|
Finally Some Good Economic News
DR. AARON SMITH
KNOXVILLE, TENN.
Livestock, dairy, non-specialty crop, and specialty crop producers started to receive CFAP payments. The payments will help mitigate some of the financial losses producers have experienced due to the COVID-19 pandemic. Producers still have until August 28 to sign up for payments at USDA FSA service centers or online at www.farmers.gov/cfap. Organize your inventory and sales records for eligible commodities and call your FSA service center to complete the CFAP application as offices are still closed to the public.
The May unemployment rate was released this Friday and was a pleasant surprise at 13.3 percent, down from April’s rate of 14.7 percent. While unemployment is still high, the May estimate was substantially lower than the 17-20 percent many analysts were predicting. The economy still has a long way to go to recover from COVID-19, however the addition of 2.5 million jobs in May was a very pleasant surprise and markets reacted positively. Consumer spending will be a key factor in the economic recovery.
Harvest futures also had a good week. December corn was up 6 ½ cents at $3.44 ¼ and is now 19 ¾ cents above the contract low of $3.25 ½ on April 21. November soybeans were up 28 ¼ cents at $8.80 and is now 49 cents above the contract low of $8.31 on April 21. December cotton was up 3.5 cents at 60.98 cents and is now 10.8 cents above the contract low of 50.18 cents on April 2. July wheat was down 5 ½ cents for the week at $5.15 ¼ and is 21 ½ cents above the six month low of $4.93 ¾ on May 18. Corn, cotton, and soybean futures are still 10-20 percent lower than pre-COVID-19 levels, however prices are trending in a positive direction.
Corn
Ethanol production for the week ending May 29 was 0.765 million barrels per day, up 41,000 barrels from the previous week. Ethanol stocks were 22.476 million barrels, down 0.7 million barrels compare to last week. Corn net sales reported by exporters for May 22-28 were up compared to last week with net sales of 25.1 million bushels for the 2019/20 marketing year and 1.1 million bushels for the 2020/21 marketing year. Exports for the same time period were up 27 percent from last week at 53.0 million bushels. Corn export sales and commitments were 90 percent of the USDA estimated total exports for the 2019/20 marketing year (September 1 to August 31) compared to the previous 5-year average of 96 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened in Northwest Tennessee and weakened or remained unchanged at Memphis, Northwest Barge Points, and Upper-middle Tennessee. Overall, basis for the week ranged from 5 under to 21 over, with an average of 9 over the July futures at elevators and barge points. July 2020 corn futures closed at $3.31, up 6 cents since last Friday. For the week, July 2020 corn futures traded between $3.19 and $3.32. Jul/Sep and Jul/Dec future spreads were 4 and 14 cents.
Nationally the Crop Progress report estimated corn condition at 74 percent good-to-excellent and 4 percent poor-to-very poor; corn planting at 93 percent compared to 88 percent last week, 64 percent last year, and a 5-year average of 89 percent; and corn emerged at 78 percent compared to 64 percent last week, 42 percent last year, and a 5-year average of 73 percent. In Tennessee, the Crop Progress report estimated corn condition at 71 percent good-to-excellent and 4 percent poor-to-very poor; corn planted at 90 percent compared to 86 percent last week, 94 percent last year, and a 5-year average of 97 percent; and corn emerged at 78 percent compared to 71 percent last week, 86 percent last year, and a 5-year average of 91 percent. In Tennessee, new crop cash corn contracts ranged from $3.12 to $3.39. September 2020 corn futures closed at $3.35, up 5 cents since last Friday. December 2020 corn futures closed at $3.45, up 7 cents since last Friday. Downside price protection could be obtained by purchasing a $3.50 December 2020 Put Option costing 24 cents establishing a $3.26 futures floor.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 18.2 million bushels for the 2019/20 marketing year and 22.3 million bushels for the 2020/21 marketing year. Exports for the same period were up 46 percent compared to last week at 17.7 million bushels. Soybean export sales and commitments were 94 percent of the USDA estimated total annual ex-ports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 99 percent. Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, and Northwest Tennessee and weakened at Upper-middle Tennessee. Basis ranged from 15 under to 32 over the July futures contract at elevators and barge points. Average basis at the end of the week was 15 over the July futures contract. July 2020 soybean futures closed at $8.67, up 27 cents since last Friday. For the week, July 2020 soybean futures traded between $8.34 and $8.73. Jul/Aug and Jul/Nov future spreads were 3 and 12 cents. August 2020 soybean futures closed at $8.70, up 27 cents since last Friday. July soybean-to-corn price ratio was 2.62 at the end of the week.
