Weekly Crop Comments by Dr. Aaron Smith

 

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

 

With November soybeans at $12.50, December corn at $4.80, and December cotton at 84 cents, there is an incentive to increase acres for spring planted crops in 2021. Currently, the USDA projects corn planted acres at 92 million acres, soybeans at 90 million acres, and cotton at 12 million acres. To achieve the increased planted acres nationally the weather will need to cooperate. In 2019 and 2020, prevented planted acres were 16.4 million and 8.1 million acres. A return to 3-6 million prevented acres will be required to meet the current USDA planted acres projection. 

 

In Tennessee 2021 planted acres are projected at: 1.7 million acres of soybeans, 965,000 acres of corn, and 325,000 acres of cotton. If realized this would be an increase of 190,000 planted acres over 2020. A portion of this increase would require being able to plant most of the 103,246 and 187,112 prevented planted acres for corn, cotton, and soybeans in 2019 and 2020. In Tennessee fall planted wheat had the greatest number of prevented planted acres for a commodity in 2019 and 2020 with 146,671 and 72,878 acres.  

 

July wheat futures have traded between $6.15 and $6.72 since January 1. Wheat has benefited from the corn and soybean price rally, however the fundamentals in wheat markets are not as bullish. Corn and soybeans are well ahead of the export pace required to meet USDA’s marketing year target. Corn is at 90% compared to a five year average of 70%; soybeans are 98% compared to a five year average of 83%. Wheat is at 90% compared to the five year average of 94%. World wheat stocks are projected at over 11 billion bushels an all-time high. If winter wheat conditions continue to improve we could see a test of the low end of the current trading range.   

 

After last week’s contract high of 89.28 December cotton futures dropped dramatically (5.62 cents) and has closed lower in 5 of the last 7 trading days. A correction in cotton markets was overdue, with the current rally extending back to March 24, 2020. Moving forward export sales, planted acreage estimates, and weather will dictate if prices are able to push towards 90 cents or fall back to 80 cents.

 

 

 

 

Ethanol production for the week ending February 26 was 0.849 million barrels per day, up 191,000 barrels from the previous week. Ethanol stocks were 22.425 million barrels, down 0.360 million barrels compared to last week. Corn net sales reported by exporters for February 19-25 were down compared to last week with net sales of 4.6 million bushels (a marketing year low) for the 2020/21 marketing year and 1.5 million bushels for the 2021/22 marketing year. Exports for the same time period were up 69% from last week at 79.1 million bushels (a marketing year high). Corn export sales and commitments were 90% of the USDA estimated total exports for the 2020/21 marketing year (September 1 to August 31) compared to the previous 5-year average of 70%. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest, West-Central, West, and Mississippi River and strengthened at North-Central elevators and barge points. Overall, basis for the week ranged from 10 over to 41 over, with an average of 27 over the May futures at elevators and barge points. May 2021 corn futures closed at $5.45, down 2 cents since last Friday. For the week, May 2021 corn futures traded between $5.29 and $5.54. May/Jul and May/Dec future spreads were -11 and -64 cents. July 2021 corn futures closed at $5.34, down 1 cent since last Friday?.

 

 

In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.48 to $4.96. December 2021 corn futures closed at $4.81, up 11 cents since last Friday. Downside price protection could be obtained by purchasing a $4.90 December 2021 Put Option costing 57 cents establishing a $4.33 futures floor.

 

 

 

Net sales reported by exporters were up compared to last week with net sales of 12.3 million bushels for the 2020/21 marketing year and 7.3 million bushels for the 2021/22 marketing year. Exports for the same period were up 18% compared to last week at 42.7 million bushels. Soybean export sales and commitments were 98% of the USDA estimated total annual exports for the 2020/21 marketing year (September 1 to August 31), compared to the previous 5-year average of 83%. Across Tennessee, average soybean basis weakened or remained unchanged at West, West-Central, North-Central, Northwest, and Mississippi River elevators and barge points. Basis ranged from 5 over to 34 over the May futures contract. Average basis at the end of the week was 19 over the May futures contract. May 2021 soybean futures closed at $14.30, up 26 cents since last Friday. For the week, May 2021 soybean futures traded between $13.80 and $14.38. May/Jul and May/Nov future spreads were -17 and -183 cents. May 2021 soybean-to-corn price ratio was 2.62 at the end of the week. July 2021 soybean futures closed at $14.13, up 22 cents since last Friday?.

 

 

In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $12.15 to $12.67. November 2021 soybean futures closed at $12.47, up 24 cents since last Friday. Downside price protection could be achieved by purchasing a $12.60 November 2021 Put Option which would cost 112 cents and set an $11.48 futures floor.  Nov/Dec 2021 soybean-to-corn price ratio was 2.59 at the end of the week?.

 

 

 

Net sales reported by exporters were down compared to last week with net sales of 169,000 bales for the 2020/21 marketing year and 40,600 bales for the 2021/22 marketing year. Exports for the same time period were up 29% compared to last week at 377,400 bales. Upland cotton export sales were 95% of the USDA estimated total annual exports for the 2020/21 marketing year (August 1 to July 31), compared to the previous 5-year average of 88%. Delta upland cotton spot price quotes for March 4 were 84.39 cents/lb (41-4-34) and 86.64 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 1.81 cents to 73.95 cents. May 2021 cotton futures closed at 87.76, down 1.07 cents since last Friday. For the week, May 2021 cotton futures traded between 85.67 and 92.8 cents. May/Jul and May/Dec cotton futures spreads were 0.91 cents and -3.22 cents. July 2021 cotton futures closed at 88.67 cents, down 1.04 cents since last Friday.

 

 

December 2021 cotton futures closed at 84.54 cents, up 0.21 cents since last Friday. Downside price protection could be obtained by purchasing an 85 cent December 2021 Put Option costing 7.4 cents establishing a 77.6 cent futures floor.

 

 

 

Wheat net sales reported by exporters were up compared to last week with net sales of 8.1 million bushels for the 2020/21 marketing year and 0.9 million bushels for the 2021/22 marketing year. Exports for the same time period were up 4% from last week at 15.0 million bushels. Wheat export sales were 90% 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 94%. In Tennessee, spot wheat prices ranged from $6.85 to $7.02. May 2021 wheat futures closed at $6.53, down 7 cents since last Friday. May 2021 wheat futures traded between $6.45 and $6.68 this week. May wheat-to-corn price ratio was 1.20. May/Jul and May/Sep future spreads were -10 and -11 cents.

 

 

In Tennessee, new crop wheat cash contracts ranged from $6.28 to $6.79. July 2021 wheat futures closed at $6.43, down 7 cents since last Friday. Downside price protection could be obtained by purchasing a $6.50 July 2021 Put Option costing 47 cents establishing a $6.03 futures floor. September 2021 wheat futures closed at $6.42, down 4 cents since last Friday.