September 1 Quarterly Grain Stocks Estimates Were A Bit Of A Mixed Bag
DR. AARON SMITH
KNOXVILLE, TENN.
The USDA September 1 quarterly grain stocks estimates were a bit of a mixed bag. Soybean stocks were estimated higher than anticipated, while corn and wheat stocks were within and below pre-report estimates, respectively. Soybean stocks were estimated at 256 million bushels, 81 million bushels higher than the September WASDE estimate.
November soybean futures fell 45 cents, when the report was released, and moved lower to close the week. While the soybean stock number exceeded expectations, export sales purchases and South American crop progress will dictate price direction moving forward. Corn stocks were estimated at 1.236 billion bushels, 49 million bushels above the September estimate. Corn prices initially fell 20 cents before recovering on Thursday and Friday, closing close to pre-report prices.
Wheat was a clear benefactor from the report. After initial volatility, wheat prices moved up from $7.20 per bushel before the report, on Thursday, to a$7.57 ¾ per bushel close on Friday October 1.
December cotton futures have blown through the psychological threshold of $1 with ease. In two weeks, the December cotton futures contract has added a remarkable 15.51 cents. With futures at 104.53 cents, the path forward is uncertain. The last time cotton prices were this high was 2011 when futures prices broke through the $2.00 level. While $2 cotton is very unlikely (supply and demand dynamics, as currently known, would not indicate the likeliness of such a move) an advance to $1.10 could be forthcoming, however cotton prices are not likely to remain above $1.00 for an extended period. Finishing your 2021 crop pricing with prices above $1.00 is a prudent marketing move.
Corn
Ethanol production for the week ending September 24 was 0.914 million barrels per day, down 12,000 from the previous week. Ethanol stocks were 20.22 million barrels, up 0.109 million compared to last week.
Corn net sales reported by exporters for September 17-23, 2021, were down compared to last week with net sales of 14.6 million bushels for the 2021/22 marketing year. Exports for the same period were up 39 percent from last week at 26.6 million bushels. Corn export sales and commitments were 40 percent of the USDA estimated total exports for the 2021/22 marketing year (September 1 to August 31) compared to the previous 5-year average of 30 percent. Nationally, this week’s Crop Progress report estimated corn condition at 59 percent good-to- excellent and 15 percent poor-to-very poor; corn dented at 97 percent compared to 93 percent last week, 98 percent last year, and a 5-year average of 94 percent; corn mature at 74 percent compared to 57 percent last week, 73 percent last year, and a 5-year average 64 percent; and corn harvested at 18 percent compared to 10 percent last week, 14 percent last year, and a 5-year average of 15 percent. In Tennessee, corn condition was estimated at 82 percent good-to- excellent and 2 percent poor-to-very poor; corn dented at 100 percent compared to 98 percent last week, 100 percent last year, and a 5-year average of 100 percent; corn mature at 90 percent compared to 79 percent last week, 87 percent last year, and a 5-year average of 94 percent; and corn harvested at 43 percent compared to 31 percent last week, 38 percent last year, and a 5-year average of 62 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 30 under to 56 under, with an average of 43 under the December futures at elevators and barge points.
December 2021 corn futures closed at $5.41, up 15 cents since last Friday. Downside price protection could be obtained by purchasing a $5.45 December 2021 Put Option costing 21 cents establishing a $5.24 futures floor. For the week, December 2021 corn futures traded between $5.24 and $5.48. In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.79 to $5.10. Dec/Mar and Dec/May future spreads were 8 and 13 cents. March 2022 corn futures closed at $5.49, up 15 cents since last Friday. May 2022 corn futures closed at $5.54, up 15 cents since last Friday.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 40.2 million bushels for the 2021/22 marketing year. Exports for the same period were up 93 percent compared to last week at 19.4 million bushels. Soybean export sales and commitments were 43 percent of the USDA estimated total annual exports for the 2021/22 marketing year (September 1 to August 31), compared to the previous 5-year average of 45 percent. Nationally, this week’s Crop Progress report estimated soybean condition at 58 percent good-to-excellent and 14 percent poor-to-very poor; soybeans dropping leaves at 75 percent compared to 58 percent last week, 72 percent last year, and a 5-year average of 66 percent; and soybeans harvested 16 percent compared to 6 percent last week, 18 percent last year, and a 5-year average 13 percent. In Tennessee, soybean condition was estimated at 75 percent good-to-excellent and 4 percent poor-to-very poor; soybeans dropping leaves at 48 percent compared to 37 percent last week, 50 percent last year, and a 5-year average of 61 percent; and soybeans harvested at 9 percent compared to 5 percent last week, 11 percent last year, and a 5- year average of 15 percent. Across Tennessee, average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North- Central, and Mississippi River elevators and barge points. Basis ranged from 30 under to 70 under the November futures contract.
