Weekly Crop Comments by Dr. Aaron Smith

 

​Soybeans were up; corn and cotton were mixed; and wheat was down for the week.

 

December corn opened October at $3.86 ¾ and closed at $3.90, up 3 ¼ cents for the month. For most of the month the December contract traded between $3.80 and $4.00 (the low for the month was $3.78 ¼; the high was $4.02 ½). Corn harvest remains well behind typical progress due to late planting and uncooperative harvest weather in several Northern states. Nearby futures are likely to continue trading between $3.80 and $4.10 for the remainder of 2019.

 

November soybeans opened October at $9.04 and closed at $9.16 ¾, up 12 ¾ cents for the month. For the month, November soybean futures peaked at $9.45 ½ on October 14 before trending down for the second half of the month. U.S. export sales and South American planting / crop progress will dictate price direction for the remainder of 2019. Soybean sales to China will continue to be closely monitored by market participants. Phase 1 of a potential trade agreement has been announced by the President, however details and finalization of an agreement have yet to occur.

 

December cotton opened the month at 60.96 cents and closed at 64.44, up 3.48 cents. Cotton futures gained steadily for most of the month, however a pull back towards 60-62 cents is possible if export sales pace is not maintained.  For the 2019/20 marketing year, USDA projects export sales and ending stocks at 16.5 million bales and 7 million bales. If these estimates are realized it will be challenging for cotton prices to rise above 70 cents.

 

July wheat futures opened at $5.10 ¾ and closed at $5.23 ¼, up 12 ½ cents.  July wheat futures extended the September price appreciation for the first half of October peaking at $5.45 ¾ on October 21 before retreating in the final two weeks of the month. Global wheat stocks continue to be abundant, thus maintaining downward pressure on prices.

 

 

 

Ethanol production for the week ending October 25 was 1.004 million barrels per day, up 8,000 from the previous week. Ethanol stocks were 21.099 million barrels, down 0.265 million barrels compare to last week. Corn net sales reported by exporters for October 12-24 were down from last week with net sales of 21.6 million bushels for the 2019/20 marketing year. Exports for the same time period were up 1% from last week at 19.5 million bushels. Corn export sales and commitments were 24% of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31) compared to the previous 5-year average of 37%. Nationally, the Crop Progress report estimated corn condition at 58% good-to-excellent and 12% poor-to-very poor; corn mature at 93% compared to 86% last week, 100% last year, and a 5-year average of 99%; and corn harvested at 41% compared to 30% last week, 61% last year, and a 5-year average of 61%. In Tennessee, the Crop Progress report estimated corn condition at 83% good-to-excellent and 3% poor-to-very poor; and corn harvested at 98% compared to 96% last week, 95% last year, and a 5-year average of 96%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee. Overall, basis for the week ranged from 39 under to 20 over with an average of 4 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.89, up 3 cents since last Friday. For the week, December 2019 corn futures traded between $3.82 and $3.91.

 

 

 

Dec/Mar and Dec/Dec future spreads were 9 and 16 cents. In Tennessee, January corn cash contracts averaged $4.05 with a range of $3.91 to $4.17. March 2020 corn futures closed at $3.98, up 1 cent since last Friday. December 2020 corn futures closed at $4.05, down 2 cents since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2020 Put Option costing 28 cents establishing a $3.82 futures floor.

 

 

 

Net sales reported by exporters were up compared to last week with net sales of 34.7 million bushels for the 2019/20 marketing year. Exports for the same period were up 25% compared to last week at 63.3 million bushels. Soybean export sales and commitments were 40% of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 57%. Nationally, the Crop Progress report estimated soybeans dropping leaves at 97% compared to 94% last week, 100% last year, and a 5-year average of 99%; and soybeans harvested at 62% compared to 46% last week, 69% last year, and a 5-year average of 78%. In Tennessee, the Crop Progress report estimated soybean condition at 61% good-to-excellent and 10% poor-to-very poor; soybeans dropping leaves at 98% compared to 96% last week, 100% last year, and a 5-year average of 98%; and soybeans harvested at 72% compared to 62% last week, 59% last year, and a 5-year average of 64%. Average soybean basis strengthened at Memphis, Northwest Barge Points, and Upper-middle Tennessee, and weakened at Northwest Tennessee. Basis ranged from 36 under to 25 over the November futures contract at elevators and barge points. Average basis at the end of the week was 3 under the November futures contract. January 2020 soybean futures closed at $9.36, up 2 cents since last Friday. For the week, January 2020 soybean futures traded between $9.25 and $9.40. January/December 2019 soybean-to-corn price ratio was 2.41 at the end of the week.

