48 percent. Nationally, the Crop Progress report estimated soybean condition at 53 percent good-to-excellent and 15 percent poor-to-very poor; soybeans dropping leaves at 72 percent compared to 55 percent last week, 90 percent last year, and a 5-year average of 87 percent; and soybeans harvested at 14 percent compared to 7 percent last week, 31 percent last year, and a 5-year average of 34 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 85 percent compared to 71 percent last week, 81 percent last year, and a 5-year average of 80 percent; and soybeans harvested at 39 percent compared to 27 percent last week, 28 percent last year, and a 5-year average of 27 percent. Average soybean basis strengthened at Memphis and Northwest Barge Points and weakened at Upper-middle and Northwest Tennessee. Basis ranged from 68 under to 15 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. November 2019 soybean futures closed at $9.36, up 25 cents since last Friday. For the week, November 2019 soybean futures traded between $9.25 and $9.48. November/December 2019 soybean-to-corn price ratio was 2.36 at the end of the week.
Nov/Jan and Nov/Nov future spreads were 14 and 34 cents. January 2020 soybean futures closed at $9.50, up 24 cents since last Friday. In Tennessee, January 2020 cash contracts ranged from $8.95 to $9.38. Nov/Dec 2020 soybean-to-corn price ratio was 2.37 at the end of the week. November 2020 soybean futures closed at $9.70, up 9 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2020 Put Option which would cost 61 cents and set a $9.19 futures floor.
Cotton
Net sales reported by exporters were down compared to last week with net sales of 188,800 bales for the 2019/20 marketing year and net sales cancelations of 5,300 bales for the 2020/21 marketing year. Exports for the same time period were down 4 percent compared to last week at 149,100 bales. Upland cotton export sales were 58 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 51 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 83 percent compared to 77 percent last week, 76 percent last year, and a 5-year average of 75 percent; and cotton harvested at 25 percent compared to 16 percent last week, 24 percent last year, and a 5-year average of 20 percent. In Tennessee, the Crop Progress report estimated cotton condition at 63 percent good-to-excellent and 11 percent poor-to-very poor; cotton bolls opening at 90 percent compared to 82 percent last week, 96 percent last year, and a 5-year average of 89 percent; and cotton harvested at 22 percent compared to 12 percent last week, 30 percent last year, and a 5-year average of 17 percent. Delta upland cotton spot price quotes for October 10 were 60.92 cents/lb (41-4-34) and 63.17 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.54 cents to 53.9 cents. December 2019 cotton futures closed at 63.88, up 2.28 cents since last Friday. For the week, December 2019 cotton futures traded between 60.79 and 64 cents. Downside price protection could be obtained by purchasing a 64 cent December 2019 Put Option costing 1.97 cents establishing a 62.03 cent futures floor.
Dec/Mar and Dec/Dec cotton futures spreads were 0.57 cents and 1.53 cents. March 2020 cotton futures closed at 64.45, up 2.09 cents since last Friday. December 2020 cotton futures closed at 65.41, up 0.78 cents since last Friday.
Wheat
Nationally, the Crop Progress report estimated spring wheat harvested at 91 percent compared to 90 percent last week, 100 percent last year, and a 5-year average of 99 percent; winter wheat planted at 52 percent compared to 39 percent last week, 55 percent last year, and a 5-year average of 53 percent; and winter wheat emerged at 26 percent compared to 11 percent last week, 28 percent last year, and a 5-year average of 26 percent. In Tennessee, winter wheat planted was estimated at 16 percent compared to 10 percent last week, 16 percent last year, and a 5-year average of 15 percent; and winter wheat emerged at 3 percent compared to 2 percent last week, 9 percent last year, and a 5-year average of 3 percent. Wheat net sales reported by exporters were up compared to last week with net sales of 19.2 million bushels for the 2019/20 marketing year. Exports for the same time period were down 14 percent from last week at 17.9 million bushels. Wheat export sales were 51 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 57 percent. In Tennessee, October 2019 wheat cash contracts ranged from $4.85 to $5.32 for the week. December 2019 wheat futures closed at $5.08, up 20 cents since last Friday. December 2019 wheat futures traded between $4.86 and $5.12 this week. December wheat-to-corn price ratio was 1.28.
Dec/Mar and Dec/Jul future spreads were 6 and 14 cents. March 2020 wheat futures closed at $5.14, up 18 cents since last Friday. In Memphis, June/July 2020 cash contracts ranged from $5.06 to $5.17. July 2020 wheat futures closed at $5.22, up 16 cents since last Friday. Downside price protection could be obtained by purchasing a $5.30 July 2020 Put Option costing 37 cents establishing a $4.93 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
|
|