Weekly Crop Comments

Overview

Corn and wheat were up; cotton and soybeans were mixed for the week. On Thursday the USDA released their monthly World Supply and Demand Estimates  (WASDE), highlights of the report were: corn – projected harvested acres were decreased by 400,000 to 89.1 million, beginning stocks were revised down 40 million bushels, and ending stocks were revised up 10 million bushels; soybeans – estimated production was increased 30 million bushels due to an increase in harvested acreage of 700,000 acres; cotton – projected harvested acreage was decreased 300,000 acres, projected yield was increased 31 lbs/acre, projected season average prices were adjusted down 3 cents/lb on both ends of the range to 70- 90 cents/lb, and beginning U.S. stocks and ending foreign stocks were increased 300,000 and 1.55 million bales, respectively; wheat – estimated yield was increased 1.6 bu/acre to 46.2 bu/acre, beginning and ending wheat stocks were revised down, and price was increased 20 cents on both ends of the price range to $6.45-7.75/bu. Due to high cash corn prices wheat is being used as a substitute feedstock for livestock in some areas which is lending support to wheat prices.

Corn

Weekly exports were above expectations with net sales of 41.3 million bushels (15.4 million bushels for the 2012/13 marketing year and 25.9 million bushels for the 2013/14 year). Exports were 10.5 million bushels. Last week ethanol production increased 18,000 barrels per day to 881,000 barrels per day. July 5th ending ethanol stocks increased to 15.7 million barrels from 15.4 million. Tight corn stocks continue to sup port cash prices. Concern over the late planting of corn acres should also lend some support to the September contract. Sep/Dec future spread was -$0.36.

Crop progress report released July 8th reported corn si lking at 6% compared to 3% last week, 46% last year, and 20% for the 5-year average. Corn condition was reported as 68% good to excellent compared to 67% last week and 40% last year; 8% poor to very poor the same as last week and 30% last year. In Tennessee corn silking or beyond was reported at 60% (5-year average 74%) and corn condition was 82% good to excellent and 4% poor to very poor. Having at least 40% of pro duction priced at this point is beneficial and producers should look for any rallies as an opportunity to price additional production. It is important for producers to evaluate all alternatives available when looking at potential marketing strategies and not over react to market volatility. From a price risk management standpoint a $5.50 September Put Option costing 25 cents would establish a $5.25 futures floor or a $5.10 December Put Option costing 34 cents would establish a $4.76 futures floor.

Soybeans

Weekly exports were below expectations for old crop and above expectations for new crop with net sales of 12.5 million bushels (a 2.6 million bushel reduction for 2012/13 and 15.1 million bushels in sales for 2013/14). Exports were 2.8 million bushels. T ight old crop stocks continue to push cash and nearby futures contract prices higher thus increasing the inverted futures spread. On Friday soybeans dropped 33 and 43 cents for November and August future contracts, respectively. Aug/Nov future spread was -$1.72.

Soybeans emerged was reported July 8th at 95% compared to 91% last week, 100% last year, and a 5-year average of 97%. Soybeans blooming were 10% compared to 42% last year, and a 5-year average of 24%. Soybean condition was reported as: 67% good to excellent unchanged from last week (45% last year); 7% poor to very poor the same as last week (27% last year). In Tennessee soybeans pla nted was reported at 92% (5-year average 99%), soybeans emerged were 78% (5-year average 92%), and crop condition was 80% good to excellent and 4% poor to very poor. Having 40% 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 53 cents and set a $12.07 futures floor.

Wheat

Weekly exports were above expectations with net sales of 54.1 million bushels for 2013/14 marketing year. Exports were 26.3 million bushels. Sep/Dec future spread was 12 cents.

Winter wheat harvest reported as of July 8th was reported at 57% compared to 43% last week, 78% last year, and a 5-year average of 64%. Crop condition ratings for winter wheat were: 34% good to excellent the same as last week and last week; 42% poor to very poor the same as last week. In Tennessee, winter wheat was reported as: 93% harvested compared to a 5-year average of 99%. Nationally, spring wheat emerged was 98% compared to 93% last week, 100% last year, and a 5-year average of 99%. Spring wheat headed was 45% (5-year average of 53%). Spring wheat condition was reported as: 72% good to excellent compared to 68% last week and 66% last year; 5% poor to very poor the same as last week (7% last year). A $6.85 September Put Option would cost 24 cents and set a $6.61 futures floor.