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Department of Agricultural and Resource Economics

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Weekly Crop Comments

By Dr. Aaron Smith

September 12, 2014


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Overview

Corn, soybeans, and wheat were down; cotton was up for the week. The September WASDE and Crop Production reports were released on Thursday. The reports confirmed record domestic yields and production for soybeans and corn. Average corn yields were estimated to be 171.7 bpa for the U.S. and 152 bpa for Tennessee. Total domestic corn production was increased 363 million bushels from the August WASDE report to a new all-time record of 14.395 billion bushels. Total foreign corn production was decreased 280 million bushels partially offsetting the estimated increase in domestic production. Lower prices resulted in increased use for ethanol, feed, food, and exports of 170 million bushels. The net result was an increase in estimated domestic corn ending stocks to just over 2 billion bushels for the 2014/15 marketing year. Average soybean yields were estimated to be 46.6 bpa for the U.S. and 47 bpa for Tennessee. Domestic soybean production was estimated to be an all-time high as well at 3.913 billion bushels up 97 million bushels from the August estimate. Unlike corn, foreign soybean production was increased from the previous estimate by 139 million bushels. Soybean use was revised up due to strong domestic crush and exports but the net result was a 168 million bushel increase in global soybean ending stocks for the 2014/15 marketing year. Cotton received some bullish news domestically in the reports, as domestic production was revised down almost 1 million bales. However, total global cotton production and ending stocks were raised to 118.01 million bales and 106.29 million bales, respectively. Average upland cotton yields were estimated at 790 lbs/acre for the U.S. (down 13 lbs/acre from the August report) and 933 lbs/acre for Tennessee. Global wheat ending stocks were revised up 123 million bushels pushing wheat futures close to $5.00/bu.

 

 

 

 

 

Corn

December 2014 corn futures closed at $3.38 down 18 cents from last week with support at $3.31 and resistance at $3.50. Across Tennessee average basis (cash price- nearby future price) weakened or remained unchanged in Memphis, Northwest Barge Points, Lower-middle, and Upper-middle Tennessee and strengthened in Northwest Tennessee. Overall basis for the week ranged from 40 under to even the December futures contract with an average of 17 under at the end of the week. Ethanol production for the week ending September 5th was 927,000 barrels per day up 6,000 barrels per day. Ending ethanol stocks were 18.021 million barrels up 348,000 barrels from last week. Nationally, the September 8th Crop Progress report estimated corn dough or beyond at 95% compared to 90% last week, 91% last year, and a 5-year average of 94%; corn dented or beyond at 69% compared to 53% last week, 61% last year, and a 5-year average of 74%; corn mature at 15% compared to 8% last week, 8% last year, and a 5-year average of 26%; and corn condition at 74% good to excellent 7% poor to very poor. In Tennessee the Crop Progress report estimated, corn dough or beyond at 99% compared to 98% last week, 100% last year, and a 5-year average of 100%; corn dented or beyond at 91% compared to 82% last week, 94% last year, and a 5-year average of 97%; corn mature at 42% compared to 18% last week, 40% last year, and a 5-year average of 66%; corn harvested at 8% compared to 2% last week, 9% last year, and a 5-year average of 32%; and corn condition at 80% good to excellent and 3% poor to very poor. This week December 2014 corn futures prices traded between $3.35 and $3.58. Dec/Mar and Dec/Sep future spreads were 13 cents and 36 cents, respectively.

Historical September Corn Futures Prices


 


 

 

 

 

January cash forward contracts at elevators and barge points for the week averaged $3.39 with a range of $3.13 to $3.61. March 2015 corn futures closed at $3.51 down 17 cents from last week with support at $3.43 and resistance at $3.63. Corn net sales reported by exporters from August 29th to September 4th were within expectations with net sales reductions of 22.2 million bushels for the 2014/15 marketing year. A total of 52.8 million bushels in sales were carried over from the 2013/14 marketing year which ended August 31. Exports for the same time period were up from last week at 47.4 million bushels. Corn export sales and commitments were 25% 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 33%. September 2015 futures closed at $3.74. Downside price protection could be obtained by purchasing a $3.80 September 2015 Put Option costing 34 cents establishing a $3.46 futures floor.

 

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

November 2014 soybean futures closed at $9.85 down 36 cents for the week with support at $9.73 and resistance at $9.96. November/December soybean to corn price ratio was 2.91 at the end of the week. For the week, average soybean basis weakened or remained unchanged in Northwest, Upper-middle, and Lower-middle Tennessee and strengthened at Northwest Barge Points and Memphis. Basis ranged from 27 under to 55 over the November futures contract at elevators and barge points. Average basis at the end of the week was 19 over the November futures contract. The Crop Progress report estimated soybeans dropping leaves at 12% compared to 5% last week, 10% last year, and a 5-year average of 17%; and soybean condition at 72% good to excellent 6% poor to very poor. In Tennessee, the Crop Progress report estimated, soybeans setting pods at 96% compared to 92% last week, 93% last year, and a 5-year average of 97%; soybeans dropping leaves at 13% compared to 3% last week, 5% last year, and a 5-year average of 21%; and soybean condition at 80% good to excellent 3% poor to very poor. This week November 2014 soybean futures traded between $9.69 and $10.28. November cash forward contracts averaged $9.93 with a range of $9.60 to $10.34.

