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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 24, 2015


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Overview

Cotton was up; corn was down; and Soybeans and wheat were mixed for the week. This week, December 2015 corn futures established new lows for 2015. The December 2015 corn contract low was $3.64/bu set back on Oct 1, 2014. Despite strong export sales this week, USDA estimated corn exports still lag behind the needed pace to meet their marketing year estimates. Reduced export sales could push 2014-15 marketing year ending stocks close to 2 billion bushels (currently estimated at 1.8 billion) and continue to provide downward price pressure. Corn planting progress is a story of two regions. Corn planting progress in the northcentral plains is ahead of the five year average while the southeast and mid-south lag behind their normal pace due to sustained wet weather. Tennessee is currently 37% behind their five year average planting progress, the greatest deficiency of the 18 states reported in the Crop Progress report. November 2015 soybeans traded mostly sideways this week. It is still too early in the planting season to determine if a move from corn in favor of soybeans will occur if planting delays continue. December 2015 cotton futures are poised to break the 66 cent barrier, a feat not accomplished since the beginning of March. Global stocks continue to remain a concern, however, strong exports, in spite of a high US dollar, continue to be a positive. As usual, domestic abandonment will be key in determining final harvested acreage and domestic production. This week, July 2015 wheat futures dropped to$4.88/bu, near the contract low. Currently, the US drought monitor records 12.06% of the South region (Texas, Oklahoma, Arkansas, Louisiana, Mississippi, and Tennessee) in an extreme or exceptional drought, down substantially from last week’s estimate of 15.93%. Moisture conditions in the South region have improved dramatically since last year when 29.81% of the region was in an extreme or exceptional drought.

 

 

 

 

 

Corn

May 2015 corn futures closed at $3.64 down 15 cents a bushel since last week. This week May 2015 corn futures prices traded between $3.63 and $3.81. Across Tennessee average basis (cash price- nearby future price) strengthened or remained unchanged at Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee and weakened in Memphis. Overall, average basis for the week ranged from 9 under to 28 over the May futures contract with an average of 16 over at the end of the week. Ethanol production for the week ending April 17th was 930,000 barrels per day up 6,000 barrels per day from last week. Ending ethanol stocks were 21.342 million barrels up 697,000 barrels from last week. Corn net sales reported by exporters from April 10th to 16th were above expectations with net sales of 34.2 million bushels for the 2014/15 marketing year and 0.2 million bushels for the 2015/16 marketing year. Exports for the same time period were up from last week at 41.0 million bushels. Corn export sales and commitments were 86% 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 88%. July 2015 corn futures closed at $3.69 down 17 cents from last week. May/Jul and May/Sep future spreads were 5 cents and 13 cents, respectively.

 

Historical September Corn Futures Prices

 


 


 

 

September 2015 futures closed at $3.77 down 17 cents from last week. September 2015 cash forward contracts averaged $3.80 with a range of $3.53 to $4.12. Nationally, this week’s Crop Progress report estimated corn planted at 9% compared to 2% last week, 6% last year, and a 5-year average of 13%. In Tennessee, corn planted was estimated at 6% compared to 5% last week, 17% last year, and a 5-year average of 43%. Downside price protection could be obtained by purchasing a $3.80 September 2015 Put Option costing 24 cents establishing a $3.56 futures floor.


Nearby and Harvest Corn Futures Prices

 

 

 

 

 

 

 

Soybeans

May 2015 soybean futures closed at $9.69 up 1 cent since last week. This week May 2015 soybean futures traded between $9.65 and $9.83. May soybean to corn price ratio was 2.66 at the end of the week. For the week, average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Upper-middle, and Lower-middle Tennessee. Basis ranged from 10 under to 30 over the May futures contract at elevators and barge points. Average basis at the end of the week was 12 over the May futures contract. Net sales reported by exporters were within expectations with net sales of 3.8 million bushels for the 2014/15 marketing year and 0.3 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 5.7 million bushels. Soybean 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 98%. July 2015 soybean futures closed at $9.70 down 1cent since last week. May/Jul and May/Nov future spreads were 1 cent and -17 cents.

Historical November Soybean Futures Prices

 

 

 

 

 



November 2015 futures closed at $9.52 the same as last week. Nov/Sep 2015 soybean to corn price ratio was 2.53. October/November 2015 cash forward contracts averaged $9.46 with a range of $9.22 to $9.63 at elevators and barge points. Downside price protection could be achieved by purchasing a $9.60 November 2015 Put Option which would cost 54 cents and set a $9.06 futures floor.


Nearby and Harvest Soybean Futures Prices

 

 

 

 

 

 

 

Cotton

May 2015 cotton futures closed at 66.5 up 3.21 cents since last week. May 2015 cotton futures traded between 62.2 and 66.89 cents this week. Adjusted world price (AWP) decreased 1.75 cents to 48.56 cents per pound. Net sales reported by exporters were up from last week with net sales of 144,900 bales for the 2014/15 marketing year and net sales of 67,100 bales for the 2015/16 marketing year. Exports for the same period were up from last week at 324,200 bales. Upland cotton export sales were 101% 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 99%. July 2015 cotton futures closed at 66.34 up 3.05 cents since last week. May/July and May/Dec futures spread were -0.16 cents and -0.88 cents.

Historical December Cotton Futures Prices

 

 

 


 

 

 

December 2015 cotton futures closed at 65.62 up 1.98 cents since last week. Nationally, this week’s Crop Progress report estimated cotton planted at 8% compared to 4% last week, 9% last year, and a 5-year average of 11%. Downside price protection could be obtained by purchasing a 66 cent December 2015 Put Option costing 3.71 cents establishing a 62.29 cent futures floor.

 

Nearby and Harvest Cotton Futures Prices

 

 

 

 

 

 

 

 

Wheat

May 2015 wheat futures closed at $4.86 down 8 cents since last week. May wheat futures traded between $4.85 and $5.06 this week. May wheat to corn price ratio was 1.29. In Memphis, old crop cash wheat traded between $4.54 and $4.60 last week. Net sales reported by exporters were above expectations at 14.6 million bushels for the 2014/15 marketing year and 4.7 million bushels for the 2015/16 marketing year. Exports for the same period were up from last week at 20.5 million bushels. Wheat export sales were 99% 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 102%. May/July and July/Sept future spreads were 2 cents and 10 cents, respectively.

Historical July Wheat Futures Prices

 

 

 

 

 

 

July 2015 wheat futures closed at $4.88 down 1 cent since last week. June/July 2015 cash forward contracts averaged $4.88 with a range of $4.38 to $5.23 at elevators and barge points. Nationally, this week’s Crop Progress report estimated winter wheat condition at 42% good to excellent and 19% poor to very poor; winter wheat headed was estimated at 16% compared to 6% last week, 8% last year, and a 5-year average of 15%; and spring wheat planted was estimated at 36% compared to 17% last week, 9% last year, and a 5-year average of 19%. In Tennessee, winter wheat condition was estimated at 78% good to excellent and 2% poor to very poor; winter wheat jointing was estimated at 66% compared to 43% last week, 52% last year, and a 5-year average of 77%; and winter wheat headed was estimated at 1% compared to 2% last year and a 5-year average of 22%. Downside price protection could be obtained by purchasing a $4.90 July 2015 Put Option costing 22 cents establishing a $4.68 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.