Weekly Crop Comments by Dr. Aaron Smith

Dec 01, 2020

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Overview
 
​Corn, cotton, soybeans, and wheat were up for the week.
 
A shortened Thanksgiving Day week still saw modest gains across the board for corn, soybeans, cotton, and wheat. Export sales continue to be the primary driver for price increases. However, crop progress in South America will have a strong influence on corn, cotton, and soybean supplies that are available to global markets in 2021 and thus be the dominant driver in prices paid by importers / received by U.S. farmers for the first half of the year.
 
The current rally in futures has been remarkable. Compared to the mid-August lows corn has added $1.10, soybeans $3.28 ¼, cotton 10.69 cents, and wheat $1.19 ½. Wheat has started to show signs of a sideways trend while cotton, corn, and soybeans are maintaining a strong upward trend in prices.  
 
With very good pricing opportunities for the 2020 crop producers are likely still focusing on selling the remainder of the crop at harvest or pricing crops in storage. However, we all know how quickly pricing opportunities can disappear. As such, producers may want to start looking at opportunities to price 2021 corn and soybean production with futures above $4.10 and $10.50.
Cotton remains challenging for 2021 pricing opportunities with futures prices in the 70-72 cent range, which would be difficult for most producers in Tennessee to turn a profit. At current prices there is little incentive to plant cotton over corn and soybeans, so we could see cotton acreage fall in Tennessee without price improvements between now and planting. There is still plenty of time for 2021 crop pricing but getting a start early and pricing incrementally when warranted should be considered.
 
 
Corn
 
Ethanol production for the week ending November 20 was 0.990 million barrels per day, up 28,000 barrels from the previous week. Ethanol stocks were 20.866 million barrels, up 0.663 million barrels compared to last week. Corn net sales reported by exporters for November 13-19 were up compared to last week with net sales of 65.6 million bushels for the 2020/21 marketing year. Exports for the same time period were up 3% from last week at 34.3 million bushels. Corn export sales and commitments were 55% 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 42%.

Corn

Dec 20

Change

Mar 21

Change

Price

$4.25

$0.02

$4.33

$0.05

Support

$4.15

$0.00

$4.21

$0.01

Resistance

$4.31

$0.02

$4.41

$0.08

20 Day MA

$4.14

$0.03

$4.21

$0.04

50 Day MA

$3.99

$0.04

$4.06

$0.04

100 Day MA

$3.71

$0.03

$3.80

$0.03

4-Week High

$4.29

$0.01

$4.35

$0.00

4-Week Low

$3.93

$0.00

$3.96

$0.00

Technical Trend

Up

=

Up

=

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at North-Central, Mississippi River, West-Central, and West and weakened at Northwest elevators and barge points. Overall, basis for the week ranged from 20 under to 27 over, with an average of 8 over the December futures. December 2020 corn futures closed at $4.25, up 2 cents since last Friday. For the week, December 2020 corn futures traded between $4.16 and $4.29. Dec/Mar and Dec/Dec future spreads were 8 and -11 cents. March 2021 corn futures closed at $4.33, up 5 cents since last Friday. December 2021 corn futures closed at $4.14, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.20 December 2021 Put Option costing 37 cents establishing a $3.83 futures floor.

Soybeans
 
Net sales reported by exporters were down compared to last week with net sales of 28.2 million bushels for the 2020/21 marketing year – a marketing year low. Exports for the same period were down 4% compared to last week at 88.6 million bushels. Soybean export sales and commitments were 87% 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 60%.
 

Soybeans

Jan 21

Change

Nov 21

Change

Price

$11.91

$0.10

$10.57

$0.08

Support

$11.73

$0.19

$10.41

$0.05

Resistance

$12.03

$0.10

$10.66

$0.07

20 Day MA

$11.39

$0.25

$10.26

$0.17

50 Day MA

$10.81

$0.14

$9.91

$0.07

100 Day MA

$10.03

$0.12

$9.53

$0.07

4-Week High

$12.00

$0.04

$10.60

$0.01

4-Week Low

$10.45

$0.00

$9.61

$0.00

Technical Trend

Up

=

Up

=

In Tennessee, the Crop Progress report estimated soybeans harvested at 87% compared to 80% last week, 89% last year, and a 5-year average of 89%. Across Tennessee, average soybean basis strengthened at Mississippi River, West, West-Central, North-Central, and Northwest elevators and barge points. Basis ranged from 27 under to 19 over the January futures contract. Average basis at the end of the week was 4 under the January futures contract. January 2021 soybean futures closed at $11.91, up 10 cents since last Friday. For the week, January 2021 soybean futures traded between $11.74 and $12.00. Jan/Mar and Jan/Nov future spreads were 1 and -134 cents. March 2021 soybean futures closed at $11.92, up 11 cents since last Friday. November 2021 soybean futures closed at $10.57, up 8 cents since last Friday. Downside price protection could be achieved by purchasing a $10.60 November 2021 Put Option which would cost 72 cents and set a $9.88 futures floor.  Nov/Dec 2021 soybean-to-corn price ratio was 2.55 at the end of the week.