Nationally the Crop Progress report estimated soybean condition at 70 percent good-to-excellent and 4 percent poor-to-very poor; soy-bean planting at 75 percent compared to 65 percent last week, 36 percent last year, and a 5-year average of 68 percent; and soybeans emerged at 52 percent compared to 35 percent last week, 17 percent last year, and a 5-year average of 44 percent. In Tennessee, soybean condition was estimated at 67 percent good-to-excellent and 3 percent poor-to-very poor; soybeans planted at 49 percent compared to 39 percent last week, 60 percent last year, and a 5-year average of 59 percent; and soybeans emerged at 31 percent compared to 21 percent last week, 39 percent last year, and a 5-year average of 39 percent. In Tennessee, new crop soybean cash contracts ranged from $8.22 to $8.97. Nov/Dec 2020 soybean-to-corn price ratio was 2.55 at the end of the week. November 2020 soybean futures closed at $8.79, up 28 cents since last Friday. Downside price protection could be achieved by purchasing an $8.80 November 2020 Put Option which would cost 36 cents and set an $8.44 futures floor.
Cotton
Net sales reported by exporters were down compared to last week with net sales cancellations of 10,100 bales for the 2019/20 marketing year and 12,400 bales for the 2020/21 marketing year. Exports for the same time period were down 11 percent compared to last week at 237,900 bales. Upland cotton export sales were 117 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 105 percent. Delta upland cotton spot price quotes for June 4 were 57.25 cents/lb (41-4-34) and 59.5 cents/lb (31-3-35). Adjusted World Price (AWP) in-creased 0.84 cents to 44.32 cents. July 2020 cotton futures closed at 61.79 cents, up 4.2 cents since last Friday. For the week, July 2020 cotton futures traded between 57.26 and 62.32 cents. Jul/Dec and Jul/Mar cotton futures spreads were -0.4 cents and -0.81 cents.
Nationally, the Crop Progress report estimated cotton condition at 44 percent good-to-excellent and 8 percent poor-to-very poor; cotton planted at 66 percent compared to 53 percent last week, 67 percent last year, and a 5-year average of 66 percent; and cotton squaring at 8 percent compared to 7 percent last year and a 5-year average of 7 percent. In Tennessee, cotton condition was estimated at 51 percent good-to-excellent and 15 percent poor-to-very poor; cotton planted at 64 percent compared to 47 percent last week, 86 percent last year, and a 5-year average of 90 percent; and cotton squaring at 2 percent compared to 3 percent last year and a 5-year average of 3 percent. December 2020 cotton futures closed at 60.98, up 3.5 cents since last Friday. Downside price protection could be obtained by purchasing a 61 cent December 2020 Put Option costing 4.67 cents establishing a 56.33 cent futures floor. March 2021 cotton futures closed at 61.39 cents, up 2.91 cents since last Friday.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 6.6 million bushels for the 2019/20 marketing year and 16.1 million bushels for the 2020/21 marketing year. Exports for the same time period were up 34 percent from last week at 27.7 million bushels. Wheat export sales were 102 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 106 percent.
Nationally the Crop Progress report estimated winter wheat condition at 51 percent good-to-excellent and 19 percent poor-to-very poor; winter wheat headed at 77 percent compared to 68 percent last week, 73 percent last year, and a 5-year average of 81 percent; winter wheat harvest at 3 percent compared to 1 percent last year and a 5-year average of 2 percent; spring wheat condition at 80 percent good-to-excellent and 2 percent poor-to-very poor; spring wheat planted at 91 percent compared to 81 percent last week, 90 percent last year, and a 5-year average of 96 percent; and spring wheat emerged at 67 percent compared to 51 percent last week, 63 percent last year, and a 5-year average of 80 percent. In Tennessee, winter wheat condition was estimated at 53 percent good-to-excellent and 10 percent poor-to-very poor; and winter wheat coloring at 79 percent compared to 46 percent last week, 79 percent last year, and a 5-year average of 78 percent. In Tennessee, June/July 2020 cash contracts ranged from $4.90 to $5.44. July 2020 wheat futures closed at $5.15, down 5 cents since last Friday. July 2020 wheat futures traded between $5.06 and $5.29 this week. July wheat-to-corn price ratio was 1.56. Jul/Sept and Jul/Jul future spreads were 5 and 27 cents. September 2020 wheat futures closed at $5.20, down 3 cents since last Friday. September wheat-to-corn price ratio was 1.55. July 2021 wheat futures closed at $5.42, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2021 Put Option costing 43 cents establishing a $5.07 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
|
|