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The University of Tennessee | Institute of Agriculture

Department of Agricultural and Resource Economics

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Weekly Crop Comments

By Dr. Aaron Smith

August 22, 2014

There will not be a podcast posted with this week's crop comments.

Overview

Cotton was up; corn, wheat, and soybeans were mixed for the week. December corn has been trading sideways since July 21 in a range of $3.60 to $3.85 per bushel. Yield estimates from the Midwest Crop Tour for corn have been above 2013 yields with the exception of South Dakota (2014:152 bpa vs. 2013:161 bpa) and Minnesota (2014:170 bpa vs. 2013:181 bpa). While many analysts are still predicting average U.S. yields of 170 to 175 bpa there does appear to be a minor tapering of the upper limit of yield estimates. For the short term, it is likely that corn will continue to trade sideways until additional harvest information is revealed. Nearby soybean futures continue to receive support from tight old crop supplies. Futures spreads between old crop and new crop have expanded to over $1.20/bu. The Midwest Crop Tour indicated soybean pod estimates were up from last year in all states toured with the exception of Nebraska where estimates were slightly below 2013. For both corn and soybeans record domestic production and yield are still likely outcomes this fall. For corn and soybean producers, rallies in the futures markets should be looked at as an opportunity to begin pricing the 2015 crop. December cotton futures are up over 4 cents from the lows set on August 1. Wheat prices were supported this week by continued quality concerns and lower production estimates for the Canadian spring wheat harvest.

 

 

 

 

Corn

September 2014 corn futures closed at $3.65 the same as last week with support at $3.58 and resistance at $3.70. Across Tennessee average basis (cash price- nearby future price) strengthened in Northwest Tennessee and weakened at Memphis, Northwest Barge Points, Lower-middle, and Upper-Middle Tennessee. Overall basis for the week ranged from 13 under to 31 over the September futures contract with an average of 5 over at the end of the week. Corn net sales reported by exporters from August 8th to 14th were within expectations with net sales of 3.9 million bushels for the 2013/14 marketing year and within expectations at 28.3 million bushels for the 2014/15 marketing year. Exports for the same time period were up from last week at 45.0 million bushels. Corn export sales and commitments are 100% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31) compared to a 5-year average of 107%. Ethanol production for the week ending August 8th was 937,000 barrels per day up 6,000 barrels per day. Ending ethanol stocks were 18.251 million barrels up 491,000 barrels. Nationally, the August 18th Crop Progress report estimated corn dough or beyond at 70% compared to 54% last week, 49% last year, and a 5-year average of 63%; corn dented or beyond at 22% compared to 11% last week, 10% last year, and a 5-year average of 27%; and corn condition at 72% good to excellent 8% poor to very poor. In Tennessee, corn dough or beyond at 92% compared to 85% last week, 90% last year, and a 5-year average of 94%; corn dented or beyond at 53% compared to 22% last week, 63% last year, and a 5-year average of 75%; and corn condition at 76% good to excellent and 5% poor to very poor. This week September and December 2014 corn futures prices traded between $3.56 and $3.81. September cash forward contracts at elevators and barge points for the week averaged $3.45 with a range of $3.29 to $3.72. Sep/Dec and Sep/Mar future spreads were 6 cents and 19 cents, respectively.

Historical September Corn Futures Prices

 


 

 

 

 

 

December 2014 corn futures closed at $3.71 down 6 cents from last week with support at $3.65 and resistance at $3.76. March futures closed at $3.84. Downside price protection could be obtained by purchasing a $4.10 September 2015 Put Option costing 37 cents establishing a $3.73 futures floor.

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

September 2014 soybean futures closed at $11.66 up 64 cents for the week with support at $11.24 and resistance at $11.91. September soybean to corn price ratio was 3.19 at the end of the week. For the week, average soybean basis weakened in all five regions. Basis ranged from 83 under to 117 over the September futures contract at elevators and barge points. Average basis at the end of the week was 29 under the September futures contract. Net sales reported by exporters were below expectations with net cancelations of 3.3 million bushels for the 2013/14 marketing year and above expectations for the 2014/15 marketing year with net sales of 52.2 million bushels. Exports for the same period were down from last week at 3.4 million bushels. Soybean export sales and commitments are 103% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31), compared to a 5-year average of 105%. Sep/Nov and Sep/Jan future spreads were -124 cents and -118 cents.

