Weekly Crop Comments

Overview

Wheat, soybeans, and corn were up and cotton was down for the week. Drought conditions in the southern plains and Russia provided support for wheat prices. Soybean planting may be delayed in the western Corn Belt due to heavy rain anticipated in Nebraska and Iowa, however this will help corn and soybean acres that are already planted. Rain anticipated in West Texas and a May 22nd report indicating Chinese manufacturing shrank for the first time in seven months provided downward pressure on cotton prices.

Corn

Weekly exports exceeded expectations with net sales of 17.5 million bushels (4.1 million bushels for the 2012/13 marketing year and 13.4 million bushels for the 2013/14 year). Ethanol production increased 18,000 barrels per day to 875,000 barrels per day. Ethanol ending stocks shrank to 16.2 million barrels from 16.4 million barrels. Overall year to date ethanol production is 5% lower than th e previous year.

Corn planted reported May 20th was 71% compared to 28% last week, 95% last year, and a 5-year average of 79%. The 43% increase in planted acreage was a record for a 7-day period and exceed expectations. Weather related planting delays are still a concern in Wisconsin and Minnesota, however overall the progress for the past week was remarkable. Corn emerged was 19% compared to 5% last week, 73% last year, and 46% for the 5-year average. New crop sales were supported by higher than anticipated export sales. Producers should consider having 35% of their crop priced at this point in the season. Any additional rallies in prices should be looked at as an opportunity to increase the level of new crop priced. From a price risk management standpoint, a $5.70 September Put Option costing 36 cents would establish a $5.34 futures floor. Important for producers to consider when evaluating Put Options is when corn (or any commodity for that matter) will be available to the market. Delays in planting or maturity of the corn

crop can push back harvest dates thus causing producers to have a Put Option month available at a time when the crop is not available. For those producers with access to storage or in areas of the state where planting delays have occurred consideration should be given to purchasing December instead of September Puts. Higher September Futures prices are often attractive but careful consideration should be given to timing. A $5.40 December Put Option costing 43 cents would establish a $4.97 futures floor

Soybeans

Soybean cash prices continue to be very strong as supplies are tight. Weekly exports exceeded expectations, primarily from new crop sales, with net sales of 37.5 million bushels (6.7 million bushels for 2012/13 and 30.8 million bushels for 2013/14). Preliminary reports indicate that the U.S. may import 32 million bushels of soybeans for the current year, primarily from Canada and South America.

Soybean planting estimates as reported May 20th were 24% compared to 6% last week, 71% last year, and a 5-year average of 42%. Soybean planting in Tennessee is still 2-weeks behind the 5-year average. Soybeans emerged were 3% compared to 32% last year and a 5-year average of 14%. Having 30% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $12.60 November Put Option which would cost 71 cents and set an $11.89 futures floor.

Wheat

Weekly exports exceeded expectations at net sales of 35 million bushels (8.8 million bushels for 2012/13 and 26.2 million bushels for 2013/14).

Nationally, winter wheat heading as of May 20th was reported at 43% compared to 29% last week, 80% last year, and the 5-year average of 62%. Crop condition ratings for winter wheat as reported May 20th were 31% good to excellent compared to 32% last week and 58% last year. Poor to very poor was 41%, compared to 39% last week and 14% last year. Spring wheat planting reported May 20th was at 67% compared to 43% last week, 98% last year, and a 5-year average of 76%. Spring wheat emerged reported May 20th was 22% compared to 10% last week, 82% last year, and a 5-year average of 49%. Currently producers should consider having 35% of the 2013 crop priced. A $7.00 July Put Option would cost 21 cents and set a $6.79 futures floor.