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Wet, Cold Weather Delayed Harvest In Northern States
DR. AARON SMITH
KNOXVILLE, TENN.
Harvest has been later than normal this year, due to delayed planting, as such USDA will continue to provide harvest updates for corn and soybeans through the Crop Progress report beyond November 24. Information will continue to be released as deemed necessary by the USDA.
Wet, cold weather has delayed harvest in Northern states and could result in additional reductions to the size of the 2019 corn and soybean crops. However, the scope of the reductions will likely remain uncertain until the January Crop Production / WASDE reports. For now, markets will focus on finishing the U.S. harvest, South American weather and crop conditions, and potential resolution of trade disputes. USMCA remains unratified and will likely remain so until 2020. The Phase 1 trade agree-ment with China appears to have hit some roadblocks leaving many to speculate that a short or long term resolution to the tariffs on U.S. agricultural exports to China will continue indefinitely.
March corn futures have retreated over 30 cents since the 3 month high of $4.11 ¾ on October 14. A retest of the contract low of $3.65 ¾ cannot be ruled out at this time. Similarly, January soybean futures had a three month high on October 14th at $9.59 ½, before sliding below $9 this week. January soybean futures have significant support at $8.80 bushel. Barring a deterioration in China trade talks or amplification of African swine fever in southeast Asia, soybeans will likely continue to trade $9.00-9.40 through the end of the year.
Corn
Ethanol production for the week ending November 15 was 1.033 million barrels per day, up 3,000 from the previous week. Ethanol stocks were 20.514 million barrels, down 0.471 million barrels compare to last week. Corn net sales reported by exporters for November 8-14 were up from last week with net sales of 31.0 million bushels for the 2019/20 marketing year and 1.8 million bushels for the 2020/21 marketing year. Exports for the same time period were up 12 percent from last week at 26.5 million bushels. Corn export sales and commitments were 28 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 corn harvested at 76 percent compared to 66 percent last week, 89 percent last year, and a 5-year average of 92 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Northwest Tennessee and weakened at Memphis, Northwest Barge Points, and Upper-middle Tennessee. Overall, basis for the week ranged from 21 under to 25 over with an average of 9 over the December futures at elevators and barge points. December 2019 corn futures closed at $3.68, down 3 cents since last Friday. For the week, December 2019 corn futures traded between $3.65 and $3.73.
Dec/Mar and Dec/Dec future spreads were 10 and 24 cents. In Tennessee, January corn cash contracts averaged $3.92 with a range of $3.79 to $4.02. March 2020 corn futures closed at $3.78, down 2 cents since last Friday. December 2020 corn futures closed at $3.92, down 3 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2020 Put Option costing 29 cents establishing a $3.71 futures floor.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 55.7 million bushels for the 2019/20 marketing year. Exports for the same period were up 35 percent compared to last week at 62.7 million bushels. Soybean export sales and commitments were 49 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 63 percent. Nationally, the Crop Progress report estimated soybeans harvested at 91 percent compared to 85 percent last week, 91 percent last year, and a 5-year average of 95 percent. In Tennessee, the Crop Progress report estimated soybeans harvested at 85 percent compared to 80 percent last week, 74 percent last year, and a 5-year average of 85 percent. Average soybean basis strengthened at Northwest Tennessee and weakened at Memphis, Northwest Barge Points, and Upper-middle Tennessee. Basis ranged from 36 under to 30 over the January futures contract at elevators and barge points. Average basis at the end of the week was even the January futures contract. January 2020 soybean futures closed at $8.97, down 21 cents since last Friday. For the week, January 2020 soybean futures traded between $8.95 and $9.21. January/December 2019 soybean-to-corn price ratio was 2.44 at the end of the week.
Jan/Mar and Jan/Nov future spreads were 14 and 45 cents. March 2020 soybean futures closed at $9.11, down 19 cents since last Friday. In Tennessee, January 2020 cash contracts ranged from $8.98 to $9.31. Nov/Dec 2020 soybean-to-corn price ratio was 2.40 at the end of the week. November 2020 soybean futures closed at $9.42, down 11 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2020 Put Option which would cost 55 cents and set a $9.05 futures floor.
Cotton
Net sales reported by exporters were down compared to last week with net sales of 227,600 bales for the 2019/20 marketing year and 58,200 bales for the 2020/21 marketing year. Exports for the same time period were up 9 percent compared to last week at 137,900 bales. Upland cotton export sales were 66 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 59 percent. Nationally, the Crop Progress report estimated cotton harvested at 68 percent compared to 62 percent last week, 58 percent last year, and a 5-year average of 66 percent. In Tennessee, the Crop Progress report estimated cotton harvested at 79 percent compared to 73 percent last week, 86 percent last year, and a 5-year average of 83 percent. Delta upland cotton spot price quotes for November 21 were 61.01 cents/lb (41-4-34) and 63.26 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.7 cents to 56.36 cents. December 2019 cotton futures closed at 63.42, down 1.44 cents since last Friday. For the week, December 2019 cotton futures traded between 61.73 and 64.9 cents.
Dec/Mar and Dec/Dec cotton futures spreads were 1.43 cents and 3.62 cents. March 2020 cotton futures closed at 64.85, down 1.84 cents since last Friday. December 2020 cotton futures closed at 67.04, down 1.77 cents since last Friday. Downside price protection could be obtained by purchasing a 68 cent December 2020 Put Option costing 4.99 cents establishing a 63.01 cent futures floor.
Wheat
Nationally, the Crop Progress report estimated winter wheat condition at 52 percent good-to-excellent and 14 percent poor-to-very poor; winter wheat planted at 95 percent compared to 92 last percent week, 92 percent last year, and a 5-year average of 95 percent; and winter wheat emerged at 83 percent compared to 78 percent last week, 80 percent last year, and a 5-year average of 86 percent. In Tennessee, winter wheat condition was estimated at 64 percent good-to-excellent and 7 percent poor-to-very poor; winter wheat planted was estimated at 81 percent compared to 68 percent last week, 73 percent last year, and a 5-year average of 83 percent; and winter wheat emerged at 58 percent compared to 48 percent last week, 57 percent last year, and a 5-year average of 63 percent. Wheat net sales reported by exporters were up compared to last week with net sales of 16.1 million bushels for the 2019/20 marketing year. Exports for the same time period were up 7 percent from last week at 17.8 mil-lion bushels. Wheat export sales were 60 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 69 percent. In Tennessee, November 2019 wheat cash contracts ranged from $5.09 to $5.53 for the week. December 2019 wheat futures closed at $5.15, up 13 cents since last Friday. December 2019 wheat futures traded between $4.98 and $5.19 this week. December wheat-to-corn price ratio was 1.40.
Dec/Mar and Dec/Jul future spreads were 3 and 9 cents. March 2020 wheat futures closed at $5.18, up 12 cents since last Friday. March wheat-to-corn price ratio was 1.37. In Memphis, June/July 2020 cash contracts ranged from $5.22 to $5.28. July 2020 wheat futures closed at $5.24, up 10 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
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