Weekly Crop Comments by Dr. Aaron Smith

Overview

​Corn, cotton, soybeans, and wheat were up for the week.

Another large daily increase in corn and soybean futures prices was triggered by a USDA report release on Friday. The October WASDE and Crop Production reports provided additional bullish news for corn and soybean markets. U.S. corn production was projected down 178 million bushels from last month at 14.722 billion bushels. Ethanol and feed and residual use were decreased 50 million bushels each. Overall, U.S. stocks were projected down 336 million bushels from the previous month. Soybeans surpassed even the bullish pre-report expectations. U.S. production was decreased 45 million bushels, beginning stocks decreased 52 million bushels, and exports increased 75 million bushels. The net result was a 170 million bushel reduction in projected ending stocks to 290 million bushels for the 2020/21 marketing year. This would be the lowest ending stocks level in 5-years. For the day, corn futures were up 4 ¼ to 8 cents and soybeans were up 15 ½ to 26 ¾ cents.

The WASDE report was neutral for cotton with minor changes to U.S. production and no changes to use. The cotton market mover this week was hurricane Delta. Cotton prices were up nearly 2 cents for the week. While the world still has large stocks of cotton, there will be strong demand and price premiums for higher quality cotton.

July wheat bumped up to $6.00 on the futures this week which represents a good starting point for Tennessee producers to start pricing 2021 production, if they have not already done so.

Compared to last month, national corn yield was decreased 0.1 bu/acre to 178.4 bu/acre; upland cotton yields were estimated unchanged at 899 lb/acre; and soybeans were estimated unchanged at 51.9 bu/acre. Tennessee corn yields were projected down 5 bu/acre, at 169 bu/acre; soybeans down 2 bu/acre, at 48 bu/acre; and cotton down 70 lbs/acre, at 1,065 lbs.

Analysis of the October WASDE report can be found on our Monthly Crop Comments page.

Corn

Ethanol production for the week ending October 2 was 0.923 million barrels per day, down 42,000 barrels from the previous week. Ethanol stocks were 19.672 million barrels, down 0.019 million barrels compared to last week. Corn net sales reported by exporters for September 25-October 1 were down compared to last week with net sales of 48.3 million bushels for the 2020/21 marketing year. Exports for the same time period were up 25% from last week at 36.8 million bushels. Corn export sales and commitments were 44% 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 30%.

Nationally the Crop Progress report estimated corn condition at 62% good-to-excellent and 13% poor-to-very poor; corn mature at 87% compared to 75% last week, 54% last year, and a 5-year average of 78%; and corn harvested at 25% compared to 15% last week, 14% last year, and a 5-year average of 24%. In Tennessee, the Crop Progress report estimated corn condition at 73% good-to-excellent and 4% poor-to-very poor; corn mature at 96% compared to 88% last week, 99% last year, and a 5-year average of 98%; and corn harvested at 60% compared to 40% last week, 84% last year, and a 5-year average of 80%. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Mississippi River, West-Central, North-Central, Northwest, and West elevators and barge point. Overall, basis for the week ranged from 15 under to 23 over, with an average of 5 over the December futures. December 2020 corn futures closed at $3.95, up 16 cents since last Friday. For the week, December 2020 corn futures traded between $3.77 and $3.98. Dec/Mar and Dec/Dec future spreads were 7 and 1 cents. Downside price protection could be obtained by purchasing a $4.00 December 2020 Put Option costing 16 cents establishing a $3.84 futures floor. In Tennessee, new crop cash corn contracts ranged from $3.64 to $4.22. March 2021 corn futures closed at $4.02, up 13 cents since last Friday. December 2021 corn futures closed at $3.96, up 5 cents since last Friday.

Soybeans

Net sales reported by exporters were down compared to last week with net sales of 95.2 million bushels for the 2020/21 marketing year. Exports for the same period were up 82% compared to last week at 76.0 million bushels. Soybean export sales and commitments were 70% 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 43%.

