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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

June 23, 2017


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Overview

Corn, soybeans, and wheat were down; cotton was mixed for the week.

The average cash price for a bushel of soybeans, in Tennessee, fell to $8.94 on Thursday, June 22. This is the lowest average price since March 15, 2016. Similarly, harvest cash forward contracts (October/November delivery) dipped to an average of $9.01/bu, the lowest since March 18, 2016. For soybean prices to improve, it is likely that one (or both of the following will need to happen: 1) export sales will need to rebound – export sales for this marketing year have been strong, however recent weeks export sales commitments have been underwhelming (4.2 million bushels this past (reported) week for the 2016/17 and 2017/18 marketing years combined) and sales commitments for the 2017/18 marketing year are substantially lower than past years (3.4 MMT compared to 6.2, 6.0, and 10.3 MMT for the previous 3 years at the same time in the marketing year); and/or 2) adverse weather in a key production region in the US or South America – the drought affecting wheat in North and South Dakota has received the majority of the headlines, however if dry conditions persist, and move East, it could impact soybean and corn production (the prospective planting report indicated planted acreage of 5.4 and 6.9 million acres of soybeans in South and North Dakota, respectively – or 13.7% of estimated US production). Currently, the drought is more prevalent in the western portion of both states (extending into eastern Montana) however, if drought conditions move East soybean and corn acres would be adversely affected. In addition to the drought in the Dakotas, there are areas of dryness in Minnesota (8.25 million acres planted), Iowa (10.1 million acres planted), and Nebraska (5.7 million acres planted). Timely rains could bring relief this week, but weather will continue to be monitored closely as summer progresses.


 

 

 

 

Corn

July 2017 corn futures closed at $3.57 down 27 cents since last Friday. For the week, July 2017 corn futures traded between $3.56 and $3.81. Across Tennessee, average basis (cash price-nearby futures price) strengthened at Memphis, Northwest, and Lower-middle Tennessee and weakened at Northwest Barge Points and Upper-middle Tennessee. Overall, basis for the week ranged from 15 under to 35 over the July futures contract with an average of 4 over the July futures contract at the end of the week. Corn net sales reported by exporters from June 9-15 were within expectations with net sales of 20.8 million bushels for the 2016/17 marketing year and 4.9 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 47.7 million bushels. Corn 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 99%. Ethanol production for the week ending June 16 was 0.990 million barrels per day down 12,000 from last week. Ethanol stocks were 22.280 million barrels, down 262,000 barrels. Jul/Sep and Jul/Dec future spreads were 8 and 18 cents, respectively. September 2017 corn futures closed at $3.65 down 27 cents since last Friday.

Historical September Corn Futures Prices

 

 


 


 



Nationally, the Crop Progress report estimated corn emerged at 98% compared to 94% last week, 99% last year, and a 5-year average of 98%; and corn condition at 67% good-to-excellent and 8% poor-to-very poor. In Tennessee, the Crop Progress report estimated corn condition at 86% good-to-excellent 2% poor-to-very poor; and corn silking at 12% compared to1% last week, 1% last year, and a 5-year average of 12%. In Tennessee, September 2017 cash forward contracts averaged $3.68 with a range of $3.56 to $3.93. December 2017 corn futures closed at $3.75 down 27 cents since last Friday. Downside price protection could be obtained by purchasing a $3.80 December 2017 Put Option costing 24 cents establishing a $3.56 futures floor.


Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

 

Soybeans

July 2017 soybean futures closed at $9.04 down 35 cents since last Friday. For the week, July 2017 soybean futures traded between $9.00 and $9.47. Average soybean basis weakened at Memphis and Northwest Barge Points and strengthened at Lower-middle, Upper-middle, and Northwest Tennessee. Basis ranged from 36 under to 7 over the July futures contract at elevators and barge points. Average basis at the end of the week was 11 under the July futures contract. Net sales reported by exporters were below expectations with net sales of 4.1 million bushels for the 2016/17 marketing year and 0.1 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 10.9 million bushels. Soybean export sales and commitments were 106% 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 100%. July soybean-to-corn futures price ratio was 2.53 at the end of the week. Jul/Aug and Jul/Nov future spreads were 4 cents and 7 cents, respectively. August 2017 soybean futures closed at $9.08 down 35 cents since last Friday.

