Corn Net Sales Reported By Exporters For March 12-18 Were Up
DR. AARON SMITH
KNOXVILLE, TENN.
December corn is approaching a key support level of $4.60. If prices fall below $4.60, the next level of support will be $4.40. Next week’s USDA Prospective Plantings report could provide a major push (up or down) for corn prices depending on USDA estimates. Current estimates are 92 million acres of corn and 90 million acres of soybeans. The harvest price ratio of 2.6 still favors soybeans, but if weather cooperates many farmers may plant corn. Heading into the report having some production priced should be strongly considered as historically this report has moved markets.
July wheat prices have lost over 60 cents since the February 24 high of $6.72 ¾. Improved weather conditions, as wheat exits dormancy in the West, have production estimates moving higher. Prices are also under pressure from record global stocks, which is not the case with corn and soybeans. In Tennessee, sales with cash prices above $6.00 should be considered.
December 2021 cotton futures moved lower driven by a 3.83 cent decline on Thursday. The price decline was driven by improved moisture conditions and more advantageous weather forecasts in the Texas/ the Southern Plains. The dramatic decrease the past two weeks further clouds the planted acreage estimates in Tennessee and the Delta.
Producers that priced 25-50 percent (or greater) of anticipated production, with prices north of 80 cents, will plant intended acres.
Those that had not priced production will have to weigh the risks of reduced prices. The projected (spring) crop insurance price of 83 cents does provide a strong safety net, but is it enough to maintain cotton acres with harvest corn above $4.60 and soybeans above $12.00?
I had projected cotton acres in 2021 in Tennessee to reach 325,000 acres, however with recent price developments we could see acres closer to 300,000.
On March 31, the USDA will release the Prospective Plantings report, which will provide survey based estimates of intended plantings. The report will provide clarification on planted acres for spring crops.
Corn
Ethanol production for the week ending March 19 was 0.922 million barrels per day, down 49,000 barrels from the previous week. Ethanol stocks were 21.809 million barrels, up 0.469 million barrels compared to last week. Corn net sales reported by exporters for March 12-18 were up compared to last week with net sales of 176.4 million bushels for the 2020/21 marketing year and 5.7 million bushels for the 2021/22 marketing year. Exports for the same time period were down 7 percent from last week at 80.2 million bushels. Corn export sales and commitments were 98 percent of the USDA estimated total exports for the 2020/21 marketing year (September 1 to August 31) compared to the previous 5-year average of 78 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at North-Central, West-Central, Northwest, West, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 15 over to 42 over, with an average of 28 over the May futures at elevators and barge points. May 2021 corn futures closed at $5.52, down 5 cents since last Friday. For the week, May 2021 corn futures traded between $5.41 and $5.58. May/Jul and May/Dec future spreads were -17 and -86 cents. July 2021 corn futures closed at $5.35, down 3 cents since last Friday.
In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.45 to $4.89. December 2021 corn futures closed at $4.66, down 5 cents since last Friday. Downside price protection could be obtained by purchasing a $4.70 December 2021 Put Option costing 46 cents establishing a $4.24 futures floor.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 3.7 million bushels for the 2020/21 marketing year and 2.4 million bushels for the 2021/22 marketing year. Exports for the same period were down 6 percent compared to last week at 18.4 million bushels. Soybean export sales and commitments were 99 percent of the USDA estimated total annual exports for the 2020/21 marketing year (September 1 to August 31), compared to the previous 5-year average of 88 percent. Across Tennessee, average soybean basis weakened or remained unchanged at West, West-Central, North-Central, Northwest, and Mississippi River elevators and barge points. Basis ranged from 5 over to 30 over the May futures contract. Average basis at the end of the week was 14 over the May futures contract. May 2021 soybean futures closed at $14.00, down 16 cents since last Friday. For the week, May 2021 soybean futures traded between $13.99 and $14.35. May/ Jul and May/Nov future spreads were -9 and -193 cents. May 2021 soybean-to-corn price ratio was 2.54 at the end of the week. July 2021 soybean futures closed at $13.91, down 12 cent since last Friday.
In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $12.10 to $12.62. November 2021 soybean futures closed at $12.07, down 13 cents since last Friday. Downside price protection could be achieved by purchasing a $12.20 November 2021 Put Option which would cost 82 cents and set an $11.38 futures floor. Nov/ Dec 2021 soybean-to-corn price ratio was 2.59 at the end of the week.
Cotton
Net sales reported by exporters were down compared to last week with net sales of 271,200 bales for the 2020/21 marketing year and 69,400 bales for the 2021/22 marketing year. Exports for the same time period were down 11 percent compared to last week at 313,500 bales. Upland cotton export sales were 101 percent of the USDA estimated total annual exports for the 2020/21 marketing year (August 1 to July 31), compared to the previous 5-year average of 95 percent. Delta upland cotton spot price quotes for March 25 were 76.19 cents/lb (41-4-34) and 78.44 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 2.9 cents to 68.55 cents. May 2021 cotton futures closed at 80.38, down 4.3 cents since last Friday. For the week, May 2021 cotton futures traded between 77.12 and 85.16 cents. May/Jul and May/Dec cotton futures spreads were 1.03 cents and -1.64 cents. July 2021 cotton futures closed at 81.41 cents, down 4.31 cents since last Friday.
December 2021 cotton futures closed at 78.74 cents, down 3.77 cents since last Friday. Downside price protection could be obtained by purchasing a 79 cent December 2021 Put Option costing 7.85 cents establishing a 71.15 cent futures floor.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 12.6 million bushels for the 2020/21 marketing year and 2.6 million bushels for the 2021/22 marketing year. Exports for the same time period were down <1 percent from last week at 24.2 million bushels. Wheat export sales were 94 percent of the USDA estimated total annual exports for the 2020/21 marketing year (June 1 to May 31), compared to the previous 5-year average of 99 percent. In Tennessee, spot wheat prices ranged from $6.47 to $6.70. May 2021 wheat futures closed at $6.13, down 14 cents since last Friday. May 2021 wheat futures traded between $6.08 and $6.44 this week. May wheat- to-corn price ratio was 1.11. May/Jul and May/Sep future spreads were -4 and -3 cents.
In Tennessee, new crop wheat cash contracts ranged from $5.96 to $6.50. July 2021 wheat futures closed at $6.09, down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2021 Put Option costing 34 cents establishing a $5.76 futures floor. September 2021 wheat futures closed at $6.10, down 9 cents since last Friday. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee