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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 31, 2015

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Overview

Corn, soybeans, cotton, and wheat were down for the week. For the third straight week December corn and November soybean futures declined. After a high of $4.54 on July 14th, December corn futures have retreated more than 70 cents. Similar to corn, soybeans have decreased $1.05 since reaching a high of $10.45 on July 14th. Improved weather conditions have been the primary factor in the price declines. While some areas lost acreage to flooding or planting was unable to occur due to wet conditions, the majority of crops have improved with the mild temperatures and timely rains. Weather will continue to be the primary market mover as we move through August. December cotton futures have declined almost 5 cents since July 1st. December cotton futures will likely continue to trade between 62 and 67 cents. This trading range has been established for 10 months and is unlikely to change until we get closer to harvest or new information about the current crop is revealed. September wheat futures opened July 1st at $6.14 and closed July 31st at $4.99, a decrease of $1.15.  From March through July wheat futures have seen a tremendous amount of volatility with 50 cent price swings in all five months.

 

 

 

 

 

Corn

September 2015 corn futures closed at $3.71 down 21 cents from last week. This week, September 2015 corn futures prices traded between $3.65 and $3.89. Across Tennessee, average basis (cash price-nearby futures price) strengthened at Northwest Barge Points, Memphis, Upper-middle, Northwest, and Lower-middle Tennessee. Overall, average basis for the week ranged from 21 under to 25 over the September futures contract with an average of 3 over at the end of the week. Ethanol production for the week ending July 24th was 965,000 barrels per day down 8,000 barrels per day from last week. Ending ethanol stocks were 19.648 million barrels up 89,000 barrels from last week. Corn net sales reported by exporters from July 17th to 23rd were within expectations with net sales of 14.4 million bushels for the 2014/15 marketing year and 17.5 million bushels for the 2015/16 marketing year. Exports for the same time period were down from last week at 42.2 million bushels. Corn export sales and commitments were 100% 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 104%. Sep/Dec and Sep/Mar future spreads were 10 cents and 21 cents, respectively.

Historical September Corn Futures Prices

 


 


 

 

 

December 2015 corn futures closed at $3.81 down 21 cents since last week. In Tennessee, September 2015 cash forward contracts averaged $3.60 with a range of $3.27 to $3.95. Nationally, this week’s Crop Progress report estimated corn condition at 70% good-to-excellent and 9% poor-to-very poor; corn silking at 78% compared to 55% last week, 75% last year, and a 5-year average of 77%; and corn dough or beyond at 14% compared to 15% last year and a 5-year average of 17%. In Tennessee, corn condition was estimated at 85% good-to-excellent and 2% poor-to-very poor; corn silking at 93% compared to 89% last week, 95% last year, and a 5-year average of 95%; and corn dough or beyond at 59% compared to 30% last week, 44% last year, and a 5-year average of 62%. Downside price protection could be obtained by purchasing a $3.75 September 2015 Put Option costing 13 cents establishing a $3.62 futures floor.


Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

 

Soybeans

August 2015 soybean futures closed at $9.80 down 11 cents since last week. This week August 2015 soybean futures traded between $9.59 and $10.02. Aug/Sep soybean-to-corn price ratio was 2.64 at the end of the week. For the week, average soybean basis weakened or remained unchanged at Northwest Barge Points, Memphis, Northwest, Upper-middle, and Lower-middle Tennessee. Basis ranged from 40 under to 25 over the August futures contract at elevators and barge points. Average basis at the end of the week was 5 over the August futures contract. Net sales reported by exporters were above expectations with net sales of 15.3 million bushels for the 2014/15 marketing year and net sales of 33 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 4.7 million bushels. Soybean export sales and commitments were 103% 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 104%. September 2015 soybean futures closed at $9.53 down 14 cents since last week.  Aug/Sep and Aug/Nov future spreads were -27 cents and -40 cents, respectively.