Historical November Soybean Futures Prices

 

 

 

 

 





Nationally, the Crop Progress report estimated soybeans planted at 96% compared to 92% last week, 95% last year, and a 5-year average of 93%; soybeans emerged at 89% compared to 77% last week, 88% last year, and a 5-year average of 84%; and soybean condition at 67% good-to-excellent and 7% poor-to-very poor. In Tennessee, the Crop Progress report estimated soybean condition at 86% good-to-excellent and 2% poor-to-very poor; soybeans planted at 86% compared to 74% last week, 83% last year, and a 5-year average of 79%; and soybeans emerged at 69% compared to 59% last week, 69% last year, and a 5-year average of 62%. In Tennessee, October / November 2017 soybean cash contracts average $9.22 with a range of $8.73 to $9.55. November/December 2017 soybean-to-corn price ratio was 2.43 at the end of the week. November 2017 soybean futures closed at $9.11 down 39 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 November 2017 Put Option which would cost 42 cents and set a $8.78 futures floor.

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 



Cotton

July 2017 cotton futures closed at 73.09 cents up 1.21 cents since last Friday. For the week, July 2017 cotton futures traded between 70.68 and 73.4 cents. Delta upland cotton spot price quotes for June 22 were 66.53 cents/lb (41-4-34) and 67.78 cents/lb (31-3-35). Adjusted world price (AWP) decreased 2.71 cents to 64.6 cents per pound. Net sales reported by exporters were up from last week with net sales of 167,500 bales for the 2016/17 marketing year and 426,800 bales for the 2017/18 marketing year. Exports for the same period were up from last week at 233,300 bales. Upland cotton export sales were 105% 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 106%. October 2017 cotton futures closed at 68 down 2.86 cents since last Friday. Jul/Oct and Jul/Dec cotton futures spreads were -5.09 cents and -5.83 cents, respectively.

Historical December Cotton Futures Prices

 

 

 


 

 


Nationally, the Crop Progress report estimated cotton planted at 94% compared to 92% last week, 94% last year, and a 5-year average of 96%; cotton squaring at 22% compared to 15% last week, 21% last year, and a 5-year average of 20%; and cotton condition at 61% good-to-excellent and 6% poor-to-very poor. In Tennessee, cotton condition was estimated at 86% good-to-excellent and 5% poor-to-very poor; and cotton squaring at 23% compared to 18% last week, 23% last year, and a 5-year average of 21%. December 2017 cotton futures closed at 67.26 down 2.1 cents since last Friday. Downside price protection could be obtained by purchasing a 68 cent December 2017 Put Option costing 3.85 cents establishing a 64.15 cent futures floor.

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 



Wheat

July 2017 wheat futures closed at $4.59 down 6 cents since last Friday. July 2017 wheat futures traded between $4.55 and $4.74 this week. July wheat-to-corn price ratio was 1.29.Wheat net sales reported by exporters were above expectations with net sales of 19.9 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 26.4 million bushels. Wheat export sales were 28% of the USDA estimated total annual exports for the 2017/18 marketing year (June 1 to May 31), compared to a 5-year average of 27%. Jul/Sep and Jul/Dec future spreads were 14 cents and 36 cents, respectively. In Tennessee, June/July 2017 cash wheat ranged from $4.42 to $5.03.


Historical July Wheat Futures Prices

 

 

 

 

 

 


Nationally, the Crop Progress report estimated winter wheat condition at 49% good-to-excellent and 16% poor-to-very-poor; winter wheat headed at 97% compared to 92% last week, 99% last year, and a 5-year average of 95%; winter wheat harvested at 28% compared to 17% last week, 23% last year, and a 5-year average of 25%; spring wheat headed at 15% compared to 25% last year and a 5-year average of 17%; and spring wheat condition at 41% good-to-excellent and 27% poor-to-very poor. In Tennessee, winter wheat condition was reported at 71% good-to-excellent and 8% poor-to-very poor; winter wheat mature at 95% compared to 87% last week; and winter wheat harvested at 75% compared to 32% last week, 46% last year, and a 5-year average of 43%. September 2017 wheat futures closed at $4.73 down 8 cents from last Friday. July 2018 wheat futures closed at $5.28 down 10 cents since last Friday. Downside price protection could be obtained by purchasing a $5.30 July 2018 Put Option costing 42 cents establishing a $4.88 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.