Weekly Crop Comments : Soybeans And Wheat Were Up

By Dr. Aaron Smith

Overview

Soybeans and wheat were up; corn and cotton were mixed for the week. This week saw modest increases in corn and soybean futures prices. These increases came after seven (November soybeans) and six (December corn) consecutive weeks where prices decreased from one Friday to the next. Increases in corn and soybean harvest futures are not likely to hold or perpetuate over the coming weeks however they may indicate that we are approaching a harvest futures low for both commodities. Where the harvest low occurs for both November soybeans and December corn remains to be seen, to date both contracts had lows on Oct 1st of $9.04 and $3.18, respectively. Transportation and logistical issues continue (and will continue for the foreseeable future) to hamper grain movement from field to market in many areas of the country. December cotton futures moved sideways this week trading near 62 cents per pound. Cotton harvest is just getting underway in Tennessee, however with the rain at the end of the week we could see some temporary delays. Wheat futures prices rebound 10 cents this week on solid export sales numbers and reduced exports from Russia on the global market   

This week USDA Secretary of Agriculture Tom Vilsack announced the following time lines for implementation of the 2104 Farm Bill: September 29th to February 28th - During this period, paperwork dealing with the program yield updating and program acre reallocation decisions can be completed for each FSA farm. November 17 to March 31 - During this period, paperwork dealing with program choice (Agricultural Risk Coverage - County (ARC-CO), Price Loss Coverage (PLC), and Agricultural Risk Coverage - Individual Coverage (ARC-IC)) can be completed for each FSA farm.

Corn

December 2014 corn futures closed at $3.23 down even with last week with support at $3.18 and resistance at $3.28. Across Tennessee average basis (cash price- nearby future price) weakened in all five regions. Overall basis for the week ranged from 56 under to 20 over the December futures contract with an average of 35 under at the end of the week. Ethanol production for the week ending September 26th was 881,000 barrels per day down 8,000 barrels per day from last week. Ending ethanol stocks were 18.828 million barrels up 236,000 barrels from last week. Nationally, the September 29th Crop Progress report estimated corn dented or beyond at 96% compared to 90% last week, 95% last year, and a 5-year average of 97%; corn mature at 60% compared to 42% last week, 60% last year, and a 5-year average of 70%; corn harvested at 12% compared to 7% last week, 11% last year, and a 5-year average of 23%; and corn condition at 74% good to excellent 7% poor to very poor. In Tennessee, the Crop Progress report estimated, corn dented or beyond at 99% compared to 98% last week, 100% last year, and a 5-year average of 100%; corn mature at 93% compared to 85% last week, 87% last year, and a 5-year average of 93%; corn harvested at 56% compared to 37% last week, 47% last year, and a 5-year average of 65%; and corn condition at 86% good to excellent and 2% poor to very poor. This week December 2014 corn futures prices traded between $3.18 and $3.26. Dec/Mar and Dec/Sep future spreads were 13 cents and 37 cents, respectively.

January cash forward contracts at elevators and barge points for the week averaged $3.10 with a range of $2.67 to $3.39. March 2015 corn futures closed at $3.36 up 1 cent from last week with support at $3.31 and resistance at $3.40. Corn net sales reported by exporters from September 19th to 25th were below expectations with net sales of 25.1 million bushels for the 2014/15 marketing year and 1.9 million bushels for the 2015/16 marketing year. Exports for the same time period were down from last week at 24.4 million bushels. Corn export sales and commitments were 33% 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 38%. September 2015 futures closed at $3.60. Downside price protection could be obtained by purchasing a $3.70 September 2015 Put Option costing 36 cents establishing a $3.34 futures floor.

