Skip to Main Content

The University of Tennessee | Institute of Agriculture

Department of Agricultural and Resource Economics

Frequently Used Tools:




Weekly Crop Comments

By Dr. Aaron Smith

January 23, 2015

The podcast of this week's comments will be posted on Monday, January 26th.

Overview

Soybeans, cotton, and wheat were down; corn was mixed for the week. Grains and oilseeds have continued to slide lower as we progress through January. Large projected domestic and global ending stocks for the 2014/15 marketing year for corn, soybeans, wheat, and cotton loom in the background. Contributing to large potential ending stocks is the dramatic increase in global grain and oilseed acreage over the past 5 years. The U.S. is still a dominant force in global grain and oilseed production however you need only look at the U.S’s percentage of global ending stocks for the current marketing year for key commodities (corn 25%; soybeans 12%; wheat 9.5%; and cotton 4%) to realize we are not the only game in town. The global stocks issue can snowball very quickly as we build upon good years in 2014 in both hemispheres. For example, producers in South America have begun harvesting soybeans and by most accounts estimated production will be up 5-10% over last year. As we build on record production domestically and abroad downward price pressure in commodity markets is sure to persist and limit potential rallies to the upside until supply and demand can reestablish equilibrium. The longer production out paces consumption the further we will see prices decline. As such, for the upcoming growing season producers are strongly encouraged to control costs and evaluate all the risk management tools available to them to protect against further downside in commodity markets. Given the current marketing environment (which can change quickly with a major production failure), pricing your near zero yield risk prior to planting should be considered.  

 

 

 

 

Corn

March 2015 corn futures closed at $3.86 down 1 cent a bushel since last week. Across Tennessee average basis (cash price- nearby future price) strengthened or remained unchanged at Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee and weakened in Memphis. Overall average basis for the week ranged from 17 under to 30 over the March futures contract with an average of 14 over at the end of the week. Ethanol production for the week ending January 16th was 979,000 barrels per day up 1,000 barrels per day from last week. Ending ethanol stocks were 20.387 million barrels up 158,000 barrels from last week. This week March 2015 corn futures prices traded between $3.82 and $3.92. Mar/May and Mar/Sep future spreads were 9 cents and 23 cents, respectively.

Historical September Corn Futures Prices

 


 


 

 

 

May 2015 corn futures closed at $3.95 up 1 cent since last week. Corn net sales reported by exporters from January 9th to 15th were above expectations with net sales of 86 million bushels for the 2014/15 marketing year and 1 million bushels for the 2015/16 marketing year. Exports for the same time period were up from last week at 30 million bushels. Corn export sales and commitments were 68% 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 63%. September 2015 cash forward contracts averaged $3.96 with a range of $3.75 to $4.32. September 2015 futures closed at $4.09 up 3 cents from last week. Downside price protection could be obtained by purchasing a $4.10 September 2015 Put Option costing 32 cents establishing a $3.78 futures floor.

 

 

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

March 2015 soybean futures closed at $9.72 down 19 cents since last week. March soybean to corn price ratio was 2.52 at the end of the week. For the week, average soybean basis strengthened or remained unchanged at Memphis, Northwest, and Lower-middle Tennessee and weakened in Northwest Barge Points and Upper-middle Tennessee. Basis ranged from 5 under to 41 over the March futures contract at elevators and barge points. Average basis at the end of the week was 17 over the March futures contract. This week March 2015 soybean futures traded between $9.67 and $9.92.

Historical November Soybean Futures Prices

 

 

 

 

 

 

 

May 2015 soybean futures closed at $9.79 down 18 cents since last week. Net sales reported by exporters were below expectations with net sales of 0.5 million bushels for the 2014/15 marketing year and 3.7 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 60 million bushels. Soybean export sales and commitments were 92% 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 87%. Mar/May and Mar/Nov future spreads were 7 cents and -13 cents. October/November 2015 cash forward contracts averaged $9.52 with a range of $9.27 to $9.77. Nov/Sep 2015 soybean to corn price ratio was 2.34. November 2015 futures closed at $9.59 down 16 cents from last week. Downside price protection could be achieved by purchasing a $9.60 November 2015 Put Option which would cost 64 cents and set an $8.96 futures floor.

 

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

March 2015 cotton futures closed at 57.30 down 1.93 cents since last week. Cotton adjusted world price (AWP) decreased 1.18 cents from last week to 45.59 cents. March 2015 cotton futures traded between 57.05 and 59.39 cents this week.  

Historical December Cotton Futures Prices

 

 


 

 

 

 

May 2015 cotton futures closed at 58.2 down 1.82 cents since last week. Net sales reported by exporters were up from last week at 470,300 bales for the 2014/15 marketing year and 2,400 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 226,200 bales. Upland cotton export sales were 92% 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 84%. Mar/May and Mar/Dec futures spread were 0.9 cents and 4.2 cents. December 2015 cotton futures closed at 61.5 down 1.54 cents since last week. Downside price protection could be obtained by purchasing a 62 cent December 2015 Put Option costing 4.40 cents establishing a 57.60 cent futures floor.

 

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

March 2015 wheat futures closed at $5.30 down 2 cents since last week. March wheat futures traded between $5.23 and $5.44 this week. March wheat to corn price ratio was 1.37. Mar/May and Mar/July future spreads were 2 cents and 6 cents, respectively. In Memphis, old crop cash wheat traded between $4.92 and $4.97 this week.

Historical July Wheat Futures Prices

 

 

 

 

 

 

 

May 2015 wheat futures closed at $5.32 down 2 cents since last week. Net sales reported by exporters were above expectations at 16.8 million bushels for the 2014/15 marketing year and 3.9 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 10.3 million bushels. Wheat export sales were 77% 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 80%. June/July 2015 cash forward contracts averaged $5.34 with a range of $4.81 to $5.59 at elevators and barge points. July 2015 wheat futures closed at $5.36 down 2 cents since last week. Downside price protection could be obtained by purchasing a $5.40 July 2015 Put Option costing 37 cents establishing a $5.03 futures floor.

 

Nearby and Fall Wheat Futures Prices

 

 

 

 

 

 

 


Farm Bill Update

Important deadlines for producers/landowners for the 2014 Farm Bill:

  1. September 29 to February 28th. During this period, paperwork dealing with the program yield updating and program acre reallocation decisions can be completed for each FSA farm.
  2. November 17 to March 31. During this period, paperwork dealing with program choice (Agricultural Risk Coverage - County (ARC-CO), Price Loss Coverage (PLC), and Agricultural Risk Coverage - Individual Coverage (ARC-IC)) can be completed for each FSA farm.

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.