Weekly Crop Comments : Corn, Cotton, Soybeans, And Wheat Were Down

By Dr. Aaron Smith

Overview

Corn, cotton, soybeans, and wheat were down for the week. The July WASDE report, released today, pushed markets lower across the board. For corn, planted and harvested acreage were reduced 100,000 and 500,000 acres, respectively. Average yield was left unchanged from the June report. Many were expecting an increase in yield due to the very favorable growing conditions so far this year. Carryover from the 2013/14 marketing year was increased 100 million bushels, primarily due to lower feed and residual use as indicated on the June 30th Stocks Report. 2014/15 domestic and foreign ending stocks were increased 75 and 138 million bushels, respectively. For soybeans, acreage adjustments from the June 30th Acreage report were included on the balance sheet resulting in increased production of 165 million bushels. Reduced use from 2013/14 resulted in beginning stocks for 2014/15 being increased 15 million bushels to 140 million bushels. Projected ending stocks for the upcoming marketing year are now estimated at 415 million bushels, nearly 3 times greater than the current year ending stocks. Cotton production was raised 1.5 million bales largely due to reduced abandonment due to favorable weather conditions primarily in Texas. Exports were raised due to projected lower prices. U.S. ending stocks for the 2014/15 marketing year are projected at 5.2 million bales their highest level since 2008/2009. Internationally, foreign stocks were increased over 2 million bales with a 1.5 million increase in projected ending stocks for China leading the way. Chinese stocks to use are now estimated at over 170% for the upcoming marketing year. Wheat also received bearish news today as domestic production was increased 50 million bushels due to higher anticipated yields and harvested acreage. Global ending stocks for 2014/15 are just less than 7 billion bushels due to increased production and reduced use. Additional details on the July WASDE Report available here.

Corn

September 2014 corn futures closed at $3.78 down 31 cents from last week with support at $3.68 and resistance at $3.93. Across Tennessee basis (cash price- nearby future price) weakened at Memphis, Northwest Barge Points, Lower-middle, and Upper-middle Tennessee and strengthened in Northwest Tennessee. Overall basis for the week ranged from 15 under to 18 over the July futures contract with an average of 2 over at the end of the week. July corn futures closed at $3.99. Corn net sales reported by exporters from June 27th to July 3rd were within expectations at 14.3 million bushels for the 2013/14 marketing year and within expectations at 15 million bushels for the 2014/15 marketing year. Exports for the same time period were up from last week at 47.5 million bushels. Corn export sales and commitments are 99% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31) compared to a 5-year average of 101%. Ethanol production for the week ending July 4th was 927,000 barrels per day down 26,000 barrels per day. Ending ethanol stocks were 18.286 million barrels up 82,000 barrels. Nationally, the July 7th Crop Progress report estimated corn silking at 15% compared to 5% last week, 6% last year, and a 5-year average of 18% and corn condition at 75% good to excellent 5% poor to very poor. In Tennessee, corn silking was estimated at 56% compared to 25% last week, 56% last year, and a 5-year average of 71% and corn condition at 79% good to excellent and 5% poor to very poor. This week September and December 2014 corn futures prices traded between $3.75 and $4.10. September cash forward contracts at elevators and barge points for the week averaged $3.80 with a range of $3.27 to $4.06.Sep/Dec and Sep/Mar future spreads were 6 cents and 18 cents, respectively.

December 2014 corn futures closed at $3.84 down 31 cents from last week with support at $3.75 and resistance at $3.99. March futures closed at $3.96. Downside price protection could be obtained by purchasing a $4.20 September 2015 Put Option costing 37 cents establishing a $3.83 futures floor.

Soybeans

August 2014 soybean futures closed at $11.95 down 104 cents for the week with support at $11.18 and resistance at $12.76. Nearby soybean to corn price ratio was 3.16 at the end of the week. For the week, average soybean basis weakened in Memphis, Northwest Barge Points, Upper-middle, and Lower-middle Tennessee and strengthened in Northwest Tennessee. Basis ranged from 77 under to 36 over the July futures contract at elevators and barge points. Average basis at the end of the week was 30 under the July futures contract. July futures closed at $12.95. Net sales reported by exporters were within expectations with net sales of 2.1 million bushels for the 2013/14 marketing year and above expectations for the 2014/15 marketing year with net sales of 19.3 million bushels. Exports for the same period were down from last week at 3.3 million bushels. Soybean export sales and commitments are 105% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31), compared to a 5-year average of 102%. August 2014 soybean futures were trading at $10.99. Aug/Sep and Aug/Nov future spreads were -96 cents and -120 cents.