Average basis at the end of the week was 57 under the November futures contract. November 2021 soybean futures closed at $12.46, down 39 cents since last Friday. For the week, November 2021 soybean futures traded between $12.42 and $12.97. Downside price protection could be achieved by purchasing a $12.50 November 2021 Put Option which would cost 21 cents and set a $12.29 futures floor. Nov/Dec 2021 soybean-to- corn price ratio was 2.30 at the end of the week. In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $11.81 to $12.58.
Nov/Jan and Nov/Mar future spreads were 11 and -14 cents. January 2022 soybean futures closed at $12.56, down 38 cents since last Friday. March 2022 soybean futures closed at $12.64, down 33 cents since last Friday. March 2022 soybean-to-corn price ratio was 2.3 at the end of the week.
Cotton
Net sales reported by exporters were up compared to last week with net sales 571,400 bales for the 2021/22 marketing year. Exports for the same period were down 7 percent compared to last week at 163,900 bales. Upland cotton export sales were 49 percent of the USDA estimated total annual exports for the 2021/22 marketing year (August 1 to July 31), compared to the previous 5-year average of 54 percent. Delta upland cotton spot price quotes for September 30 were 104.55 cents/lb (41-4-34) and 106.8 cents/lb (31-3-35). Adjusted world price increased 6.33 cents to 83.92 cents.
Nationally, this week’s Crop Progress report estimated cotton condition at 65 percent good-to-excellent and 6 percent poor-to-very poor; cotton bolls opening at 60 percent compared to 48 percent last week, 65 percent last year, and a 5-year average of 64 percent; and cotton harvested at 11 percent compared to 9 percent last week, 13 percent last year, and a 5-year average of 14 percent. In Tennessee, cotton condition was estimated at 68 percent good-to-excellent and 12 percent poor-to-very poor; cotton bolls opening at 40 percent compared to 20 percent last week, 64 percent last year, and a 5-year average of 77 percent. December 2021 cotton futures closed at 104.53 cents, up 8.54 cents since last Friday. Downside price protection could be obtained by purchasing a 105 cent December 2021 Put Option costing 5.06 cents establishing a 99.94 cent futures floor. For the week, December 2021 cotton futures traded between 96.02 and 107.28 cents. Dec/Mar and Dec/May cotton futures spreads were -3.09 cents and -4.09 cents. March 2022 cotton futures closed at 101.44 cents, up 6.87 cents since last Friday. May 2022 cotton futures closed at 100.44 cents, up 6.7 cents since last Friday.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 10.7 million bushels for the 2021/22 marketing year. Exports for the same period were down 27 percent from last week at 13.6 million bushels. Wheat export sales were 47 percent of the USDA estimated total annual exports for the 2021/22 marketing year (June 1 to May 31), compared to the previous 5-year average of 53 percent. In Tennessee, spot wheat prices at elevators and barge points ranged from $5.97 to $6.16. December 2021 wheat futures closed at $7.55, up 32 cents since last Friday. December 2021 wheat futures traded between $7.01 and $7.58 this week. December wheat-to-corn price ratio was 1.4. Dec/Mar and Dec/Jul future spreads were 11 and -14 cents. March 2022 wheat futures closed at $7.66, up 32 cents since last Friday. March wheat-to-corn futures price ratio was 1.4.
Nationally, the Crop Progress report estimated winter wheat planted at 34 percent compared to 21 percent last week, 33 percent last year, and a 5-year average of 32 percent; and winter wheat emerged at 9 percent compared to 3 percent last week, 9 percent last year, and a 5-year average of 8 percent. In Tennessee, winter wheat planted was estimated at 11 percent compared to 8 percent last week, 5 percent last year, and a 5-year average of 5 percent; and winter wheat emerged at 4 percent compared to 1 percent last week, 3 percent last year, and a 5- year average of 1 percent. New crop wheat cash prices at elevators and barge points ranged from $6.67 to $6.87. July 2022 wheat futures closed at $7.41, up 25 cents since last Friday. Downside price protection could be obtained by purchasing a $7.50 July 2022 Put Option costing 66 cents establishing a $6.84 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee