Export Sales Follow Distinct Seasonal Patterns
DR. AARON SMITH
KNOXVILLE, TENN.
Strong export sales this fall and winter will be imperative if prices are to remain or exceed current levels. To meet the USDA’s current marketing year goal for exports, export sales will need to average 48.0 million bushels of corn per week, 40.2 million bushels of soybeans per week, 298,077 bales of cotton per week, and 16.8 million bushels of wheat per week. So, the previous week’s net export sales of 50.1 million bushels of corn, 105.8 million bushels of soybeans, 391,800 bales of cotton, and 13.3 million bushels of wheat are encouraging. However, export sales follow distinct seasonal patterns.
Looking at the previous 5-year average the monthly percent of the marketing year total export sales for corn ranged from 6.6 percent to 10.6 percent; soybeans from 3.6 percent to 15.9 percent; cotton 4.6 percent to 12.3 percent; and wheat 6.7 percent to 9.9 percent. As such, on average a short period of time is more important to cotton and soybean export sales than corn or wheat sales, which are distributed more evenly throughout the year (there is still seasonality in corn and wheat, it is just not as prevalent as soybeans and cotton).
For example, over the past five years, 54.2 percent of soybean export sales occurred in October through January and 43.4 percent of cotton export sales occurred February through May. As such, it is important to consider the time of year to determine how robust weekly export sales data are relative to the marketing year total. Assuming 54.2 percent of this marketing year’s soybean export sales will occur October through January would necessitate weekly sales on average of 70.8 million bushels over the four-month interval. Likewise, cotton sales outside February through May would indicate export sales on average of 280,000 bales to meet the marketing year target, when adjusted for seasonal influences. Accumulated export sales and weekly export sales will be closely monitored by market participants and will be one or the key drivers of price direction this winter.
Corn
Ethanol production for the week ending October 15 was 1.096 million barrels per day, up 64,000 from the previous week. Ethanol stocks were 20.080 million barrels, up 0.233 million compared to last week. Corn net sales reported by exporters for October 8-14, 2021, were up compared to last week with net sales of 50.1 million bushels for the 2021/22 marketing year and 0.02 million bushels for the 2022/23 marketing year. Exports for the same period were up 14 percent from last week at 41.0 million bushels. Corn export sales and commitments were 46 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 36 percent. Nationally, this week’s Crop Progress report estimated corn condition at 60 percent good-to-excellent and 14 percent poor-to-very poor; corn mature at 97 percent compared to 94 percent last week, 97 percent last year, and a 5-year average of 93 percent; and corn harvested at 52 percent compared to 41 percent last week, 57 percent last year, and a 5-year average of 41 percent. In Tennessee, corn condition was estimated at 82 percent good-to- excellent and 2 percent poor-to-very poor; corn mature at 100 percent compared to 99 percent last week, 100 percent last year, and a 5-year average of 100 percent; and corn harvested at 78 percent compared to 67 percent last week, 82 percent last year, and a 5-year average of 91 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest, West, West- Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 5 under to 45 under, with an average of 32 under the December futures at elevators and barge points. December 2021 corn futures closed at $5.38, up 13 cents since last Friday. Downside price protection could be obtained by purchasing a $5.50 December 2021 Put Option costing 31 cents establishing a $5.19 futures floor. For the week, December 2021 corn futures traded between $5.23 and $5.40. In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.85 to $5.65.
Dec/Mar and Dec/May future spreads were 8 and 12 cents. March 2022 corn futures closed at $5.46, up 12 cents since last Friday. May 2022 corn futures closed at $5.50, up 12 cents since last Friday.
Soybeans
Net sales reported by exporters were up compared to last week with net sales of 105.7 million bushels for the 2021/22 marketing year. Exports for the same period were up 29 percent compared to last week at 81.1 million bushels. Soybean export sales and commitments were 51 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 53 percent. Nationally, this week’s Crop Progress report estimated soybeans dropping leaves at 95 percent compared to 91 percent last week, 96 percent last year, and a 5-year average of 95 percent; and soybeans harvested 60 percent compared to 49 percent last week, 73 percent last year, and a 5-year average of 55 percent. In Tennessee, soybean condition was estimated at 81 percent good-to- excellent and 3 percent poor-to-very poor; soybeans dropping leaves at 87 percent compared to 77 percent last week, 88 percent last year, and a 5-year average of 92 percent; and soybeans harvested at 31 percent compared to 22 percent last week, 40 percent last year, and a 5-year average of 50 percent. Across Tennessee, average soybean basis weakened at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 8 under to 62 under, with an average basis at the end of the week of 39 under the November futures contract. November 2021 soybean futures closed at $12.20, up 3 cents since last Friday. For the week, November 2021 soybean futures traded between $12.10 and $12.49. Downside price protection could be achieved by purchasing a $12.30 November 2021 Put Option which would cost 9 cents and set a $12.21 futures floor. Nov/ Dec 2021 soybean-to-corn price ratio was 2.27 at the end of the week. In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $11.62 to $12.51.
Nov/Jan and Nov/Mar future spreads were 10 and 19 cents. January 2022 soybean futures closed at $12.30, up 4 cents since last Friday. March 2022 soybean futures closed at $12.39, up 4 cents since last Friday. March 2022 soybean-to-corn price ratio was 2.27 at the end of the week.
Cotton
Net sales reported by exporters were up compared to last week with net sales of 391,800 bales for the 2021/22 marketing year and 63,900 for the 2022/23 marketing year. Exports for the same period were up 23 percent compared to last week at 117,400 bales. Upland cotton export sales were 55 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 57 percent. Delta upland cotton spot price quotes for October 21 were 104.89 cents/lb (41-4-34) and 107.14 cents/ lb (31-3-35). Adjusted world price decreased 0.08 cents to 92.80 cents.
Nationally, this week’s Crop Progress report estimated cotton condition at 64 percent good-to-excellent and 5 percent poor-to-very poor; cotton bolls opening at 86 percent compared to 78 percent last week, 93 percent last year, and a 5-year average of 88 percent; and cotton harvested at 28 percent compared to 20 percent last week, 33 percent last year, and a 5-year average of 34 percent. In Tennessee, cotton condition was estimated at 69 percent good-to-excellent and 11 percent poor-to-very poor; cotton bolls opening at 85 percent compared to 75 percent last week, 94 percent last year, and a 5-year average of 97 percent; and cotton harvested at 15 percent compared to 2 percent last week, 30 percent last year, and a 5-year average of 44 percent.
December 2021 cotton futures closed at 108.26 cents, up 0.93 cents since last Friday. Downside price protection could be obtained by purchasing a 108 cent December 2021 Put Option costing 5.73 cents establishing a 103.27 cent futures floor. For the week, December 2021 cotton futures traded between 105.25 and 111.35 cents. Dec/Mar and Dec/ May cotton futures spreads were -2.07 cents and -3.09 cents. March 2022 cotton futures closed at 106.19 cents, up 1.19 cents since last Friday. May 2022 cotton futures closed at 105.17 cents, up 1.2 cents since last Friday.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 13.3 million bushels for the 2021/22 marketing year. Exports for the same period were down 65 percent from last week at 5.9 million bushels. Wheat export sales were 52 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 58%. December 2021 wheat futures closed at $7.56, up 22 cents since last Friday. December 2021 wheat futures traded between $7.28 and $7.59 this week. December wheat-to-corn price ratio was 1.41. Dec/Mar and Dec/Jul future spreads were 11 and 0 cents. March 2022 wheat futures closed at $7.67, up 21 cents since last Friday. March wheat-to-corn futures price ratio was 1.40.
Nationally, the Crop Progress report estimated winter wheat planted at 70 percent compared to 60 percent last week, 76 percent last year, and a 5-year average of 71 percent; and winter wheat emerged at 44 percent compared to 31 percent last week, 50 percent last year, and a 5-year average of 47 percent. In Tennessee, winter wheat planted was estimated at 37 percent compared to 22 percent last week, 40 percent last year, and a 5-year average of 50 percent; and winter wheat emerged at 21 percent compared to 13 percent last week, 20 percent last year, and a 5-year average of 13 percent. New crop wheat cash prices at elevators and barge points ranged from $7.05 to $7.29. July 2022 wheat futures closed at $7.56, up 18 since last Friday. Downside price protection could be obtained by purchasing a $7.60 July 2022 Put Option costing 63 cents establishing a $6.97 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee