​Weekly Crop Comments by Dr. Aaron Smith                                                            October 13, 2017


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

 

On Thursday, the USDA released the October World Agriculture Supply and Demand Estimates (WASDE) report. Analysis of the report and market reaction for corn, soybeans, cotton, and wheat is available on our Monthly Crop Comments.

 

The USDA also released the Crop Production report on Thursday. Nationally, average yields for corn, soybeans, and upland cotton were estimated to be 171.8 bu/acre, 49.5 bu/acre, and 877 lbs/acre, respectively. Corn was up 1.9 bu/acre, soybeans were down 0.4 bu/acre, and upland cotton was down 19 lbs/acre from last month’s USDA estimates. The decrease in soybean yield was the biggest surprise and soybean futures reacted accordingly closing up 25-30 cents for the day.

 

In Tennessee, average yield was estimated to be 170 bu/ acre (up 2 bu/acre), 50 bu/acre (up 2 bu/acre), and 1,045 lbs/acre (unchanged) for corn, soybeans, and upland cotton, respectively. Corn and soybean yields would be all time records for the state, while cotton would be 59 lbs/acre under last year’s all-time record yield. Record yields will help farmer’s bottom lines, however vigilance in marketing crops will need to be adhered to as basis in the state will be substantially weaker than last year.

 



 

Corn

 

December 2017 corn futures closed at $3.52 up 2 cents since last Friday. For the week, December 2017 corn futures traded between $3.42 and $3.54. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Lower-middle, and Upper-middle Tennessee and weakened at Northwest Tennessee. Overall, basis for the week ranged from 71 under to 15 over the December futures contract with an average of 17 under at the end of the week. Nationally, the Crop Progress report estimated corn mature at 92% compared to 68% last week, 82% last year, and a 5-year average of 87%; corn harvested at 22% compared to 17% last week, 33% last year, and a 5-year average of 37%; and corn condition at 64% good-to-excellent and 11% poor-to-very poor. In Tennessee, the Crop Progress report estimated corn mature at 97% compared to 96% last week, 99% last year, and a 5-year average of 98%; and corn harvested at 85% compared to 74% last week, 93% last year, and a 5-year average of 81%. Dec/Mar and Dec/Dec future spreads were 14 and 46 cents, respectively.

 

 


 

Corn net sales reported by exporters from September 29-October 5 were above expectations with net sales of 62.7 million bushels for the 2017/18 marketing year and 0.6 million bushels for the 2018/19 marketing year. Exports for the same time period were down from last week at 26.4 million bushels. Corn export sales and commitments were 29% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31) compared to a 5-year average of 35%. Ethanol production for the week ending October 6 was 0.967 million barrels per day down 43,000 from the previous week. Ethanol stocks were 21.523 million barrels, down 22,000 barrels. In Tennessee, January 2018 cash forward contracts averaged $3.58 with a range of $3.44 to $3.73. March 2018 corn futures closed at $3.66 up 3 cents since last Friday. December 2018 corn futures closed at $3.98 up 2 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2018 Put Option costing 29 cents establishing a $3.71 futures floor.

 





Soybeans

 

November 2017 soybean futures closed at $10.00 up 28 cents since last Friday. For the week, November 2017 soybean futures traded between $9.59 and $10.03. Average soybean basis strengthened at Memphis, Northwest Barge Points, Upper-middle, and Northwest Tennessee and weakened at Lower-middle Tennessee. Basis ranged from 62 under to 10 under the November futures contract at elevators and barge points. Average basis at the end of the week was 26 under the November futures contract. Nationally, the Crop Progress report estimated soybeans dropping leaves at 89% compared to 80% last week, 90% last year, and a 5-year average of 87%; soybeans harvested at 36% compared to 22% last week, 41% last year, and a 5-year average of 43%; and soybean condition at 61% good-to-excellent and 12% poor-to-very poor. In Tennessee, the Crop Progress report estimated soybean condition at 82% good-to-excellent and 6% poor-to-very poor; soybeans dropping leaves at 83% compared to 70% last week, 90% last year, and a 5-year average of 78%; and soybeans harvested at 29% compared to 14% last week, 42% last year, and a 5-year average of 26%. November/December 2017 soybean-to-corn price ratio was 2.84 at the end of the week.

