Corn, cotton, soybeans, and wheat were down for the week. Friday saw new harvest futures contract lows for both soybeans and corn of $9.56 and $3.31, respectively. The size of this year’s crop will continue to provide downward pressure for corn and soybean futures and weaken basis across the state. In Tennessee, cash corn prices dipped below $3.00 in some locations. At this time, it is unlikely that we have seen the harvest low for either soybeans or corn as the record harvest is just underway and a strong downward trend persists in futures markets for both commodities. Given prices have decreased substantially from where they have been the past few years, it is likely that many producers will look to store their crop. However, producers need to be cognizant of the cost of storage and may want to consider alternatives available to them in the futures and options markets that would allow them to participate in any post-harvest price rallies while not maintaining ownership of the physical commodity. There are a wide range of strategies that are available to producers such as buying a deferred futures contract at the time of a cash sale or purchasing call options. Similar to storage, these strategies are not without risks or costs and provide no guarantee of higher returns; this is merely another marketing alternative that producers may wish to consider. This week, December cotton futures gave back all of last week’s increase. Since July 24th harvest cotton futures have traded in a 62-68 cent price range. For cotton producers, a high quality crop will provide the opportunity to obtain price premiums. World stocks are at record levels however quality cotton appears to be in relative short supply making high quality American cotton attractive to foreign buyers. December wheat futures prices have dropped nearly $3.00 a bushel since early May.
Corn
December 2014 corn futures closed at $3.31 down 7 cents from last week with support at $3.27 and resistance at $3.40. Across Tennessee average basis (cash price- nearby future price) weakened at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee and strengthened in Lower-middle Tennessee. Overall basis for the week ranged from 44 under to 2 over the December futures contract with an average of 22 under at the end of the week. Ethanol production for the week ending September 12th was 931,000 barrels per day up 4,000 barrels per day. Ending ethanol stocks were 18.805 million barrels up 784,000 barrels from last week. Nationally, the September 15th Crop Progress report estimated corn dented or beyond at 82% compared to 69% last week, 79% last year, and a 5-year average of 85%; corn mature at 27% compared to 15% last week, 20% last year, and a 5-year average of 39%; corn harvested at 4% compared to 4% last year and a 5-year average of 9%; and corn condition at 74% good to excellent 7% poor to very poor. In Tennessee the Crop Progress report estimated, corn dented or beyond at 96% compared to 91% last week, 97% last year, and a 5-year average of 99%; corn mature at 67% compared to 42% last week, 63% last year, and a 5-year average of 79%; corn harvested at 20% compared to 8% last week, 19% last year, and a 5-year average of 45%; and corn condition at 82% good to excellent and 3% poor to very poor. This week December 2014 corn futures prices traded between $3.31 and $3.50. Dec/Mar and Dec/Sep future spreads were 13 cents and 36 cents, respectively.
January cash forward contracts at elevators and barge points for the week averaged $3.35 with a range of $3.01 to $3.59. March 2015 corn futures closed at $3.44 down 7 cents from last week with support at $3.39 and resistance at $3.53. Corn net sales reported by exporters from September 5th to 11th were within expectations with net sales of 26 million bushels for the 2014/15 marketing year. Exports for the same time period were down from last week at 28.4 million bushels. Corn export sales and commitments were 29% of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31) compared to a 5-year average of 34%. September 2015 futures closed at $3.67 Downside price protection could be obtained by purchasing a $3.70 September 2015 Put Option costing 32 cents establishing a $3.38 futures floor.
Soybeans
November 2014 soybean futures closed at $9.57 down 28 cents for the week with support at $9.45 and resistance at $9.77. Nov/Dec soybean to corn price ratio was 2.89 at the end of the week. For the week, average soybean basis weakened at Northwest Barge Points, Memphis, and Northwest Tennessee and strengthened at Upper-middle and Lower-middle Tennessee. Basis ranged from 24 under to 55 over the November futures contract at elevators and barge points. Average basis at the end of the week was 8 over the November futures contract. The Crop Progress report estimated soybeans dropping leaves at 24% compared to 12% last week, 24% last year, and a 5-year average of 32%; and soybean condition at 72% good to excellent 6% poor to very poor. In Tennessee, the Crop Progress report estimated soybeans dropping leaves at 30% compared to 13% last week, 15% last year, and a 5-year average of 34%; soybeans harvested at 3% the same as last year and the 5-year average; and soybean condition at 79% good to excellent 4% poor to very poor. This week November 2014 soybean futures traded between $9.56 and $9.99. November cash forward contracts averaged $9.76 with a range of $9.45 to $10.15.