Soybeans

November 2014 soybean futures closed at $9.12 up 2 cents for the week with support at $8.99 and resistance at $9.34. Nov/Dec soybean to corn price ratio was 2.82 at the end of the week. For the week, average soybean basis weakened at Memphis, Northwest, and Upper-middle Tennessee and strengthened or remain unchanged at Northwest Barge Points and Lower-middle Tennessee. Basis ranged from 46 under to 53 over the November futures contract at elevators and barge points. Average basis at the end of the week was 15 under the November futures contract. The Crop Progress report estimated soybeans dropping leaves at 64% compared to 45% last week, 69% last year, and a 5-year average of 71%; soybeans harvested at 10% compared to 3% last week, 10% last year, and a 5-year average of 17%; and soybean condition at 72% good to excellent 6% poor to very poor. In Tennessee, the Crop Progress report estimated soybeans dropping leaves at 58% compared to 42% last week, 36% last year, and a 5-year average of 62%; soybeans harvested at 11%, compared to 6% last week, 8% last year, and a 5-year average of 13%; and soybean condition at 83% good to excellent 3% poor to very poor. This week November 2014 soybean futures traded between $9.10 and $9.54. January cash forward contracts averaged $9.23 with a range of $8.79 to $9.83.

January 2015 soybean futures closed at $9.20 up 2 cents from last week with support at $9.07 and resistance at $9.42. Net sales reported by exporters were within expectations with net sales of 31.9 million bushels for the 2014/15 marketing year and 0.8 million bushels for the 2015/16 marketing year. Exports for the same period were the same as last week at 15.3 million bushels. Soybean export sales and commitments were 62% 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 55%. Nov/Jan and Nov/Nov future spreads were 8 cents and 22 cents. November 2015 futures closed at $9.34. Downside price protection could be achieved by purchasing a $9.40 November 2015 Put Option which would cost 69 cents and set an $8.71 futures floor.

Cotton

December 2014 cotton futures closed at 62.47 up 0.58 cents for the week with support at 61.22 and resistance at 63.34. Cotton adjusted world price (AWP) decreased 1.67 cents to 49.27 cents. The Crop Progress report estimated cotton bolls opening at 64% compared to 58% last week, 57% last year, and a 5-year average of 70%; cotton harvested at 10% compared to 8% last week, 7% last year, and a 5-year average of 13%; and cotton condition at 49% good to excellent 18% poor to very poor. In Tennessee, the Crop Progress report estimated cotton bolls opening at 75% compared to 61% last week, 35% last year, and a 5-year average of 71%; Cotton harvested at 2% compared to 1% last week, 4% last year, and a 5-year average of 12%; and cotton condition at 71% good to excellent 5% poor to very poor. December cotton futures traded between 61.01 and 62.87 cents this week. Downside price protection could be obtained by purchasing a 63 cent December 2014 Put Option costing 1.96 cents establishing a 61.04 cent futures floor.

March 2014 cotton futures closed at 61.1 down 0.36 cents for the week with support at 59.94 and resistance at 61.80. Net sales reported by exporters were up from last week at 226,400 bales for the 2014/15 marketing year and net sales of 7,700 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 77,600 bales. Cotton export sales were 60% 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 49%. Oct/Dec and Dec/Mar future spreads were -0.6 cents and -1.37 cents.

Wheat

December 2014 wheat futures closed at $4.85 up 11 cents from last week with support at $4.73 and resistance at $4.95. In Memphis, old crop cash wheat traded between $4.32 and $4.38 for the week. The Crop Progress report estimated spring wheat harvested at 94% compared to 86% last week, 95% last year, and a 5-year average of 96%. December wheat futures traded between $4.68 and $4.89 this week. December wheat to corn price ratio was 1.50. Dec/Mar and Dec/July future spreads were 12 cents and 28 cents.

March 2015 wheat futures closed at $4.97 up 10 cents from last week with support at $4.86 and resistance at $5.06. Net sales reported by exporters were above expectations at 27.2 million bushels for the 2014/15 marketing year. Exports for the same period were down from last week at 27.6 million bushels. Wheat export sales were 56% 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 53%. The Crop Progress report estimated winter wheat planted at 43% compared to 25% last week, 37% last year, and a 5-year average of 36%; and winter wheat emerged at 14% compared to 11% last year and a 5-year average of 12%. In Tennessee, winter wheat planting was estimated at 6% compared to 2% last week and a 5-year average of 4%. June/July 2015 cash forward contracts averaged $4.81 with a range of $4.49 to $5.03 at elevators and barge points. July 2015 wheat futures closed at $5.13. Downside price protection could be obtained by purchasing a $5.20 July 2015 Put Option costing 41 cents establishing a $4.79 futures floor.

Source : ukt.edu