Cotton
 
Net sales reported by exporters were up compared to last week with net sales of 354,700 bales for the 2020/21 marketing year and 38,500 for the 2021/22 marketing year. Exports for the same time period were down 34% compared to last week at 183,000 bales. Upland cotton export sales were 71% 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 63%. Delta upland cotton spot price quotes for November 24 were 69.98 cents/lb (41-4-34) and 72.23 cents/lb (31-3-35). Adjusted World Price (AWP) increased 1.79 cents to 58.63 cents.
 

Cotton

Dec 20

Change

Mar 21

Change

Price

71.68

0.80

73.24

0.28

Support

71.48

2.93

71.95

0.78

Resistance

71.78

-0.63

74.15

0.20

20 Day MA

69.88

0.10

71.54

0.26

50 Day MA

68.81

0.41

69.94

0.48

100 Day MA

66.30

0.33

67.26

0.36

4-Week High

72.70

0.10

74.27

1.00

4-Week Low

68.06

0.00

68.91

0.00

Technical Trend

Up

+

Up

=

Nationally, the Crop Progress report estimated cotton harvested at 77% compared to 69% last week, 75% last year, and a 5-year average of 71%. In Tennessee, cotton harvested was estimated at 90% compared to 78% last week, 85% last year, and a 5-year average 90%. December 2020 cotton futures closed at 71.68, up 0.8 cents since last Friday. For the week, December 2020 cotton futures traded between 70.8 and 72.7 cents. Dec/Mar and Dec/Dec cotton futures spreads were 1.56 cents and -0.24 cents. March 2021 cotton futures closed at 73.24 cents, up 0.28 cents since last Friday. December 2021 cotton futures closed at 71.44 cents, up 0.87 cents since last Friday. Downside price protection could be obtained by purchasing a 72 cent December 2021 Put Option costing 5.53 cents establishing a 66.47 cent futures floor.

Wheat
 
Wheat net sales reported by exporters were up compared to last week with net sales of 29.2 million bushels for the 2020/21 marketing year – a marketing year high. Exports for the same time period were up 27% from last week at 12.6 million bushels. Wheat export sales were 69% 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 69%.
 

Wheat

Dec 20

Change

Jul 21

Change

Price

$5.96

$0.03

$6.06

$0.08

Support

$5.84

$0.01

$5.93

$0.00

Resistance

$6.06

$0.02

$6.14

$0.05

20 Day MA

$5.99

-$0.03

$6.03

$0.01

50 Day MA

$5.94

$0.04

$5.95

$0.03

100 Day MA

$5.64

$0.04

$5.70

$0.04

4-Week High

$6.26

-$0.11

$6.19

-$0.05

4-Week Low

$5.80

$0.00

$5.86

$0.00

Technical Trend

Down

=

Down

-

Nationally the Crop Progress report estimated winter wheat condition at 43% good-to-excellent and 21% poor-to-very poor; and winter wheat emerged at 89% compared to 85% last week, 86% last year, and 5-year average of 88%. In Tennessee, winter wheat condition was estimated at 71% good-to-excellent and 3% poor-to-very poor; winter wheat planted was estimated at 91% compared to 85% last week, 85% last year, and a 5-year average of 87%; and winter wheat emerged at 78% compared to 69% last week, 68% last year, and a 5-year average of 70%. December 2020 wheat futures closed at $5.96, up 3 cents since last Friday. December 2020 wheat futures traded between $5.87 and $6.16 this week. December wheat-to-corn price ratio was 1.40. Dec/Mar and Dec/Jul future spreads were 10 and 10 cents. March 2021 wheat futures closed at $6.06, up 7 cents since last Friday. In Tennessee, new crop wheat cash contracts ranged from $5.88 to $6.22. July 2021 wheat futures closed at $6.06 up 8 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2021 Put Option costing 42 cents establishing a $5.68 futures floor.

Source : tennessee.edu

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