|
November Soybean Contract Now At Highest Level Since March
DR. AARON SMITH
KNOXVILLE, TENN.
December corn futures took a pause for the second consecutive week, trading mostly sideways. Prices rallied for almost one month after the contract low of $3.52 ¼ was set on September 9, gaining over 40 cents. Prices are likely to move sideways between $3.80 and $4.00 until additional production data (yield, quality deterioration due to winter storms, and harvested acres) are better understood. Corn basis in Tennessee has been weaker than typical, indicative of greater harvested area (920,000 versus 690,000 acres in 2018) and above trend line average state yield (estimated at 175 bu/acre by USDA). Storing the crop and waiting for basis to improve in 2020 remains a good strategy for those with unset basis on 2019 production.
The November soybean contract is now at its highest level since March 21 ($9.77 ¼), closing the week at $9.72 ¾. The positive price direction is largely production driven with U.S. harvested acres projected at 75.626 million acres, compared to 87.594 million acres last year. Recently positive developments in the trade deal with China have also improved futures prices. Last year, the November 2018 futures contract, in October, averaged $8.60/bu. Currently, the November 2019 contract has an average close of $9.25/bu, 65 cents higher.
December cotton prices were able to close the week above 65 cents for the first time since July 9. The rally off the August 26 low of 56.59 has been triggered by reduced US production expectations, positive trade news with China, and short coverings by managed money. Significant technical resistance exists at 67.50 cents, so an advance above 68 cents will require another catalyst. Look for prices to move sideways between 62.50 and 67.50 cents until additional information is revealed.
July wheat futures are up nearly 80 cents since the September 9th low of $4.68/bu. Estimated wheat stocks are still near all-time highs, however production concerns have crept into many exporting countries (Argentina, Canada, and E.U). $5.50 may be a rea-sonable starting place to price some production (price approximately 10 percent of 2020 production) for producers that have planted or are planting wheat this fall.
Corn
Ethanol production for the week ending October 11 was 0.971 million barrels per day, up 8,000 from the previous week. Ethanol stocks were 22.061 million barrels, up 0.837 million barrels compare to last week. Corn net sales reported by exporters for October 4-10 were up from last week with net sales of 14.5 million bushels for the 2019/20 marketing year and 3,937 bushels for the 2020/21 marketing year. Exports for the same time period were up 17 percent from last week at 21.9 million bushels. Corn export sales and commitments were 21 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 34 percent. Nationally, the Crop Progress report estimated corn condition at 55 percent good-to-excellent and 15 percent poor-to-very poor; corn dented at 96 percent compared to 93 percent last week, 100 percent last year, and a 5-year average of 100 percent; corn mature at 73 percent compared to 58 percent last week, 96 percent last year, and a 5-year average of 92 percent; and corn harvested at 22 percent compared to 15 percent last week, 38 percent last year, and a 5-year average of 36 percent. In Tennessee, the Crop Progress report estimated corn condition at 83 percent good-to-excellent and 3 percent poor-to-very poor; and corn harvested at 92 percent compared to 88 percent last week, 87 percent last year, and a 5-year average of 89 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 53 under to 2 under with an average of 19 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.91, down 6 cents since last Friday. Downside price protection could be obtained by purchasing a $3.95 December 2019 Put Option costing 11 cents establishing a $3.84 futures floor. For the week, December 2019 corn futures traded between $3.87 and $4.02.
