Weekly Crop Comments

Overview

Cotton was up; wheat, soybeans, and corn were down for the week. The USDA World Supply and Demand Estimates (WASDE) were released June 12, 2013. Overall the report provided only minimal changes to previous estimates. U.S. season average farm price ranges were increased for all commodities: cotton $0.73-0.93 ($0.05 increase); corn $4.40-5.20 ($0.10 increase); wheat $6.25-7.55 ($0.10 increase); and soybeans $9.75- 11.75($0.25 increase). Average corn yield was adjusted down 1.5 bu/acre to 156.5 bu/acre; wheat yield was adjusted up 0.5 bu/acre to 44.6; non-Chinese cotton stocks decreased 3% and domestic cotton production and use were both down; soybean estimates remained consistent with the May WASDE report. Producers have many pricing options which they can utilize. Look for increased volatility as July and deferred contract spreads narrow. Establishing a floor price using Put Options is quoted, and used, as an example in this publication as one possible marketing alternative and should not be deemed as a strategy for all marketers. Advanced marketing alternatives should be entered into carefully by producers and consultation with a marketing specialist is recommended to fully understand the risks and benefits of each strategy.

Corn

Weekly exports were below expectations for old crop and new crop with net sales of 5.9 million bushels (3.2 million bushels for the 2012/13 marketing year and 2.7 million bushels for the 2013/14 year). Exports were 9.2 million bushels. Last week ethanol production decreased 1,000 barrels per day to 884,000 barrels per day. June 7th ending ethanol stocks decreased to 15.99 million barrels from 16.04 million. Jul/Sep and Jul/Dec future spreads were -84 cents and -122 cents, respectively.

Corn planted reported June 10th was 95% compared to 91% last week, 100% last year, and a 5-year average of 98%. Corn emerged was 85% compared to 74% last week, 99% last year , and 92% for the 5-year average. In Tennessee corn planted was 98% (5-year average 99%), corn emerged was 94% (5-year average 97%), and corn condition was 75% good to excellent 6% poor to very poo r. Producers should consider having 35% of their crop priced at this point. From a price risk management standpoint a $5.75 Sep tember Put Option cost ing 30 cents would establish a $5.45 futures floor or a $5.40 December Put Option costing 41 cents would establish a $4.99 futures floor.

Soybeans

Weekly exports were above expectations for old crop and within expectations for new crop with net sales of 17.7 million bushels (1.2 million bushels for 2012/13 and 16.5 million bushels for 2013/14). Exports were 4.7 million bushels. Low soybean supplies continue to contribute to volatility in price. Jul/Nov future spread was -$2.18.

Soybean planting estimates as reported June 10th were 71% compared to 57% last week, 97% last year, and a 5-year average of 84%. Soybeans emerged were 48% compared to 31% last week, 88% last year, and a 5-year average of 67%. In Tennessee soybeans planted were 47% (5-year average 67%) and soybeans emerged were 29% (5-year average 48%). Planting progress in the northern Corn Belt continues to be of concern, primarily in southeastern Minnesota and Wisconsin. Planting progress released on Monday should provide an indication of what can be anticipated for prevented planting numbers in wetter regions. Having 35% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $13.00 November Put Option which would cost 76 cents and set a $12.24 futures floor.

Wheat

Weekly exports were within expectations for old crop and new crop. Net sales for 2013/14 marketing year beginning June 1st were 15.7 million bushels. A total 43.6 million bushels were carried over from the 2012/13 marketing year. Exports for June 1-6 were 13.8 million bushels. Jul/Sep future spread was 8 cents.

Nationally, winter wheat heading as of June 10th was reported at 82% compared to 73% last week, 91% last year, and a 5-year average of 86%. Winter wheat harvest was reported for the first time this year at 5% compared to 37% last year and a 5-year average of 16%. Crop condition ratings for winter wheat were 31% good to excellent compared to 32% last week and 53% last year. Poor to very poor were 42%, compared to 43% last week and 17% last year. In Tennessee winter wheat was reported as 90% turning color (5-year average 97%), 11% ripe (5-year average 52%), 0% harvested (5-year average 24%), and crop condition was reported as 79% good to excellent and 5% poor to very poor. Nationally, spring wheat planting was at 87% compared to 80% last week, 100% last year, and a 5-year average of 96%. Spring wheat emerged was 71% compared to 61% last week, 100% last year, and a 5-year average of 89%. Spring wheat condition was reported as 62% good to excellent compared to 64% last week and 7% poor to very poor compared to 8% last week. Currently producers should consider having at least 45% of the 2013 crop priced and look to increase the amount priced if prices strengthen as we move into harvest. A $6.90 September Put Option would cost 30 cents and set a $6.60 futures floor.