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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

October 31, 2014


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Overview

Corn, soybeans, cotton, and wheat were up for the week. October provided substantial increases in futures prices for most grains and oilseeds. The rally was led by soybeans which increased $1.42/bu (from $9.04 on October 1st to $10.46 today). Corn increased $0.58/bu ($3.18 on October 1st to $3.76 today) and wheat was up $0.53 ($4.79 on Oct 1st to $5.32 today). This is the first major rally in futures prices we have seen since early May. Producers with substantial amounts of unpriced production in the field or in the bin should consider using this rally to price a portion of their production. Additionally, producers may want to examine 2015 harvest futures prices to look for opportunities to start pricing their 2015 crop. It is early to consider the 2015/16 marketing year however prices have rebounded substantially and opportunities exist to price corn near $4.20/bu. November 2014 and 15 soybean futures currently have an inverted spread of negative 19 cents, while December 2014 and 2015 corn has a positive spread of 42 cents. Pricing some production at profitable futures prices should be considered. Cotton futures did not participate in the rebound experienced in grain and oilseed futures in October. December futures prices, since late July have traded between 61 and 68 cents.

 

 

 

 

Corn

December 2014 corn futures closed at $3.76 up 23 cents a bushel since last week with support at $3.64 and resistance at $3.84. Across Tennessee average basis (cash price- nearby future price) strengthened in all five regions. Overall basis for the week ranged from 42 under to 13 over the December futures contract with an average of 13 under at the end of the week. Ethanol production for the week ending October 24th was 937,000 barrels per day up 41,000 barrels per day from last week. Ending ethanol stocks were 17.039 million barrels down 901,000 barrels from last week. Nationally, the October 27th Crop Progress report estimated corn mature at 96% compared to 93% last week, 97% last year, and a 5-year average of 97%; corn harvested at 46% compared to 31% last week, 56% last year, and a 5-year average of 65%; and corn condition at 74% good to excellent 7% poor to very poor. In Tennessee, the Crop Progress report estimated, corn mature at 100% compared to 99% last week, 100% last year, and a 5-year average of 100%; corn harvested at 94% compared to 88% last week, 82% last year, and a 5-year average of 92%; and corn condition at 86% good to excellent and 2% poor to very poor. This week December 2014 corn futures prices traded between $3.48 and $3.81. Dec/Mar and Dec/Sep future spreads were 13 cents and 34 cents, respectively.

Historical September Corn Futures Prices


 


 

 

 

 

 

January cash forward contracts at elevators and barge points for the week averaged $3.66 with a range of $3.18 to $3.94. March 2015 corn futures closed at $3.89 up 23 cents from last week with support at $3.77 and resistance at $3.96. Corn net sales reported by exporters from October 17th to 23rd were below expectations with net sales of 19.3 million bushels for the 2014/15 marketing year and 1.8 million bushels for the 2015/16 marketing year. Exports for the same time period were down from last week at 26.6 million bushels. Corn export sales and commitments were 42% 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 45%. September 2015 futures closed at $4.10. Downside price protection could be obtained by purchasing a $4.20 September 2015 Put Option costing 42 cents establishing a $3.78 futures floor.

 

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

November 2014 soybean futures closed at $10.46 up 69 cents for the week with support at $9.98 and resistance at $10.76. Nov/Dec soybean to corn price ratio was 2.78 at the end of the week. For the week, average soybean basis weakened or remained unchanged at Northwest Barge Points, Northwest, and Upper-middle Tennessee and strengthened at Memphis and Lower-middle Tennessee. Basis ranged from 36 under to 35 over the November futures contract at elevators and barge points. Average basis at the end of the week was 1 under the November futures contract. The Crop Progress report estimated soybeans harvested at 70% compared to 53% last week, 75% last year, and a 5-year average of 76%. In Tennessee, the Crop Progress report estimated soybeans harvested at 49% compared to 30% last week, 34% last year, and a 5-year average of 56%. This week November 2014 soybean futures traded between $9.67 and $10.52. January cash forward contracts averaged $10.40 with a range of $10.08 to $10.84.