Nationally the Crop Progress report estimated soybean condition at 64% good-to-excellent and 10% poor-to-very poor; soybeans dropping leaves at 85% compared to 74% last week, 67% last year, and a 5-year average of 82%; and soybeans harvested at 38% compared to 20% last week, 12% last year, and a 5-year average of 28%. In Tennessee, soybean condition was estimated at 75% good-to-excellent and 4% poor-to-very poor; soybeans dropping leaves at 69% compared to 52% last week, 81% last year, and a 5-year average of 79%; and soybeans harvested at 21% compared to 12% last week, 36% last year, and a 5-year average of 27%. Across Tennessee, average soybean basis weakened at Mississippi River, West, and West-Central and strengthened or remained unchanged at North-Central and Northwest elevators and barge points. Basis ranged from 10 under to 26 over the November futures contract. Average basis at the end of the week was 11 over the November futures contract. November 2020 soybean futures closed at $10.65, up 45 cents since last Friday. For the week, November 2020 soybean futures traded between $10.16 and $10.79. Nov/Jan and Nov/Nov future spreads were 0 and -85 cents. November/December soybean-to-corn price ratio was 2.70 at the end of the week. Downside price protection could be achieved by purchasing a $10.70 November 2020 Put Option which would cost 20 cents and set a $10.50 futures floor. In Tennessee, new crop soybean cash contracts ranged from $10.12 to $10.88. January 2021 soybean futures closed at $10.65, up 41 cents since last Friday. November 2021 soybean futures closed at $9.80, up 10 cents since last Friday. Nov/Dec 2021 soybean-to-corn price ratio was 2.47 at the end of the week.

Cotton

Net sales reported by exporters were down compared to last week with net sales of 178,400 bales for the 2020/21 marketing year and 15,000 bales for the 2021/22 marketing year. Exports for the same time period were down 35% compared to last week at 142,300 bales. Upland cotton export sales were 60% 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 53%. Delta upland cotton spot price quotes for October 8 were 63.74 cents/lb (41-4-34) and 65.99 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.81 cents to 51.48 cents.

Nationally, the Crop Progress report estimated cotton condition at 40% good-to-excellent and 27% poor-to-very poor; cotton bolls opening at 83% compared to 66% last week, 81% last year, and a 5-year average of 75%; and cotton harvested at 17% compared to 13% last week, 22% last year, and a 5-year average of 20%. In Tennessee, cotton condition was estimated at 61% good-to-excellent and 20% poor-to-very poor; cotton bolls opening at 85% compared to 66% last week, 88% last year, and a 5-year average of 87%; and cotton harvested at 7% compared to 2% last week, 19% last year, and a 5-year average 16%. December 2020 cotton futures closed at 67.64, up 1.82 cents since last Friday. For the week, December 2020 cotton futures traded between 65.65 and 68.68 cents. Dec/Mar and Dec/Dec cotton futures spreads were 0.78 cents and -0.11 cents. Downside price protection could be obtained by purchasing a 68 cent December 2020 Put Option costing 1.75 cents establishing a 66.25 cent futures floor. March 2021 cotton futures closed at 68.42 cents, up 1.79 cents since last Friday. December 2021 cotton futures closed at 67.53 cents, up 1.57 cents since last Friday.

Wheat

Wheat net sales reported by exporters were up compared to last week with net sales of 19.5 million bushels for the 2020/21 marketing year and 1.4 million bushels for the 2021/22 marketing year. Exports for the same time period were up 9% from last week at 25.8 million bushels. Wheat export sales were 55% 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 55%.

Nationally the Crop Progress report estimated winter wheat planted at 52% compared to 35% last week, 48% last year, and a 5-year average of 47%; and winter wheat emerged at 24% compared to 10% last week, 22% last year, and 5-year average of 21%. In Tennessee winter wheat planted was estimated at 11% compared to 5% last week, 14% last year, and a 5-year average of 13%; and winter wheat emerged at 5% compared to 3% last week, 3% last year, and a 5-year average of 3%. December 2020 wheat futures closed at $5.93, up 20 cents since last Friday. December 2020 wheat futures traded between $5.73 and $6.16 this week. December wheat-to-corn price ratio was 1.50. Dec/Mar and Dec/Jul future spreads were 4 and 1 cents. March 2021 wheat futures closed at $5.97, up 18 cents since last Friday. In Tennessee, new crop wheat cash contracts ranged from $5.76 to $6.16. July 2021 wheat futures closed at $5.94, up 13 cents since last Friday. Downside price protection could be obtained by purchasing a $6.00 July 2021 Put Option costing 42 cents establishing a $5.58 futures floor.