|
Harvest Shows Higher Yields In Corn Belt
DR. AARON SMITH
KNOXVILLE, TENN.
Soybeans, corn, cotton, and wheat were up for the week. Economic and political uncertainty in Washington DC continues to influence financial and commodity markets. Corn harvest continues to move north, with initial reports of higher than expected yields in the Corn Belt leading many to believe the USDA will increase average yields on the October 11th World Agricultural Supply and Demand Estimates (WASDE) report. The October WASDE report should also provide some harvested acreage adjustments that reflect the FSA prevented planting numbers released this month. The September WASDE report showed estimated corn harvested acreage at 89.1 million acres, the FSA prevented planting acreage estimate was 84.4 million acres. Most likely the true number is somewhere in between the two. Combining the potential for acreage and yield adjustments in corn will make the October 11th WASDE report closely watched by commodity traders. Soybean harvest has commenced and initial yields are strong, however this was expected, late planted soybeans still represent a significant unknown when estimating average yields. Some expect the USDA to adjust soybean yields upward in the October WASDE report. November futures prices remain above $13. Pricing soybeans at or above the $13 mark should still be considered by producers as this represents a significant increase from the beginning of August when soybeans were in the $11.60/bu range. Cotton prices increased to near 87 cents/lb this week. Given the last 7-8 month trading range pricing cotton at or above this level is strongly encouraged as the longer term outlook in general is still pessimistic. Wheat markets have received some support on news that Argentina may have frost damage in some of its southern areas and quality concerns in Brazilian and Chinese wheat could result in additional U.S. exports. The USDA will release its quarterly stocks report on Monday, combined with the political uncertainty in Washington this could lead to some major market movements on Monday.
Corn
Weekly export net sales were above expectations with net sales of 25.2 million bushels for the 2013/14 marketing year. Exports for the week were 18.9 million bushels. Last week ethanol production decreased 6,000 barrels per day to 832,000 barrels per day. September 20th ending ethanol stocks decreased 500,000 barrels from the previous week to 15.6 million barrels. Dec/Mar and Dec/Sep futures spreads were 12 cents and 30 cents.
USDA crop progress report released September 23rd reported corn dented or beyond at 91 percent compared to 81 percent last week, 99 percent last year, and a 5-year average of 93 percent. Corn mature was reported at 40 percent compared to 22 percent last week, 86 percent last year, and a 5-year average of 55 percent. Corn harvested was 7 percent compared to 4 percent last week, 37 percent last year, and a 5-year average of 16 percent. Corn condition was reported as 55 percent good to excellent compared to 53 percent last week and 24 percent last year; 16 percent poor to very poor compared to 18 percent last week and 51 percent last year. In Tennessee, corn mature was 77 percent (5-year average 91 percent); corn silage harvested was 90 percent this week (5-year average 95 percent); corn harvest was 39 percent (5-year average 60 percent); and corn condition was 87 percent good to excellent and 2 percent poor to very poor. Downside price protection could be obtained by purchasing a $4.55 December Put Option costing 17 cents establishing a $4.38 futures floor.
Soybeans
Weekly export net sales exceeded expectations with net sales of 103.5 million bushels for 2013/14. Exports for the week were 16.3 million bushels. Nov/Jan and Nov/Nov futures spreads were 2 cents and -145 cents.
Nationally, soybeans dropping leaves were 47 percent compared to 26 percent last week, 71 percent last year, and a 5-year average of 56 percent. Soybeans harvested were 3 percent last week, 21 percent last year, and a 5-year average of 9 percent. Soybean condition was reported as: 50 percent good to excellent the same as last week, compared to 35 percent last year; 17 percent poor to very poor compared to 18 percent last week and 34 percent last year. In Tennessee, soybeans dropping leaves was 26 percent (5-year average 56 percent), soybeans harvested was 3 percent (5-year average 7 percent), and crop condition was 80 percent good to excellent and 4 percent poor to very poor. Downside price protection could be achieved by purchasing a $13.20 November Put Option which would cost 31 cents and set a $12.89 futures floor.
Cotton
All cotton weekly export net sales decreased from last week with sales of 97,300 bales (66,500 bales of Upland cotton for 2013/14; 9,900 bales of Upland cotton for 2014/15; and 20,900 bales of Pima cotton for 2013/14). Exports were 97,000 bales of Upland cotton and 10,500 of Pima. September 26th adjusted world price (AWP) increased 0.07 cents to 69.47 cents. Oct/Dec and Dec/Mar futures spreads were 0.97 cents and -0.29 cents.
Nationally, cotton opening bolls was reported at 47 percent compared to 36 percent last week, 67 percent last year, and 62 percent for the 5-year average. Cotton harvested was reported as 5 percent compared to 4 percent last week, 9 percent last year, and a 5-year average of 10 percent. Cotton condition was: 44 percent good to excellent compared to 43 percent last week and 43 percent last year; 23 percent poor to very poor compared to 24 percent last week, and 30 percent last year. In Tennessee, cotton bolls opening was 26 percent (5-year average of 75 percent); cotton defoliated was 12 percent (5-year average of 38 percent); cotton harvested was 2 percent (5-year average 7 percent), and cotton condition was reported as 69 percent good to excellent and 8 percent poor to very poor. Downside price protection could be obtained by purchasing an 87 cent December Put Option costing 2.55 cents establishing an 84.45 cent futures floor.
Wheat
Weekly exports were within expectations with net sales of 22.8 million bushels for the 2013/14 marketing year. Exports were 20.9 million bushels. Dec/Mar and Dec/Jul futures spreads were 8 cents and 1 cent.
Nationally, spring wheat harvested was 93 percent compared to 90 percent last week, 100 percent last year, and a 5-year average of 93 percent. Winter wheat planting was reported at 23 percent compared to 12 percent last week, 23 percent last year and a 5-year average of 24 percent. Downside price protection could be obtained by purchasing a $6.90 July 2014 Put Option costing 57 cents and establishing a $6.33 futures floor.∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
|
|