 

 

Jan/Mar and Jan/Nov future spreads were 13 and 36 cents. March 2020 soybean futures closed at $9.49, up 3 cents since last Friday. In Tennessee, January 2020 cash contracts ranged from $9.25 to $9.49. Nov/Dec 2020 soybean-to-corn price ratio was 2.40 at the end of the week. November 2020 soybean futures closed at $9.72, up 5 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2020 Put Option which would cost 57 cents and set a $9.23 futures floor.

 

 

 

Net sales reported by exporters were up compared to last week with net sales of 108,100 bales for the 2019/20 marketing year and 71,300 bales for the 2020/21 marketing year. Exports for the same time period were unchanged compared to last week at 149,000 bales. Upland cotton export sales were 61% 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 54%. Nationally, the Crop Progress report estimated cotton condition at 40% good-to-excellent and 20% poor-to-very poor; cotton bolls opening at 95% compared to 93% last week, 91% last year, and a 5-year average of 93%; and cotton harvested at 46% compared to 40% last week, 43% last year, and a 5-year average of 43%. In Tennessee, the Crop Progress report estimated cotton condition at 73% good-to-excellent and 7% poor-to-very poor; cotton bolls opening at 100% compared to 97% last week, 100% last year, and a 5-year average of 99%; and cotton harvested at 60% compared to 52% last week, 67% last year, and a 5-year average of 58%. Delta upland cotton spot price quotes for October 31 were 63.94 cents/lb (41-4-34) and 66.19 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.22 cents to 57.33 cents. December 2019 cotton futures closed at 64.23, down 0.67 cents since last Friday. For the week, December 2019 cotton futures traded between 63.81 and 65.99 cents.

 

 

Dec/Mar and Dec/Dec cotton futures spreads were 1.41 cents and 3.29 cents. March 2020 cotton futures closed at 65.64, down 0.19 cents since last Friday. December 2020 cotton futures closed at 67.52, up 0.4 cents since last Friday. Downside price protection could be obtained by purchasing a 68 cent December 2020 Put Option costing 4.55 cents establishing a 63.45 cent futures floor.

 

 

 

Nationally, the Crop Progress report estimated winter wheat condition at 56% good-to-excellent and 13% poor-to-very poor; winter wheat planted at 85% compared to 77% last week, 77% last year, and a 5-year average of 82%; and winter wheat emerged at 63% compared to 53% last week, 62% last year, and a 5-year average of 64%. In Tennessee, winter wheat condition was estimated at 63% good-to-excellent and 7% poor-to-very poor; winter wheat planted was estimated at 50% compared to 34% last week, 49% last year, and a 5-year average of 53%; and winter wheat emerged at 21% compared to 11% last week, 30% last year, and a 5-year average of 26%. Wheat net sales reported by exporters were up compared to last week with net sales of 18.1 million bushels for the 2019/20 marketing year. Exports for the same time period were down 15% from last week at 15.5 million bushels. Wheat export sales were 56% 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 63%. In Tennessee, October 2019 wheat cash contracts ranged from $5.03 to $5.55 for the week. December 2019 wheat futures closed at $5.16, down 1 cent since last Friday. December 2019 wheat futures traded between $5.01 and $5.18 this week. December wheat-to-corn price ratio was 1.33.  

 

 

Dec/Mar and Dec/Jul future spreads were 5 and 15 cents. March 2020 wheat futures closed at $5.21, down 2 cents since last Friday. March wheat-to-corn price ratio was 1.31. In Memphis, June/July 2020 cash contracts ranged from $5.28 to $5.43. July 2020 wheat futures closed at $5.31, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $5.40 July 2020 Put Option costing 41 cents establishing a $4.99 futures floor.