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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

April 11, 2014


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Overview

Soybeans and cotton were mixed; wheat and corn were down for the week. As expected, the April 9th WASDE report increased U.S. export estimates for corn and soybeans. Soybean imports were increased 30 million bushels to a record of 65 million bushels partially offsetting the increase in exports. The result was a tightening of ending stocks of corn to 1.331 billion bushels and soybeans to 135 million bushels. Cotton production was revised down due to a drop in average estimated yield of 20 lbs/acre to 806 lbs/acre. Foreign cotton stocks increased 0.47 million bales primarily due to a 1 million bale increase in Chinese stocks. China now has 1.65 bales in stocks for each bale used annually. Wheat imports and feed use were revised down 5 and 30 million bushels respectively. Estimated wheat ending stocks were increased both domestically and internationally. Overall the report provided bullish numbers for corn, soybeans, and cotton however this was largely already priced into the markets. Full analysis is available here.

Domestically, weather will be watched very closely as we progress through the planting season. To date, plantings are behind 5-year averages. Drought continues to persist in the southern plains and has been creeping north and east. The Dakotas and Minnesota will be watched very closely as cold weather this winter and into the spring combined with a deeper than usual frost could have a dramatic impact on corn acreage. In Tennessee and much of the south, wet weather has slowed planting thus far. 

 

 

 

 

Corn

May 2014 corn futures closed at $4.98 down 3 cents from last week with support at $4.92 and resistance at $5.08. Across Tennessee basis (cash price- nearby future price) strengthened in Memphis, remained unchanged at northwest barge points and northwest Tennessee, and weakened at upper and lower-middle Tennessee. Overall basis for the week ranged from 6 under to 35 over the May futures contract with an average of 16 over at the end of the week. Corn net sales reported by exporters from March 28th to April 3rd were below expectations at 25.9 million bushels for the 2013/14 marketing year and within expectations at 2.3 million bushels for the 2014/15 marketing year. Exports for the same time period were 47.9 million bushels. Corn export sales and commitments are 94% 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 82% (after the 125 million bushel revision of exports in April's WASDE). Ethanol production for the week ending April 4th was 896,000 barrels per day down 26,000 barrels per day. Ending ethanol stocks were 16.407 million barrels down 532,000 barrels. July 2014 corn futures were trading at $5.04. May/July and May/Sep future spreads were 6 cents and 4 cent.

Historical September Corn Futures Prices

 


 

 

 

 

September 2014 corn futures closed at $5.02 down 5 cents from last week with support at $4.96 and resistance at $5.12. This week September and December 2014 corn futures prices traded between $4.98 and $5.19/bu. September cash forward contracts at elevators and barge points for the week averaged $4.98 with a range of $4.77 to $5.18. Estimated corn planting progress in Tennessee was 2% compared to 1% last year and a 5-year average of 12%. Downside price protection could be obtained by purchasing a $5.10 September 2014 Put Option costing 39 cents establishing a $4.71 futures floor.

Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

May 2014 soybean futures closed at $14.63 down 10 cents for the week with support at $14.47 and resistance at $14.90. Nearby soybean to corn price ratio was 2.94 at the end of the week. For the week, average soybean basis weakened or remained unchanged in all five regions. Basis ranged from 19 under to 39 over the May futures contract at elevators and barge points. Average basis at the end of the week was 2 over the May futures contract. Net sales reported by exporters from March 28th to April 3rd were within expectations at 2.9 million bushels for the 2013/14 marketing year and within expectations for the 2014/15 marketing year at 7.7 million bushels. Exports for the same period were 25.7 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 94% (after a 50 million bushel increase in the April WASDE). July 2014 soybean futures were trading at $14.47. May/July and May/Nov future spreads were -16 cents and -249 cents.


Historical November Soybean Futures Prices

 

 

 

 

 

 

 

November 2014 soybean futures closed at $12.14 up 6 cents for the week with support at $12.02 and resistance at $12.30. This week November 2014 soybean futures traded between $11.99 and $12.34. Harvest soybean to corn price ratio was 2.42. November cash forward contracts averaged $12.19 with a range of $11.78 to $12.41. Downside price protection could be achieved by purchasing a $12.20 November 2014 Put Option which would cost 74 cents and set an $11.46 futures floor.

 

Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

May 2014 cotton futures closed at 89.02 down 3.38 cents for the week with support at 87.84 and resistance at 90.6. Cotton adjusted world price (AWP) decreased 2.63 cents to 71.18 cents. Net sales reported by exporters from March 28th to April 3rd were down from last week at 10,900 bales of upland cotton for the 2013/14 marketing year and 119,300 bales for the 2014/15 marketing year. Exports for the same period were up from last week at 303,900 bales. Cotton export sales and commitments are 92% 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 97%. July 2014 cotton futures are trading at 90.45. May/July and May/Dec future spreads were 1.43 cents and -7.55 cents.

Historical December Cotton Futures Prices

 

 


 

 

 

 

December 2014 cotton futures closed at 81.47 up 1.55 cents for the week with support at 80.32 and resistance at 82.22. December cotton futures traded between 79.40 and 81.65 cents this week. This week we saw 6 month highs for December cotton. Nationally, the April 7th Crop Progress report estimated cotton planted at 6% compared to 5% last year and a 5-year average of 6%. Downside price protection could be obtained by purchasing an 82 cent December 2014 Put Option costing 5.35 cents establishing a 76.65 cent futures floor.

 

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

Wheat

May 2014 wheat futures closed at $6.60 down 9 cents for the week with support at $6.50 and resistance at $6.71. Net sales reported by exporters from March 28th to April 3rd were below expectations at 1.5 million bushels for the 2013/14 marketing year and above expectations at 12.8 million bushels for the 2014/15 marketing year. Exports for the same period were 20.3 million bushels. Wheat export sales are 95% of the USDA estimated total annual exports for the 2013/14 marketing year (June 1 to May 31), compared to a 5-year average of 99%. May wheat to corn price ratio was 1.33. In Tennessee, old crop wheat was trading between $6.83 and $6.87. May/July and May/September future spreads were 8 cents and 16 cents.

 

Historical July Wheat Futures Prices

 

 

 

 

 


 

July 2014 wheat futures closed at $6.68 down 8 cents from last week with support at $6.58 and resistance at $6.79. July wheat futures traded between $6.63 and $6.95 this week. July/September wheat to corn price ratio was 1.33. Nationally, the April 7th Crop Progress report estimated winter wheat condition at 36% good to excellent and 28% poor to very poor. Winter wheat condition in Tennessee was estimated at 74% good to excellent and 5% poor to very poor. In Tennessee, winter wheat jointed was estimated at 15% compared to 33% last year and a 5-year average of 46%. In Tennessee, June/July cash forward contracts averaged $6.66 with a range of $6.20 to $6.93 at elevators and barge points. Downside price protection could be obtained by purchasing a $6.70 July 2014 Put Option costing 33 cents establishing a $6.37 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.