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Grain Stocks Report Indicated As Of December 1, US Corn, Soybean And Wheat Stocks Down
DR. AARON SMITH
KNOXVILLE, TENN.
On Friday the USDA released the Winter Wheat and Canola Seedings, WASDE, and Grain Stocks reports. A muted market reaction was realized, although all four commodities closed up for the day.
The Winter Wheat and Canola Seedings report indicated total US planted acres at 30.804 million, down 355,000 (-1.1 percent) compared to last year. This is the lowest winter wheat acres planted in the US since 29.196 million in 1909 and less than half of the all-time record of 65.547 million in 1981. In Tennessee, winter wheat acres were estimated at 370,000, up 90,000 (+32 percent) compared to last year. The increase in acres was expected due to improved fall planting conditions compared to a year ago when many producers were unable to get wheat planted due to extremely wet field conditions in several West Tennessee Counties.
The WASDE report projected 2019/20 corn ending stocks at 1.892 billion bushels, down 18 million. A 300,000 acre decrease in harvested acres was more than offset by a 1 bu/acre increase in national average yield. Feed and residual use was increased 250 million bushels offsetting reduced exports of 75 million bushels. Overall, the report was neutral to moderately bullish for corn.
Soybean harvested acres were decreased 600,000 and national average yield was estimated up 0.5 bu/acre. Overall production was increased 8 million bushels. Use and ending stocks were left unchanged compared to the previous month. The WASDE re-port was neutral for soybeans.
Cotton harvested acres were reduced 710,000 offsetting the increase in national average yield of 42 lb/acre to 817 lb/acre. Production was down 110,000 bales, use was unchanged resulting in a 100,000 bale decrease in ending stocks to 5.4 million bales. Season average price was raised 2 cents to 63 cents per lb. Overall the report was moderately bullish for cotton.
Wheat production was not changed compared to last month. Use was increased 9 million bushels, and stocks were decreased 9 million bushels to 965 million bushels. Overall the report was neutral for wheat.
The Grain Stocks report indicated that, as of December 1, US corn, soybean, and wheat stocks were down 5 percent, 13 percent, and 9 percent compared to 1-year ago.
Corn
Ethanol production for the week ending January 3 was 1.062 million barrels per day, down 4,000 from the previous week. Ethanol stocks were 22.462 million barrels, up 1.428 million barrels compare to last week. Corn net sales reported by exporters for December 27-January 3 were down compared to last week with net sales of 6.4 million bushels for the 2019/20 marketing year. Exports for the same time period were up 15 percent last week at 20.3 million bushels. Corn export sales and commitments were 39 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 56 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest Barge Points, Northwest, and Upper-middle Tennessee and weakened at Memphis. Overall, basis for the week ranged from 7 over to 22 over with an average of 16 over the March futures at elevators and barge points. In Tennessee, January corn cash contracts averaged $4.06 with a range of $3.98 to $4.11. March 2020 corn futures closed at $3.85, down 1 cents since last Friday. For the week, March 2020 corn futures traded between $3.76 and $3.87. Mar/May and Mar/Dec future spreads were 7 and 17 cents. May 2020 corn futures closed at $3.92, down 1 cent since last Friday.
In Memphis, new crop cash corn contracts ranged from $3.91 to $4.02. December 2020 corn futures closed at $4.02, up 2 cents since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2020 Put Option costing 32 cents establishing a $3.78 futures floor.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 13.1 million bushels for the 2019/20 marketing year and 0.1 million bushels for the 2020/21 marketing year. Exports for the same period were up 4 percent compared to last week at 41.1 million bushels. Soybean export sales and commitments were 62 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 77 percent. Average soybean basis strengthened at Memphis and Northwest Barge Points and weakened at Northwest and Upper-middle Tennessee. Basis ranged from 28 under to 47 over the March futures contract at elevators and barge points. Average basis at the end of the week was 4 over the March futures contract. In Tennessee, January 2020 cash contracts ranged from $9.34 to $9.64. March 2020 soybean futures closed at $9.46, up 5 cents since last Friday. For the week, March 2020 soybean futures traded between $9.35 and $9.54. Mar/May and Mar/Nov future spreads were 13 and 28 cents. May 2020 soybean futures closed at $9.59, up 4 cents since last Friday. March soybean-to-corn price ratio was 2.46 at the end of the week.
In Memphis, new crop soybean cash contracts ranged from $9.55 to $9.78. Nov/Dec 2020 soybean-to-corn price ratio was 2.42 at the end of the week. November 2020 soybean futures closed at $9.74, up 3 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2020 Put Option which would cost 53 cents and set a $9.27 futures floor.
Cotton
Net sales reported by exporters were down compared to last week with net sales of 152,000 bales for the 2019/20 marketing year and 5,500 bales for the 2020/21 marketing year. Exports for the same time period were down 6 percent compared to last week at 211,400 bales. Upland cotton export sales were 76 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 71 percent. Delta upland cotton spot price quotes for January 9 were 67.94 cents/lb (41-4-34) and 70.19 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.45 cents to 60.08 cents. March 2020 cotton futures closed at 71.31 cents, up 2.11 cents since last Friday. For the week, March 2020 cotton futures traded between 69.05 and 71.31 cents. Mar/May and Mar/Dec cotton futures spreads were 1.15 cents and 1.17 cents. May 2020 cotton futures closed at 72.46, up 2.08 cents since last Friday.
December 2020 cotton futures closed at 72.48, up 1.24 cents since last Friday. Downside price protection could be obtained by purchasing a 73 cent December 2020 Put Option costing 4.82 cents establishing a 68.18 cent futures floor.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 3.0 million bushels for the 2019/20 marketing year and 1.8 million bushels for the 20/21 marketing year. Exports for the same time period were up 4 percent from last week at 12.9 million bushels. Wheat export sales were 71 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 81 percent. March 2020 wheat futures closed at $5.64, up 10 cents since last Friday. March 2020 wheat futures traded between $5.45 and $5.68 this week. March wheat-to-corn price ratio was 1.46. Mar/May and Mar/Jul future spreads were 2 and 4 cents. May 2020 wheat futures closed at $5.66, up 9 cents since last Friday. May wheat-to-corn price ratio was 1.44.
In Tennessee, June/July 2020 cash contracts ranged from $5.59 to $6.05. July 2020 wheat futures closed at $5.68, up 8 cents since last Friday. Downside price protection could be obtained by purchasing a $5.70 July 2020 Put Option costing 38 cents establishing a $5.32 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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