November 2014 soybean futures closed at $10.75 down 58 cents from last week with support at $10.47 and resistance at $11.10. The Crop Progress report estimated soybeans emerged at 98% compared to 94% last week, 94% last year, and a 5-year average of 97%; soybeans blooming at 24% compared to 10% last week, 9% last year, and a 5-year average of 21%; and soybean condition at 72% good to excellent 5% poor to very poor. In Tennessee, soybeans emerged were estimated at 78% compared to 71% last week, 76% last year, and a 5-year average of 90%; soybeans blooming at 18% compared to 9% last week, 4% last year, and a 5-year average of 24%; and soybean condition at 80% good to excellent 3% poor to very poor. This week November 2014 soybean futures traded between $10.65 and $11.28. Harvest soybean to corn price ratio was 2.80. November cash forward contracts averaged $11.09 with a range of $10.63 to $11.90. Downside price protection could be achieved by purchasing a $10.80 November 2014 Put Option which would cost 49 cents and set a $10.31 futures floor.

Cotton
 
December 2014 cotton futures closed at 68.12 down 3.94 cents for the week with support at 66.11 and resistance at 70.11. Net sales reported by exporters were up from last week at 67,600 bales of upland cotton for the 2013/14 marketing year and 203,200 bales for the 2014/15 marketing year. Exports for the same period were down from last week at 136,400 bales. Cotton export sales and commitments are 106% of the USDA estimated total annual exports for the 2013/14 marketing year (August 1 to July 31), compared to a 5-year average of 109%. Oct 2014 cotton futures are trading at 68.74. The Crop Progress report estimated cotton squaring at 53% compared to 36% last week, 49% last year, and a 5-year average of 60%; cotton setting bolls at 12% compared to 7% last week, 9% last year, and a 5-year average 16%; and cotton condition at 55% good to excellent 13% poor to very poor. In Tennessee, cotton squaring was estimated at 62% compared to 50% last week, 38% last year, and a 5-year average of 63%; cotton setting bolls at 8% compared to 4% last week and a 5-year average of 6%; and cotton condition at 69% good to excellent 7% poor to very poor. December cotton futures traded between 67.10 and 72.06 cents this week. Downside price protection could be obtained by purchasing a 69 cent December 2014 Put Option costing 3.24 cents establishing a 65.76 cent futures floor.

March 2014 cotton futures closed at 69.04 down 3.98 cents for the week with support at 67.13 and resistance at 70.79. Cotton adjusted world price (AWP) decreased 2.68 cents to 64.34 cents. Oct/Dec and Dec/Mar future spreads were -0.62 cents and 0.92 cents.

Wheat

September 2014 wheat futures closed at $5.26 down 53 cents from last week with support at $5.08 and resistance at $5.58. Net sales reported by exporters were below expectations at 12.4 million bushels for the 2014/15 marketing year. Exports for the same period were up from last week at 14.5 million bushels. Wheat export sales are 32% 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 28%. The Crop Progress report estimated winter wheat harvested at 57% compared to 43% last week, 55% last year, and a 5-year average of 60%; and winter wheat condition at 31% good to excellent and 44% poor to very poor. In Tennessee, winter wheat condition was estimated at 79% good to excellent and 3% poor to very poor; winter wheat mature at 99% compared to 97% last week, 98% last year, and a 5-year average of 100%; and wheat harvested at 57% compared to 33% last week, 74% last year, and a 5-year average of 90%. September wheat futures traded between $5.25 and $5.77 this week. September wheat to corn price ratio was 1.36. In Tennessee, July cash forward contracts averaged $5.29 with a range of $4.67 to $5.57 at elevators and barge points. Sep/Dec and Sep/July future spreads were 21 cents and 70 cents.

December 2014 wheat futures closed at $5.47 down 53 cents from last week with support at $5.31 and resistance at $5.79. The Crop Progress report estimated spring wheat headed at 47% compared to 26% last week, 41% last year, and a 5-year average of 47%; and spring wheat condition at 70% good to excellent 5% poor to very poor. December wheat to corn price ratio was 1.42. July 2015 wheat futures closed at $5.96. Downside price protection could be obtained by purchasing a $6.00 July 2015 Put Option costing 46 cents establishing a $5.54 futures floor.

Source : uky.edu