Historical November Soybean Futures Prices

 

 

 

 

 

 

 

November 2014 soybean futures closed at $10.42 down 10 cents from last week with support at $10.32 and resistance at $10.52. The Crop Progress report estimated soybeans blooming at 95% compared to 92% last week, 91% last year, and a 5-year average of 95%; soybeans setting pods at 83% compared to 72% last week, 70% last year, and a 5-year average of 79%; and soybean condition at 71% good to excellent 6% poor to very poor. In Tennessee, the Crop Progress report estimated, soybeans blooming at 91% compared to 83% last week, 78% last year, and a 5-year average of 92%; soybeans setting pods at 75% compared to 62% last week, 59% last year, and a 5-year average of 76%; and soybean condition at 72% good to excellent 6% poor to very poor. This week November 2014 soybean futures traded between $10.35 and $10.60. Harvest soybean to corn price ratio was 2.81. November cash forward contracts averaged $10.45 with a range of $10.08 to $10.76. Downside price protection could be achieved by purchasing a $10.50 November 2014 Put Option which would cost 37 cents and set a $10.13 futures floor. January 2015 soybean futures were trading at $10.42.

 

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

December 2014 cotton futures closed at 66.18 up 1.83 cents for the week with support at 65.05 and resistance at 66.85. Net sales reported by exporters were down from last week at 155,600 bales for the 2014/15 marketing year. Exports for the same period were up from last week at 105,700 bales. Cotton export sales are 48% 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 40%. Oct 2014 cotton futures are trading at 67.46. The Crop Progress report estimated cotton setting bolls at 88% compared to 83% last week, 83% last year, and a 5-year average 88%; cotton bolls opening at 12% compared to 7% last week, 8% last year, and a 5-year average of 12%; and cotton condition at 50% good to excellent 16% poor to very poor. In Tennessee, the Crop Progress report estimated cotton setting bolls at 89% compared to 82% last week, 81% last year, and a 5-year average of 93%; cotton bolls opening at 8% compared to 2% last week, 0% last year, and a 5-year average of 4%; and cotton condition at 69% good to excellent 7% poor to very poor. December cotton futures traded between 63.78 and 66.67 cents this week. Downside price protection could be obtained by purchasing a 67 cent December 2014 Put Option costing 2.68 cents establishing a 64.32 cent futures floor.

Historical December Cotton Futures Prices

 

 


 

 

 

 

March 2014 cotton futures closed at 66.57 up 1.32 cents for the week with support at 65.54 and resistance at 67.20. Cotton adjusted world price (AWP) increased 0.01 cents to 53.19 cents. Oct/Dec and Dec/Mar future spreads were -1.28 cents and 0.39 cents.

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

September 2014 wheat futures closed at $5.52 up 1 cent from last week with support at $5.36 and resistance at $5.70. Net sales reported by exporters were below expectations at 7.7 million bushels for the 2014/15 marketing year. Exports for the same period were up from last week at 19.5 million bushels. Wheat export sales are 43% 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 41%. The Crop Progress report estimated in Tennessee winter wheat harvested at 99% compared to 97% last week, 100% last year, and a 5-year average of 100%. September wheat futures traded between $5.34 and $5.62 this week. September wheat to corn price ratio was 1.51. In Tennessee, August cash contracts averaged $4.59 with a range of $3.90 to $5.26 at elevators and barge points. Sep/Dec and Sep/July future spreads were 10 cents and 44 cents.

 

Historical July Wheat Futures Prices

 

 

 

 

 


 

December 2014 wheat futures closed at $5.62 down 1 cent from last week with support at $5.47 and resistance at $5.78. The Crop Progress report estimated spring wheat harvested at 17% compared to 6% last week, 16% last year, and a 5-year average of 33%; and spring wheat condition at 68% good to excellent 5% poor to very poor. December wheat to corn price ratio was 1.51. June/July 2015 cash forward contracts averaged $5.55 with a range of $5.27 to $5.81 at elevators and barge points. July 2015 wheat futures closed at $5.96. Downside price protection could be obtained by purchasing a $6.00 July 2015 Put Option costing 48 cents establishing a $5.52 futures floor.

 

Nearby and Fall Wheat Futures Prices

 

 

 

 

 

 


 

Additional Information

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.