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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

July 25, 2014

The podcast of this week's comments will be posted on Monday, July 28th.

Overview

Corn and cotton were down, soybeans were mixed, and wheat was up for the week. Corn prices have continued on their downward trend as record yields appear to be coming to fruition. Conditions could change between now and harvest however that window is getting smaller and smaller with each passing week. Soybeans like corn are on pace for record production which could result in further price decreases this fall. In the short term we could see a small rebound in corn and soybean prices over the next few weeks as markets are currently over sold. If there is a small rebound it will likely be short lived unless a production disruption occurs in August. At present, harvest corn prices look to have some support at $3.60 and soybeans at $10.60, if these prices are not able to hold we could see corn move towards $3.40 and soybeans to $10.00. Export and domestic demand remain very strong however it is unlikely that it will be able to fully counter balance the record production to come this fall. Harvest cotton last week appeared to be stabilizing near 68 cents then this Thursday and Friday moved down below 65 cents, before closing at 65.35. The cotton market should find support near 65 cents at least in the short term. September wheat prices appear to have found a low near $5.20. Dry conditions in Australia have helped to support prices. After 2 months of price decreases, prices are up for the 2nd straight week.

August 18th to 21st the University of Tennessee, Farm Credit Mid-America, Tennessee Soybean Promotion Board, and Tennessee Farm Bureau are holding informational meetings about the 2014 Farm Bill at Jackson, Dyersburg, Fayetteville, and Knoxville. Times, locations, and additional details can be found here.

 

 

 

 

Corn

September 2014 corn futures closed at $3.63 down 8 cents from last week with support at $3.49 and resistance at $3.74. Across Tennessee average basis (cash price- nearby future price) strengthened or remained unchanged in all five regions. Overall basis for the week ranged from 1 under to 31 over the September futures contract with an average of 18 over at the end of the week. Corn net sales reported by exporters from July 11th to 17th were within expectations at 11.5 million bushels for the 2013/14 marketing year and above expectations at 45 million bushels for the 2014/15 marketing year. Exports for the same time period were up from last week at 39.1 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 103%. Ethanol production for the week ending July 18th was 959,000 barrels per day up 16,000 barrels per day. Ending ethanol stocks were 17.94 million barrels down 5,000 barrels. Nationally, the July 21st Crop Progress report estimated corn silking at 56% compared to 34% last week, 39% last year, and a 5-year average of 55% and corn condition at 76% good to excellent 5% poor to very poor. In Tennessee, corn silking was estimated at 90% compared to 78% last week, 84% last year, and a 5-year average of 91%; corn dough or beyond at 29% compared to 12% last week, 40% last year, and a 5-year average of 45%; and corn condition at 78% good to excellent and 4% poor to very poor. This week September and December 2014 corn futures prices traded between $3.56 and $3.76. September cash forward contracts at elevators and barge points for the week averaged $3.49 with a range of $3.27 to $3.72. Sep/Dec and Sep/Mar future spreads were 8 cents and 20 cents, respectively.

Historical September Corn Futures Prices

 


 

 

 

 

December 2014 corn futures closed at $3.71 down 7 cents from last week with support at $3.62 and resistance at $3.76. March futures closed at $3.83. Downside price protection could be obtained by purchasing a $4.10 September 2015 Put Option costing 39 cents establishing a $3.71 futures floor.

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

August 2014 soybean futures closed at $12.12 up 36 cents for the week with support at $11.91 and resistance at $12.24. Nearby soybean to corn price ratio was 3.34 at the end of the week. For the week, average soybean basis weakened at Northwest Barge Points, Northwest, and Upper-middle Tennessee and strengthened or remained unchanged at Memphis and Lower-middle Tennessee. Basis ranged from 7 over to 102 over the August futures contract at elevators and barge points. Average basis at the end of the week was 57 over the August futures contract. Net sales reported by exporters were within expectations with net sales of 8.3 million bushels for the 2013/14 marketing year and above expectations for the 2014/15 marketing year with net sales of 90.1 million bushels. Exports for the same period were up from last week at 6 million bushels. Soybean export sales and commitments are 104% 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 103%. September 2014 soybean futures were trading at $11.13. Aug/Sep and Aug/Nov future spreads were -99 cents and -129 cents.

