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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

March 24, 2017


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Overview

Corn, cotton, soybeans, and wheat were down for the week. As of March 24, December corn was trading 7 ¾ cents lower than last year;  November soybeans were trading 54 ¼ cents higher; December cotton was trading $0.18 cents higher; and wheat was trading 31 ¼ cents lower. Similarly, in Tennessee, September and October/November cash forward contract prices are 5 cents lower and 63 cents higher for corn and soybeans, respectively.

Planting is quickly approaching and with substantially higher relative prices to corn it is likely that cotton and soybean acreage will see increased acreage nationally. Relative prices are only one of the factors (all though a very important one) that producers consider when determining which crops they will plant. Other important considerations include: relative changes in the cost of production, adherence to crop rotations, expected yields, anticipated weather, and planting conditions. Typically if planting conditions are good early in the planting interval corn acreage increases.
 
Next Friday the USDA will release its Prospective Plantings report. Last year the March Projected Plantings report estimated U.S. planted acreage at 93.6 million acres (final estimate 94 million acres), 82.2 million acres (final estimate 83.4 million acres), and 9.6 million acres (final estimate 10.1 million acres) for corn, soybeans, and cotton, respectively.

In Tennessee, the 2016 Prospective Plantings report and final planted acreage estimates were 840,000 acres (final estimate 880,000 acres), 1.65 million acres (final estimate 1.66 million acres), and 235,000 acres (final estimate 255,00 acres) for corn, soybeans, and cotton, respectively.

Currently, both nationally and in Tennessee it is anticipated that corn acreage will be down and soybean and cotton acreage will be up from last year. When the Prospective Plantings report is released next Friday it will provide confirmation or a surprise to the markets. Producers should examine current pricing opportunities to ensure they are comfortable with their price risk exposure prior to the report release.


 

 

 

 

Corn

May 2017 corn futures closed at $3.56 down 11 cents since last Friday. For the week, May 2017 corn futures traded between $3.55 and $3.70. Across Tennessee, average basis (cash price-nearby futures price) weakened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Upper-middle, and Lower-middle Tennessee. Overall, basis for the week ranged from 6 under to 30 over the May futures contract with an average of 8 over at the end of the week. Corn net sales reported by exporters from March 10-16 were above expectations with net sales of 53 million bushels for the 2016/17 marketing year and 5 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 54.4 million bushels. Corn export sales and commitments were 83% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31) compared to a 5-year average of 79%. Ethanol production for the week ending March 17 was 1.044 million barrels per day down 1,000 from last week. Ethanol stocks were 22.595 million barrels, down 171,000 barrels. May/Jul and May/Dec future spreads were 7 and 23 cents, respectively. July 2017 corn futures closed at $3.63 down 12 cents since last Friday.

Historical September Corn Futures Prices

 

 


 


 



In Tennessee, September 2017 cash forward contracts averaged $3.65 with a range of $3.54 to $3.88. December 2017 corn futures closed at $3.79 down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $3.80 December 2017 Put Option costing 30 cents establishing a $3.50 futures floor.


Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

 

Soybeans

May 2017 soybean futures closed at $9.75 down 25 cents since last Friday. For the week, May 2017 soybean futures traded between $9.72 and $10.08. Average soybean basis weakened or remained unchanged at Memphis, Northwest Barge Points, Lower-middle, Upper-middle, and Northwest Tennessee. Basis ranged from 40 under to even the May futures contract at elevators and barge points. Average basis at the end of the week was 16 under the May futures contract. Net sales reported by exporters were above expectations with net sales of 27.1 million bushels for the 2016/17 marketing year and 2.9 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 21.2 million bushels. Soybean export sales and commitments were 98% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31), compared to a 5-year average of 93%. May soybean-to-corn futures price ratio was 2.74 at the end of the week. May/Jul and May/Nov future spreads were 11 cents and 2 cents, respectively. July 2017 soybean futures closed at $9.86 down 24 cents since last Friday.

Historical November Soybean Futures Prices

 

 

 

 

 





In Tennessee, October / November 2017 soybean cash contracts average $9.81 with a range of $9.51 to $9.99.  November/December 2017 soybean-to-corn price ratio was 2.58 at the end of the week. November 2017 soybean futures closed at $9.77 down 16 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 November 2017 Put Option which would cost 61 cents and set a $9.19 futures floor.

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 



Cotton

May 2017 cotton futures closed at 77.47 down 0.89 cents since last Friday. For the week, May 2017 cotton futures traded between 76.67 and 78.74 cents. Delta upland cotton spot price quotes for March 16 were 74.77 cents/lb (41-4-34) and 76.02 cents/lb (31-3-35). Adjusted world price (AWP) increased 0.34 cents to 68.26 cents per pound. Net sales reported by exporters were up from last week with net sales of 328,200 bales for the 2016/17 marketing year and 201,300 bales for the 2017/18 marketing year. Exports for the same period were up from last week at 379,700 bales. Upland cotton export sales were 97% of the USDA estimated total annual exports for the 2016/17 marketing year (August 1 to July 31), compared to a 5-year average of 92%. July 2017 cotton futures closed at 78.74 down 0.64 cents since last Friday. May/Jul and May/Dec cotton futures spreads were 1.27 cents and -1.98 cents, respectively.

Historical December Cotton Futures Prices

 

 

 


 

 


December 2017 cotton futures closed at 75.49 down 0.14 cents since last Friday. Downside price protection could be obtained by purchasing a 76 cent December 2017 Put Option costing 4.40 cents establishing a 71.6 cent futures floor.

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 



Wheat

May 2017 wheat futures closed at $4.24 down 12 cents since last Friday. May 2017 wheat futures traded between $4.20 and $4.42 this week. May wheat-to-corn price ratio was 1.19.Wheat net sales reported by exporters were above expectations with net sales of 15.4 million bushels for the 2016/17 marketing year and 5.5 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 23.8 million bushels. Wheat export sales were 93% of the USDA estimated total annual exports for the 2016/17 marketing year (June 1 to May 31), compared to a 5-year average of 97%. In Memphis, old crop cash wheat ranged from $4.31 to $4.46. May/Jul and May/Sep future spreads were 15 cents and 30 cents, respectively.


Historical July Wheat Futures Prices

 

 

 

 

 

 


In Tennessee, June/July 2017 cash wheat ranged from $4.15 to $4.65. July 2017 wheat futures closed at $4.39 down 12 cents since last Friday. Downside price protection could be obtained by purchasing a $4.50 July 2017 Put Option costing 17 cents establishing a $4.33 futures floor. July 2017 wheat-to-corn price ratio was 1.21.  September 2017 wheat futures closed at $4.54 down 12 cents since last Friday.

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.