January 2015 soybean futures closed at $9.65 down 27 cents from last week with support at $9.54 and resistance at $9.85. Net sales reported by exporters were above expectations with net sales of 53.9 million bushels for the 2014/15 marketing year and within expectations for the 2015/16 marketing year with net sales of 0.09 million bushels. Exports for the same period were up from last week at 7.5 million bushels. Soybean export sales and commitments were 55% of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31), compared to a 5-year average of 48%. Nov/Jan and Nov/Nov future spreads were 8 cents and 13 cents. November 2015 futures closed at $9.70. Downside price protection could be achieved by purchasing a $9.80 November 2015 Put Option which would cost 68 cents and set a $9.12 futures floor.
Cotton
December 2014 cotton futures closed at 64.39 down 3.61 cents for the week with support at 62.98 and resistance at 65.82. Cotton adjusted world price (AWP) increased 0.58 cents to 54.19 cents. Oct 2014 cotton futures are trading at 65.99. The Crop Progress report estimated cotton bolls opening at 51% compared to 39% last week, 34% last year, and a 5-year average of 49%; cotton harvested at 6% compared to 4% last year and a 5-year average of 7%; and cotton condition at 49% good to excellent 18% poor to very poor. In Tennessee, the Crop Progress report estimated cotton bolls opening at 49% compared to 35% last week, 14% last year, and a 5-year average of 53%; and cotton condition at 70% good to excellent 6% poor to very poor. December cotton futures traded between 63.70 and 67.88 cents this week. Downside price protection could be obtained by purchasing a 68 cent December 2014 Put Option costing 5.57 cents establishing a 62.43 cent futures floor.
March 2014 cotton futures closed at 64.29 down 3.14 cents for the week with support at 62.85 and resistance at 65.69. Net sales reported by exporters were up from last week at 75,000 bales for the 2014/15 marketing year and sales reductions of 1,100 bales for the 2015/16 marketing year. Exports for the same period were up from last week at 104,500 bales. Cotton export sales were 55% of the USDA estimated total annual exports for the 2014/15 marketing year (August 1 to July 31), compared to a 5-year average of 45%. Oct/Dec and Dec/Mar future spreads were -1.6 cents and -0.1 cents.
Wheat
December 2014 wheat futures closed at $4.74 down 28 cents from last week with support at $4.64 and resistance at $4.93. In Memphis, old crop cash wheat traded between $4.46 and $4.58 for the week. The Crop Progress report estimated spring wheat harvested at 74% compared to 58% last week, 89% last year, and a 5-year average of 86%. December wheat futures traded between $4.73 and $5.08 this week. December wheat to corn price ratio was 1.43. Dec/Mar and Dec/July future spreads were 17 cents and 38 cents.
March 2015 wheat futures closed at $4.91 down 29 cents from last week with support at $4.8 and resistance at $5.10. Net sales reported by exporters were below expectations at 11.6 million bushels for the 2014/15 marketing year. Exports for the same period were up from last week at 28.4 million bushels. Wheat export sales were 51% of the USDA estimated total annual exports for the 2014/15 marketing year (June 1 to May 31), compared to a 5-year average of 49%. The Crop Progress report estimated winter wheat planted at 12% compared to 3% last week, 11% last year, and a 5-year average of 11%. June/July 2015 cash forward contracts averaged $4.97 with a range of $4.66 to $5.23 at elevators and barge points. July 2015 wheat futures closed at $5.12. Downside price protection could be obtained by purchasing a $5.20 July 2015 Put Option costing 41 cents establishing a $4.79 futures floor.
Source : utk.edu