Weekly Crop Comments by Dr. Aaron Smith

Overview
Corn, Soybeans, and wheat were down; cotton was up for the week.

For the month of July, December corn opened at $3.50 and closed at $3.27, down 23 cents. The trading range for the month was $3.25 ½ to $3.63. The trend has been for lower prices as good growing conditions and concerns over COVID-19 demand drag continue to point towards large projected ending stocks. Recent large corn export sales to China have been a positive but the relationship between Washington and Beijing remains unpredictable. For now, the trend looks to be sideways to lower – a reasonable expected trading range for August is $3.15 to $3.45.

November soybeans opened at $8.82 and closed at $8.92 ½, up 10 ½ cents. The trading range for the month was $8.71 ½ to $9.12 ½. Soybean prices have moved mostly sideways since the June 30th USDA Acreage report. Soybean sales to China continue to provide support to prices with an additional 71.3 million bushels sold for the 2020/21 marketing year reported in this week’s USDA export sales data. For now, the trend is sideways – a reasonable expected trading range for August is $8.70 to $9.20.

December cotton opened at 61 cents and closed at 62.66, up 1.66 cents. The trading range for the month was 59.51 to 64.9. Cotton prices have been on a steady increase since April 2nd gaining over 10 cents, however in July prices have started to trend sideways. Export sales have been strong, but outstanding sales relative to shipments for the 2019/220 marketing year remain very high. The large amount of unshipped cotton could result in cancellations or carry over sales into the 2020/21 marketing year. For now, the trend is sideways to lower – a reasonable expected trading range for August is 58 to 66 cents.

September wheat opened at $4.92 and closed at $5.31 ¼, up 39 1/4 cents. The trading range for the month was $4.87 ¾ to $5.51 ¾.  Prices jumped 30 cents in the first two weeks of July and have moved sideways in a much narrower trading range since then. For now, the trend looks to be sideways to lower – a reasonable expected trading range for August is $5.00 to $5.50.

Corn
Ethanol production for the week ending July 24 was 0.958 million barrels per day, up 50,000 barrels from the previous week. Ethanol stocks were 20.272 million barrels, up 0.471 million barrels compared to last week. Corn net sales reported by exporters for July 17-23 were down compared to last week with net sales cancelations of 1.2 million bushels for the 2019/20 marketing year and net sales of 25.1 million bushels for the 2020/21 marketing year. Exports for the same time period were down 8% from last week at 38.2 million bushels. Corn export sales and commitments were 97% of the USDA estimated total exports for the 2019/20 marketing year (September 1 to August 31) compared to the previous 5-year average of 103%. Across Tennessee, average corn basis (cash price-nearby futures price) weakened at Memphis and Northwest Barge Points and strengthened or remained unchanged at Upper-middle and Northwest Tennessee. Overall, basis for the week ranged from 10 over to 30 over, with an average of 15 over the September futures at elevators and barge points. September 2020 corn futures closed at $3.16, down 10 cents since last Friday. For the week, September 2020 corn futures traded between $3.14 and $3.27. Sep/Dec and Sep/Mar future spreads were 11 and 22 cents.

Nationally the Crop Progress report estimated corn condition at 72% good-to-excellent and 7% poor-to-very poor; corn silking at 82% compared to 59% last week, 51% last year, and a 5-year average of 75%; and corn dough at 22% compared to 9% last week, 11% last year, and a 5-year average of 17%. In Tennessee, the Crop Progress report estimated corn condition at 75% good-to-excellent and 6% poor-to-very poor; corn silking at 87% compared to 81% last week, 92% last year, and a 5-year average of 95%; and corn dough at 43% compared to 35% last week, 60% last year, and a 5-year average of 64%. In Tennessee, new crop cash corn contracts ranged from $3.06 to $3.55. December 2020 corn futures closed at $3.27, down 8 cents since last Friday. Downside price protection could be obtained by purchasing a $3.30 December 2020 Put Option costing 15 cents establishing a $3.15 futures floor. March 2021 corn futures closed at $3.38, down 8 cents since last Friday.

Soybeans
Net sales reported by exporters were up compared to last week with net sales of 9.5 million bushels for the 2019/20 marketing year and 122.9 million bushels for the 2020/21 marketing year. Exports for the same period were up 44% compared to last week at 24.8 million bushels. Soybean export sales and commitments were 104% of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 103%. Average soybean basis weakened at Memphis and strengthened at Northwest Barge Points, Upper-middle, and Northwest Tennessee. Basis ranged from 3 under to 31 over the August futures contract at elevators and barge points. Average basis at the end of the week was 21 over the August futures contract. September 2020 soybean futures closed at $8.90, down 8 cents since last Friday. For the week, September 2020 soybean futures traded between $8.79 and $9.02. Sep/Nov and Sep/Jan future spreads were 2 and 8 cents. September soybean-to-corn price ratio was 2.82 at the end of the week.

Nationally the Crop Progress report estimated soybean condition at 72% good-to-excellent and 6% poor-to-very poor; soybeans blooming at 76% compared to 64% last week, 52% last year, and a 5-year average of 72%; and soybeans setting pods at 43% compared to 25% last week, 17% last year, and a 5-year average of 36%. In Tennessee, soybean condition was estimated at 72% good-to-excellent and 8% poor-to-very poor; soybeans blooming at 62% compared to 47% last week, 65% last year, and a 5-year average of 72%; and soybeans setting pods at 35% compared to 21% last week, 37% last year, and a 5-year average of 42%. In Tennessee, new crop soybean cash contracts ranged from $8.73 to $9.29. Nov/Dec 2020 soybean-to-corn price ratio was 2.73 at the end of the week. November 2020 soybean futures closed at $8.92, down 7 cents since last Friday. Downside price protection could be achieved by purchasing a $9.00 November 2020 Put Option which would cost 26 cents and set an $8.74 futures floor. January 2021 soybean futures closed at $8.98, down 6 cents since last Friday.

Cotton
Net sales reported by exporters were up compared to last week with net sales of 118,700 bales for the 2019/20 marketing year and 9,500 bales for the 2020/21 marketing year. Exports for the same time period were up 18% compared to last week at 320,800 bales. Upland cotton export sales were 120% of the USDA estimated total annual exports for the 2019/20 marketing year (August 1 to July 31), compared to the previous 5-year average of 109%. Delta upland cotton spot price quotes for July 30 were 59.82 cents/lb (41-4-34) and 62.07 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 1.33 cents to 47.71 cents.

Nationally, the Crop Progress report estimated cotton condition at 49% good-to-excellent and 16% poor-to-very poor; cotton squaring at 84% compared to 73% last week, 84% last year, and a 5-year average of 84%; and cotton setting bolls at 42% compared to 27% last week, 42% last year, and a 5-year average of 44%. In Tennessee, cotton condition was estimated at 66% good-to-excellent and 14% poor-to-very poor; cotton squaring at 86% compared to 80% last week, 85% last year, and a 5-year average of 91%; and cotton setting bolls at 42% compared to 37% last week, 40% last year, and a 5-year average of 52%. December 2020 cotton futures closed at 62.66, up 2.56 cents since last Friday. For the week, December 2020 cotton futures traded between 59.75 and 63.31 cents. Dec/Mar and Dec/Dec cotton futures spreads were -0.18 cent and 0.59 cent. Downside price protection could be obtained by purchasing a 64 cent December 2020 Put Option costing 3.74 cents establishing a 60.26 cent futures floor. March 2021 cotton futures closed at 63.25 cents, up 2.43 cents since last Friday. December 2021 cotton futures closed at 62.48 cents, up 1.77 cents since last Friday.

Wheat
Wheat net sales reported by exporters were up compared to last week with net sales of 24.9 million bushels for the 2020/21 marketing year. Exports for the same time period were down 4% from last week at 18.6 million bushels. Wheat export sales were 37% of the USDA estimated total annual exports for the 2020/21 marketing year (June 1 to May 31), compared to the previous 5-year average of 37%.

Nationally the Crop Progress report estimated winter wheat harvested at 81% compared to 74% last week, 73% last year, and a 5-year average of 82%; spring wheat condition at 70% good-to-excellent and 6% poor-to-very poor; spring wheat headed at 97% compared to 91% last week, 96% last year, and a 5-year average of 98%; and spring wheat harvested at 1% compared to 1% last year and a 5-year average of 3%. In Tennessee, July 2020 wheat cash contracts ranged from $5.09 to $5.58. September 2020 wheat futures closed at $5.31, down 8 cents since last Friday. September 2020 wheat futures traded between $5.19 and $5.39 this week. September wheat-to-corn price ratio was 1.68. Sep/Dec and Sep/Jul future spreads were 7 and 18 cents. December 2020 wheat futures closed at $5.38 down 7 cents since last Friday. December wheat-to-corn price ratio was 1.65. July 2021 wheat futures closed at $5.49, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $5.50 July 2021 Put Option costing 37 cents establishing a $5.13 futures floor.