 

 


Nov/Jan and Nov/Nov future spreads were 10 cents and 10 cents, respectively. In Tennessee, January 2018 soybean cash contracts average $9.75 with a range of $9.41 to $10.09.  Net sales reported by exporters were above expectations with net sales of 64.2 million bushels for the 2017/18 marketing year. Exports for the same period were up from last week at 43.7 million bushels. Soybean export sales and commitments were 41% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31), compared to a 5-year average of 56%. January 2018 soybean futures closed at $10.10 up 27 cents since last Friday. November 2018 soybean futures closed at $10.10 up 19 cents since last Friday. Downside price protection could be achieved by purchasing a $10.20 November 2018 Put Option which would cost 73 cents and set a $9.47 futures floor. November/December 2018 soybean-to-corn price ratio was 2.54 at the end of the week.


 


 


Cotton

 

Delta upland cotton spot price quotes for October 12 were 67.84 cents/lb (41-4-34) and 69.09 cents/lb (31-3-35). Adjusted world price (AWP) increased 0.4 cents to 60.44 cents per pound. Net sales reported by exporters were down from last week with net sales of 154,400 bales for the 2017/18 marketing year. Exports for the same period were up from last week at 118,000 bales. Upland cotton export sales were 56% of the USDA estimated total annual exports for the 2017/18 marketing year (August 1 to July 31), compared to a 5-year average of 44%. Dec/Mar and Dec/Dec cotton futures spreads were -0.46 cent and -0.1 cents, respectively.

 

 

 

Nationally, the Crop Progress report estimated cotton bolls opening at 72% compared to 67% last week, 79% last year, and a 5-year average of 78%; cotton harvested at 25% compared to 17% last week, 21% last year, and a 5-year average of 19%; and cotton condition at 60% good-to-excellent and 15% poor-to-very poor. In Tennessee, cotton condition was estimated at 83% good-to-excellent and 7% poor-to-very poor; cotton bolls opening at 93% compared to 77% last week, 94% last year, and a 5-year average of 83%; and cotton harvested at 24% compared to 4% last week, 25% last year, and a 5-year average of 18%. December 2017 cotton futures closed at 68.62 cents down 0.22 cents since last Friday. For the week, December 2017 cotton futures traded between 67.66 and 69.88 cents. March 2018 cotton futures closed at 68.16 down 0.13 cents since last Friday. December 2018 cotton futures closed at 68.52 up 0.06 cents since last Friday. Downside price protection could be obtained by purchasing a 69 cent December 2018 Put Option costing 4.79 cents establishing a 64.21 cent futures floor.


 

 



Wheat

 

In Memphis, old crop cash wheat ranged from $4.05 to $4.11. Wheat net sales reported by exporters were below expectations with net sales of 6.4 million bushels for the 2017/18 marketing year. Exports for the week were down from last week at 12.0 million bushels. Wheat export sales were 54% 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 58%. Dec/Mar and Dec/Jul future spreads were 19 cents and 45 cents, respectively.

 

 

 

December 2017 wheat futures closed at $4.39 down 4 cents since last Friday. December 2017 wheat futures traded between $4.28 and $4.45 this week. December wheat-to-corn price ratio was 1.25. Nationally, the Crop Progress report estimated winter wheat planted at 48% compared to 36% last week, 57% last year, and a 5-year average of 58%; and winter wheat emerged at 25% compared to 12% last week, 32% last year, and a 5-year average of 30%. In Tennessee, winter wheat planted was estimated at 18% compared to 4% last week, 23% last year, and a 5-year average of 14%; and winter wheat emerged at 3% compared to 1% last week, 2% last year, and a 5-year average of 1%. March 2018 wheat futures closed at $4.58 down 4 cents from last Friday. June/July 2018 cash forward contracts ranged from $4.21 to $4.93 for the week. July 2018 wheat futures closed at $4.84 down 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.90 July 2018 Put Option costing 32 cents establishing a $4.58 futures floor.

 

 




Additional Information:
Links for data presented:
U.S. Export Sales - https://apps.fas.usda.gov/export-sales/esrd1.html
USDA FAS: Weekly Export Performance Indicator – https://apps.fas.usda.gov/esrquery/esrpi.aspx
EIA: Weekly ethanol Plant Production - https://www.eia.gov/dnav/pet/pet_pnp_wprode_s1_w.htm
EIA: Weekly Supply Estimates - https://www.eia.gov/dnav/pet/pet_sum_sndw_a_EPOOXE_sae_mbbl_w.htm
Upland Cotton Reports - https://www.fsa.usda.gov/FSA/epasReports?area=home&subject=ecpa&topic=fta-uc
Tennessee Crop Progress - https://www.nass.usda.gov/Statistics_by_State/Tennessee/Publications/Crop_Progress_&_Condition/
U.S. Crop Progress - http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1048
USDA AMS: Market News - https://www.ams.usda.gov/market-news/search-market-news

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.