Dec/Mar and Dec/Dec future spreads were 11 and 19 cents. In Tennessee, January corn cash contracts averaged $4.09 with a range of $3.91 to $4.16. March 2020 corn futures closed at $4.02, down 5 cents since last Friday. December 2020 corn futures closed at $4.10, unchanged since last Friday.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 58.8 million bushels for the 2019/20 marketing year. Exports for the same period were down 8 percent compared to last week at 35.1 million bushels. Soybean export sales and commitments were 37 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 51 percent. Nationally, the Crop Progress report estimated soybean condition at 54 percent good-to-excellent and 14 percent poor-to-very poor; soybeans dropping leaves at 85 percent compared to 72 percent last week, 94 percent last year, and a 5-year average of 93 percent; and soybeans harvested at 26 percent compared to 14 percent last week, 37 percent last year, and a 5-year average of 49 percent. In Tennessee, the Crop Progress report estimated soybean condition at 58 percent good-to-excellent and 10 percent poor-to-very poor; soybeans dropping leaves at 92 percent compared to 85 percent last week, 89 percent last year, and a 5-year average of 89 percent; and soybeans harvested at 50 percent compared to 39 percent last week, 44 percent last year, and a 5-year average of 39 percent. Average soybean basis strengthened at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee. Basis ranged from 60 under to even the November futures contract at elevators and barge points. Average basis at the end of the week was 29 under the November futures contract. November 2019 soybean futures closed at $9.34, down 2 cents since last Friday. For the week, November 2019 soybean futures traded between $9.27 and $9.45. November/December 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 with net sales of 206,500 bales for the 2019/20 marketing year. Exports for the same time period were up 2 percent compared to last week at 151,600 bales. Upland cotton export sales were 59 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 52 percent. Nationally, the Crop Progress report estimated cotton condition at 38 percent good-to-excellent and 21 percent poor-to-very poor; cotton bolls opening at 87 percent compared to 83 percent last week, 84 percent last year, and a 5-year average of 83 percent; and cotton harvested at 32 percent compared to 25 percent last week, 31 percent last year, and a 5-year average of 27 percent. In Tennessee, the Crop Progress report estimated cotton condition at 64 percent good-to-excellent and 11 percent poor-to-very poor; cotton bolls opening at 93 percent compared to 90 percent last week, 98 percent last year, and a 5-year average of 94 percent; and cotton harvested at 35 percent compared to 22 percent last week, 48 percent last year, and a 5-year average of 30 percent. Delta upland cotton spot price quotes for October 17 were 64.49 cents/lb (41-4-34) and 66.74 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.36 cents to 55.26 cents. December 2019 cotton futures closed at 65.16, up 1.28 cents since last Friday. For the week, December 2019 cotton futures traded between 61.72 and 65.85 cents. Downside price protection could be obtained by purchasing a 66 cent December 2019 Put Option costing 2.16 cents establishing a 63.84 cent futures floor.
Dec/Mar and Dec/Dec cotton futures spreads were 0.65 cents and 1.72 cents. March 2020 cotton futures closed at 65.81, up 1.36 cents since last Friday. December 2020 cotton futures closed at 66.88, up 1.47 cents since last Friday.
Wheat
Nationally, the Crop Progress report estimated spring wheat harvested at 94 percent compared to 91 percent last week, 100 percent last year, and a 5-year average of 100 percent; winter wheat planted at 65 percent compared to 52 percent last week, 64 percent last year, and a 5-year average of 65 percent; and winter wheat emerged at 41 compared to 26 percent last week, 42 percent last year, and a 5-year average of 40 percent. In Tennessee, winter wheat planted was estimated at 23 percent compared to 16 percent last week, 26 percent last year, and a 5-year average of 26 percent; and winter wheat emerged at 7 percent compared to 3 percent last week, 13 percent last year, and a 5-year average of 7 percent. Wheat net sales reported by exporters were down compared to last week with net sales of 14.5 million bushels for the 2019/20 marketing year. Exports for the same time period were up 5 percent from last week at 18.8 million bushels. Wheat export sales were 53 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 59 percent. In Tennessee, October 2019 wheat cash contracts ranged from $5.00 to $5.61 for the week. December 2019 wheat futures closed at $5.32, up 24 cents since last Friday. December 2019 wheat futures traded between $5.04 and $5.32 this week. December wheat-to-corn price ratio was 1.36.
Dec/Mar and Dec/Jul future spreads were 5 and 12 cents. March 2020 wheat futures closed at $5.37, up 23 cents since last Friday. March wheat-to-corn price ratio was 1.34. In Memphis, June/July 2020 cash contracts ranged from $5.22 to $5.36. July 2020 wheat futures closed at $5.44, up 22 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
|
|