Historical November Soybean Futures Prices

 

 

 

 

 

 

 

January 2015 soybean futures closed at $9.92 down 36 cents from last week with support at $9.80 and resistance at $10.02. Net sales reported by exporters were within expectations with net sales of 36.2 million bushels for the 2014/15 marketing year and within expectations for the 2015/16 marketing year with net sales of 2.6 million bushels. A total of 49.3 million bushels in sales were carried over from the 2013/14 marketing year which ended August 31. Exports for the same period were down from last week at 6.8 million bushels. Soybean export sales and commitments were 54% 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 47%. Nov/Jan and Nov/Nov future spreads were 7 cents and 9 cents. November 2015 futures closed at $9.94. Downside price protection could be achieved by purchasing a $10.00 November 2015 Put Option which would cost 68 cents and set a $9.32 futures floor.

 

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

December 2014 cotton futures closed at 68.00 up 3.69 cents for the week with support at 67.03 and resistance at 68.97. Cotton adjusted world price (AWP) decreased 0.79 cents to 53.61 cents. Oct 2014 cotton futures are trading at 70.61. The Crop Progress report estimated cotton bolls opening at 39% compared to 31% last week, 23% last year, and a 5-year average of 37%; and cotton condition at 49% good to excellent 17% poor to very poor. In Tennessee, the Crop Progress report estimated cotton setting bolls at 98% compared to 96% last week, 99% last year, and a 5-year average of 100%; cotton bolls opening at 35% compared to 27% last week, 7% last year, and a 5-year average of 40%; and cotton condition at 72% good to excellent 4% poor to very poor. December cotton futures traded between 64.12 and 68.48 cents this week. Downside price protection could be obtained by purchasing a 68 cent December 2014 Put Option costing 2.05 cents establishing a 65.95 cent futures floor.

Historical December Cotton Futures Prices

 

 


 

 

 

 

March 2014 cotton futures closed at 67.43 up 3.29 cents for the week with support at 65.99 and resistance at 68.51. Net sales reported by exporters were down from last week at 34,200 bales for the 2014/15 marketing year and 6,600 bales for the 2015/16 marketing year. Exports for the same period were up from last week at 83,600 bales. Cotton export sales were 51% 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 44%. Oct/Dec and Dec/Mar future spreads were -2.61 cents and -0.57 cents.

 

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

December 2014 wheat futures closed at $5.02 down 33 cents from last week with support at $4.94 and resistance at $5.13. In Memphis, old crop cash wheat traded between $4.67 and $4.96 for the week. The Crop Progress report estimated spring wheat harvested at 58% compared to 38% last week, 78% last year, and a 5-year average of 78%; and spring wheat condition at 60% good to excellent 10% poor to very poor. December wheat futures traded between $5.00 and $5.39 this week. December wheat to corn price ratio was 1.49. Dec/Mar and Dec/July future spreads were 18 cents and 37 cents.

 

Historical July Wheat Futures Prices

 

 

 

 

 

 


March 2015 wheat futures closed at $5.20 down 33 cents from last week with support at $5.12 and resistance at $5.29. Net sales reported by exporters were above expectations at 25.4 million bushels for the 2014/15 marketing year. Exports for the same period were up from last week at 20.5 million bushels. Wheat export sales were 48% 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 47%. June/July 2015 cash forward contracts averaged $5.23 with a range of $4.87 to $5.57 at elevators and barge points. July 2015 wheat futures closed at $5.39. Downside price protection could be obtained by purchasing a $5.40 July 2015 Put Option costing 36 cents establishing a $5.04 futures floor.

 

Nearby and Fall Wheat Futures Prices

 

 

 

 

 

 


 

Additional Information

At the end of July into early August, the FSA sent out letters to farmers and landowners to confirm their acreage history. The Summary Acreage History Report show’s a farm’s base acres, counter-cyclical yields, and 2008-2012 planted, prevented, double-crop, and subsequent acres (acres planted after failed or prevented). This FSA acreage history for a farm is important and will be the basis for making base reallocation decisions and potential PLC payments. There is a 60-day deadline to review and contact your local FSA office to fix any discrepancies.

Two important deadlines producers should be aware of for the 2014 Farm Bill:
1) September 30th deadline to enroll 2015 winter wheat in SCO coverage (this is available only to producers in Crockett, Dyer, Gibson, Haywood, Henry, Obion, Robertson and Weakley counties).
2) Enrollment in Cotton Transition Assistance Program (CTAP) Aug11 to Oct 7. Payments are made on cotton base not planted acres.

Additional details and helpful links can be found on the University of Tennessee Extension's 2014 Farm Bill webpage.

If you would like further information or clarification on topics discussed in the crop comments section or would like to be added to our free email list please contact me at aaron.smith@utk.edu.