Historical November Soybean Futures Prices

 

 

 

 

 



November 2015 soybean futures closed at $9.40 down 25 cents from last week. Nov/Dec 2015 soybean-to-corn price ratio was 2.47. In Tennessee, October/November 2015 cash forward contracts averaged $9.34 with a range of $8.98 to $9.65 at elevators and barge points. Nationally, this week’s Crop Progress report estimated soybean condition at 62% good-to-excellent and 11% poor-to-very poor; soybeans blooming at 71% compared to 56% last week, 74% last year, and a 5-year average of 72%; and soybeans setting pods at 34% compared to 17% last week, 35% last year, and a 5-year average of 31%. In Tennessee, soybean condition was estimated at 80% good-to-excellent and 4% poor-to-very poor; soybeans blooming at 62% compared to 44% last week, 62% last year, and a 5-year average of 63%; and soybeans setting pods were estimated at 36% compared to 20% last week, 30% last year, and a 5-year average of 35%. Downside price protection could be achieved by purchasing a $9.50 November 2015 Put Option which would cost 41 cents and set a $9.09 futures floor.

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

 

Cotton

December 2015 cotton futures closed at 64.21 down 0.43 cents since last week. December 2015 cotton futures traded between 63.27 and 64.98 cents this week. Adjusted world price (AWP) decreased 0.48 cents to 49.54 cents per pound. Delta upland cotton spot price quotes for July 30 were 61.41 to 64.16 cents/lb. Net sales reported by exporters were down from last week with net sales of 23,300 bales for the 2014/15 marketing year and 69,800 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 168,500 bales. Upland cotton export sales were 107% 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 109%. Nationally, this week’s Crop Progress report estimated cotton condition at 57% good-to-excellent and 8% poor-to-very poor; cotton squaring at 85% compared to 76% last week, 87% last year, and a 5-year average of 88%; and cotton setting bolls at 44% compared to 33% last week, 47% last year, and 5-year average of 49%. In Tennessee, cotton condition was estimated at 72% good-to-excellent and 2% poor-to-very poor; cotton squaring at 87% compared to 75% last week, 93% last year, and a 5-year average of 91%; and cotton setting bolls at 47% compared to 26% last week, 51% last year, and a 5-year average of 51%. Downside price protection could be obtained by purchasing a 65 cent December 2015 Put Option costing 3.14 cents establishing a 61.86 cent futures floor.

Historical December Cotton Futures Prices

 

 

 


 

 

 

Dec/Mar and Dec/Dec cotton futures spreads were -0.01 cents and -0.09 cents, respectively. December 2016 cotton futures closed at 64.12 the same as last week.

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

 

Wheat

September 2015 wheat futures closed at $4.99 down 12 cents since last week. September wheat futures traded between $4.93 and $5.12 this week. September wheat-to-corn price ratio was 1.35. Net sales reported by exporters were above expectations with net sales of 25.7 million bushels for the 2015/16 marketing year and 0.04 million bushels for the 2016/17 marketing year. Exports for the same period were up from last week at 13.5 million bushels. Wheat export sales were 30% of the USDA estimated total annual exports for the 2015/16 marketing year (June 1 to May 31), compared to a 5-year average of 36%. Nationally, this week’s Crop Progress report estimated winter wheat harvested at 85% compared to 75% last week, 82% last year, and a 5-year average of 80%; spring wheat condition at 71% good-to-excellent and 7% poor-to-very poor; and spring wheat harvested at 2% compared to 1% last year and a 5-year average of 5%. In Tennessee, July 2015 cash contracts averaged $4.62 with a range of $4.34 to $4.86 at elevators and barge points.

Historical July Wheat Futures Prices

 

 

 

 

 

 

December 2015 wheat futures closed at $5.04 down 15 cents since last week. Sep/Dec and Sep/Jul future spreads were 5 cents and 18 cents, respectively. July 2016 wheat futures closed at $5.17 down 15 cents since last week. In Memphis, new crop cash contracts traded from $4.98 to $5.15 this week. Downside price protection could be obtained by purchasing a $5.20 July 2016 Put Option costing 50 cents establishing a $4.70 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.