Weekly Crop Comments by Dr. Aaron Smith

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

 

Corn and soybean prices have continued to decrease from June highs. December corn peaked at $4.73 on June 17. On Friday, the contract set a new low at $3.58 ¼, a decrease of $1.14 ¾ (or a 24% loss in value).  Similarly, November soybeans had a June high of $9.48 on June 18. On Friday, the contract closed at $8.57 ¾, a decrease of $0.90 ¼ (or a 9.5% loss in value). Soybeans started from a depressed value due to the ongoing trade dispute with China that has had a dramatic impact on soybean and cotton prices. While prices could revert due to a weather (such as an early frost) or trade event (resolution of the trade dispute with China, resulting in large agricultural purchases), it seems more likely that prices will continue to soften as harvest progresses and moves north. Storing the crop to avoid seasonal lows and extend the marketing window should be strongly considered.

 

Cotton futures prices continue to languish below 60 cents. Increased estimated production from the US (5.38 million bales greater than the previous 5-year average) and Brazil (3.572 million bales above the 5-year average) will continue to pressure prices lower. Additionally, low synthetic fiber prices and continued trade issues with China make a path to substantially higher prices seem very unlikely this fall/winter.

 

This week the USDA opened enrollment for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. Enrollment is open for the 2019 crop year, however farmers have until March 15, 2020, to finalize sign up. Farmers can enroll for the 2020 crop year starting Oct. 7 and continuing until June 30, 2020. Patience may be the best course of action when signing up for ARC and PLC, as additional market and production information will be revealed between now and the sign up deadlines that will aid in the decision making process. Farmers should fully investigate how the programs work to ensure an informed decision is made at the appropriate time. Additionally, under the 2018 Farm Bill, farmers get a one-time chance to update their payment yields for the 2020 crop year and beyond.

 

 

 

Ethanol production for the week ending August 30 was 1.013 million barrels per day, down 25,000 from the previous week. Ethanol stocks were 23.801 million barrels, up 0.819 million barrels. Corn net sales reported by exporters for August 23-29 were down from last week with net sales cancelations of 6.5 million bushels for the 2018/19 marketing year and net sales of 16.4 million bushels for the 2019/20 marketing year. Exports for the same time period were down 38% from last week at 15.0 million bushels. Corn export sales and commitments were 94% of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to the previous 5-year average of 104%. Nationally, the Crop Progress report estimated corn condition at 58% good-to-excellent and 13% poor-to-very poor; corn dough at 81% compared to 71% last week, 95% last year, and a 5-year average 93%; corn dented at 41% compared to 27% last week, 73% last year, and a 5-year average of 63%; and corn mature at 6% compared to 20% last year and a 5-year average of 13%. In Tennessee, the Crop Progress report estimated corn condition at 86% good-to-excellent and 1% poor-to-very poor; corn dough at 98% compared to 96% last week, 100% last year, and a 5-year average of 99%; corn dented at 87% compared to 79% last week, 92% last year, and a 5-year average of 89%; corn mature at 42% compared to 21% last week, 44% last year, and a 5-year average of 42%; and corn harvested at 5% compared to 1% last week, 8% last year, and a 5-year average of 6%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis and Northwest Barge Points and weakened at Upper-middle and Northwest Tennessee. Overall, basis for the week ranged from 41 under to 4 under with an average of 22 under the December futures at elevators and barge points. December 2019 corn futures closed at $3.55, down 14 cents since last Friday. Downside price protection could be obtained by purchasing a $3.60 December 2019 Put Option costing 16 cents establishing a $3.44 futures floor. For the week, December 2019 corn futures traded between $3.53 and $3.70.

 

 

Dec/Mar and Dec/Dec future spreads were 13 and 41 cents. March 2020 corn futures closed at $3.68, down 14 cents since last Friday. In Tennessee, new crop corn cash contracts averaged $3.77 with a range of $3.73 to $3.80. December 2020 corn futures closed at $3.96, down 8 cents since last Friday.