Weekly Crop Comments

Overview

Soybeans were up; cotton, corn, and wheat were down for the week. Initial corn harvest yields for early planted corn in the mid-south were well above the 200 bu/acre for several locations. Later planted corn continues to be affected by weather concerns primarily in the north and western Corn Belt. What the average corn yield is for the U.S. remains to be determined.Weather and maturity concerns continue to provide support to soybean prices. September’s USDA World Agriculture Supply and Demand Estimates (WASDE) will be released next week. Many analysts are anticipating a reduction in estimated soybean yields from 42.6 to 41 bu/acre; with some predicting an adjustment to below 40 bushels per acre. Depending on where yields come in at, rationing of soybeans may come into play again for the upcoming marketing year which would provide additional price support. Cotton markets continue to be inverted (nearby futures contracts are higher than deferred contracts) indicating that markets have priced in uncertainty, primarily potential changes in Chinese reserve policy. Changes in Chinese cotton purchasing and reserve policies are unlikely to formally occur in the short term however almost all industry experts recognize the unsustainability of the current policy and as such markets have been inverted for some time.  Tennessee cotton producers should be cautious in production decisions for the upcoming year and ensure that at minimum downside protection in some form is obtained.

Corn

Weekly export net sales were below expectations with net sales of 8.5 million bushels (a sales reduction of 4.4 million bushels for 2012/13 marketing year and 12.9 million bushels in net sales for the 2013/14 year). Exports were 14.6 million bushels. Last week ethanol production decreased 1,000 barrels per day to 819,000 barrels per day. August 30th ending ethanol stocks remained the same as last week at16.2 million barrels. Sep/Dec and Dec/Mar futures spreads were -23 cents and 13 cents.

USDA crop progress report released September 3rd reported corn dough or beyond at 84% compared to 70% last week, 97% last year, and 89% for a 5-year average. Corn dented or beyond was reported as 42% compared to 23% last week, 84% last year, and a 5-year average of 61%. Corn mature was reported as 4% compared to 38% last year and a 5-year average of 17%. Corn condition was reported as 56% good to excellent compared to 59% last week and 22% last year; 16% poor to very poor compared to 14% last week and 52% last year. In Tennessee, corn dent or beyond was 91% (5-year average 94%); corn mature was 27% (5-year average 56%); corn silage harvested was 71% this week (5-year average 79%); corn harvest was 2% (5-year average 20%) and corn condition was 87% good to excellent and 2% poor to very poor. Downside price protection could be obtained by purchasing a $4.70 December Put Option costing 24 cents establishing a $4.46 futures floor.

Soybeans

Weekly export net sales were within expectations with net sales of 31.2 million bushels (net sales of 0.2 million bushels for 2012/13 and net sales of 31 million bushels in sales for 2013/14). Exports were 2.2 million bushels. Sep/Nov and Nov/Jan futures spreads were -70 cents and -2 cents.

Nationally, soybeans setting pods were reported at 92% compared to 84% last week, 98% last year, and a 5-year average of 96%. Soybean condition was reported as: 54% good to excellent compared to 58% last week and 30% last year; 15% poor to very poor compared to 13% last week and 37% last year. In Tennessee, soybeans blooming were 97% (5-year average 100%), soybeans setting pods were 90% (5-year average 96%), soybeans dropping leaves was 2% (5-year average 15%), and crop condition was 82% good to excellent and 5% poor to very poor. Downside price protection could be achieved by purchasing a $13.70 November Put Option which would cost 50 cents and set a $13.20 futures floor.

Wheat

Weekly exports were above expectations with net sales of 24.5 million bushels for 2013/14 marketing year. Exports were 35.1 million bushels. Sep/Dec and Dec/Mar futures spreads were 12 cents and 13 cents.

Nationally, spring wheat harvest was 64% compared to 42% last week, 93% last year, and a 5-year average of 69%. Spring wheat condition was reported as: 70% good to excellent compared to 67% last week; 6% poor to very poor compared to 7% last week. Downside price protection could be obtained by purchasing a $6.50 December Put Option costing 27 cents and establishing a $6.23 futures floor.