Historical November Soybean Futures Prices

 

 

 

 

 

 

 

January 2015 soybean futures closed at $10.49 up 66 cents from last week with support at $10.02 and resistance at $10.77. Net sales reported by exporters were within expectations with net sales of 48.7 million bushels for the 2014/15 marketing year. Exports for the same period were down from last week at 67.7 million bushels. Soybean export sales and commitments were 74% 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 64%. Nov/Jan and Nov/Nov future spreads were 3 cents and -19 cents. November 2015 futures closed at $10.27. Downside price protection could be achieved by purchasing a $10.40 November 2015 Put Option which would cost 85 cents and set a $9.55 futures floor.

 

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

December 2014 cotton futures closed at 64.45 cents up 0.64 cents for the week with support at 62.62 and resistance at 65.74. Cotton adjusted world price (AWP) increased 0.27 cents to 49.57 cents. The Crop Progress report estimated cotton bolls opening at 91% compared to 86% last week, 90% last year, and a 5-year average of 95%; cotton harvested at 42% compared to 29% last week, 32% last year, and a 5-year average of 41%; and cotton condition at 48% good to excellent 18% poor to very poor. In Tennessee, the Crop Progress report estimated cotton bolls opening at 97% compared to 93% last week, 82% last year, and a 5-year average of 96%; cotton harvested at 36% compared to 20% last week, 12% last year, and a 5-year average of 49%; and cotton condition at 73% good to excellent 3% poor to very poor. December cotton futures traded between 63.21 and 66.05 cents this week. Downside price protection could be obtained by purchasing a 65 cent December 2014 Put Option costing 2.05 cents establishing a 62.95 cent futures floor.

Historical December Cotton Futures Prices

 

 


 

 

 

 

March 2014 cotton futures closed at 62.92 up 0.75 cents for the week with support at 61.38 and resistance at 63.92. Net sales reported by exporters were up from last week at 185,400 bales for the 2014/15 marketing year and 13,400 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 70,800 bales. Cotton export sales were 63% 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 56%. Dec/Mar future spread was -1.53 cents. December 2015 cotton futures closed at 66.61.

 

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

December 2014 wheat futures closed at $5.32 up 15 cents from last week with support at $5.15 and resistance at $5.47. In Memphis, old crop cash wheat traded between $4.77 and $4.93 for the week. December wheat futures traded between $5.10 and $5.45 this week. December wheat to corn price ratio was 1.41. Dec/Mar and Dec/July future spreads were 13 cents and 28 cents.

Historical July Wheat Futures Prices

 

 

 

 

 

 


March 2015 wheat futures closed at $5.45 up 14 cents from last week with support at $5.44 and resistance at $5.74. Net sales reported by exporters were above expectations at 16.3 million bushels for the 2014/15 marketing year and 0.5 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 10 million bushels. Wheat export sales were 60% 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 60%. The Crop Progress report estimated winter wheat planted at 84% compared to 76% last week, 85% last year, and a 5-year average of 84%; winter wheat emerged at 67% compared to 56% last week, 63% last year, and a 5-year average of 62%; and winter wheat condition at 59% good to excellent and 7% poor to very poor. In Tennessee, winter wheat planting was estimated at 43% compared to 25% last week, 21% last year, and a 5-year average of 39%; winter wheat emerged at 20% compared to 11% last week, 7% last year, and a 5-year average of 13%; and winter wheat condition at 76% good to excellent and 0% poor to very poor. June/July 2015 cash forward contracts averaged $5.34 with a range of $4.92 to $5.71 at elevators and barge points. July 2015 wheat futures closed at $5.60. Downside price protection could be obtained by purchasing a $5.70 July 2015 Put Option costing 45 cents establishing a $5.25 futures floor.

 

Nearby and Fall Wheat Futures Prices

 

 

 

 

 

 


 

Additional Information

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.