Historical November Soybean Futures Prices

 

 

 

 

 

 

 

November 2014 soybean futures closed at $10.83 down 2 cents from last week with support at $10.63 and resistance at $10.97. The Crop Progress report estimated soybeans blooming at 60% compared to 41% last week, 43% last year, and a 5-year average of 56%; soybeans setting pods at 19% compared to 7% last year and a 5-year average of 17%; and soybean condition at 73% good to excellent 5% poor to very poor. In Tennessee, soybeans emerged were estimated at 96% compared to 88% last week, 95% last year, and a 5-year average of 99%; soybeans blooming at 47% compared to 30% last week, 25% last year, and a 5-year average of 53%; soybeans setting pods at 16% compared to 8% last year and a 5-year average of 25%; and soybean condition at 79% good to excellent 4% poor to very poor. This week November 2014 soybean futures traded between $10.55 and $11.07. Harvest soybean to corn price ratio was 2.92. November cash forward contracts averaged $10.74 with a range of $10.28 to $11.20. Downside price protection could be achieved by purchasing an $11.00 November 2014 Put Option which would cost 58 cents and set a $10.42 futures floor.

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

December 2014 cotton futures closed at 65.16 down 2.39 cents for the week with support at 64.07 and resistance at 69.23. Net sales reported by exporters were down from last week at 1,900 bales of upland cotton for the 2013/14 marketing year and up from last week at 371,400 bales for the 2014/15 marketing year. Exports for the same period were down from last week at 72,000 bales. Cotton export sales and commitments are 107% of the USDA estimated total annual exports for the 2013/14 marketing year (August 1 to July 31), compared to a 5-year average of 109%. Oct 2014 cotton futures are trading at 65.16. The Crop Progress report estimated cotton squaring at 76% compared to 70% last week, 85% last year, and a 5-year average of 82%; cotton setting bolls at 26% compared to 24% last week, 38% last year, and a 5-year average 37%; and cotton condition at 52% good to excellent, 14% poor to very poor. In Tennessee, cotton squaring was estimated at 82% compared to 74% last week, 66% last year, and a 5-year average of 87%; cotton setting bolls at 30% compared to 15% last week, 12% last year, and a 5-year average of 37%; and cotton condition at 70% good to excellent 7% poor to very poor. December cotton futures traded between 64.53 and 68.54 cents this week. Downside price protection could be obtained by purchasing a 66 cent December 2014 Put Option costing 3.10 cents establishing a 62.90 cent futures floor.

Historical December Cotton Futures Prices

 

 

 


 

 

 

March 2014 cotton futures closed at 66.03 down 2.36 cents for the week with support at 64.38 and resistance at 68.14. Cotton adjusted world price (AWP) decreased 0.28 cents to 61.78 cents. Oct/Dec and Dec/Mar future spreads were 0.19 cents and 0.68 cents.

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

September 2014 wheat futures closed at $5.38 up 6 cents from last week with support at $5.22 and resistance at $5.46. Net sales reported by exporters were within expectations at 16.3 million bushels for the 2014/15 marketing year. Exports for the same period were up from last week at 20.3 million bushels. Wheat export sales are 37% 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 31%. The Crop Progress report estimated winter wheat harvested at 74% compared to 69% last week, 75% last year, and a 5-year average of 75%. In Tennessee, winter wheat harvested was estimated at 91% compared to 88% last week, 98% last year, and a 5-year average of 100%. September wheat futures traded between $5.20 and $5.38 this week. September wheat to corn price ratio was 1.48. In Tennessee, July cash contracts averaged $5.10 with a range of $4.65 to $5.87 at elevators and barge points. Sep/Dec and Sep/July future spreads were 21 cents and 70 cents.

Historical July Wheat Futures Prices

 

 

 

 

 


December 2014 wheat futures closed at $5.59 up 3 cents from last week with support at $5.43 and resistance at $5.68. The Crop Progress report estimated spring wheat headed at 83% compared to 69% last week, 84% last year, and a 5-year average of 85%; and spring wheat condition at 70% good to excellent 5% poor to very poor. December wheat to corn price ratio was 1.51. July 2015 wheat futures closed at $6.08. Downside price protection could be obtained by purchasing a $6.10 July 2015 Put Option costing 47 cents establishing a $5.63 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.