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Weekly Crop Comments by Dr. Aaron Smith

Overview

Corn and soybeans were up; cotton and wheat were down for the week.

December corn futures broke through resistance at $3.65/bu, closing on Friday at $3.68 ½. Prices are now at the highest point since the end of March. In Iowa, 95% of the state is classified as abnormally dry by the US drought monitor, with 14% in extreme drought. Drought conditions around the rest of the Corn Belt are not as severe as Iowa but the drought affected area has grown substantially in the past month.

November soybeans have rallied $1.22 ¾ since August 10. The rally has been triggered by modest reductions in projected US production, but mostly by large export sales, principally to China. The current rally represents an excellent opportunity for producers to sell soybeans near $10.00. Above trend line yields at $10.00/bu plus government payments will provide profitable opportunities for many farms in Tennessee.

December cotton futures have pulled back after the six month high of 66.45 on August 25, 2020. U.S. cotton abandonment is currently projected at 25.7%. Despite reduced US production carry over into the next marketing year is projected at over 7 million bales which is prohibitive for prices to move higher. Strong export sales are likely the only path for cotton futures to move above 70 cents.

The USDA Crop Production report reduced estimated national corn yield 3.3 bu/acre to 178.5 bu/acre and Tennessee average yield was dropped 4 bu/acre to 174 bu/acre; national soybean yield was decreased 1.4 bu/acre to 51.9 bu/acre and Tennessee yield was increased 1 bu/acre to 50 bu/acre; and national upland cotton yield was decreased 30 lb/acre to 899 lb/acre and Tennessee yield was increased 57 lb/acre to 1,135 lb/acre.

Corn

Ethanol production for the week ending September 4 was 0.941 million barrels per day, up 19,000 barrels from the previous week. Ethanol stocks were 19.993 million barrels, down 0.889 million barrels compared to last week. Corn net sales reported by exporters for August 31-September 3 were down compared to last week with net sales of 71.8 million bushels for the 2020/21 marketing year. Exports for the same time period were up 93% from last week at 35.3 million bushels. A total of 49.2 million bushels in sales were carried over from the 2019/2020 marketing year, which ended August 31. Accumulated exports for the 2019/20 marketing year were 1.703 billion bushels, down 14 percent from the prior year’s total of 1.937 billion bushels. Corn export sales and commitments were 41% of the USDA estimated total exports for the 2020/21 marketing year (September 1 to August 31) compared to the previous 5-year average of 23%.

Corn

Dec 20

Change

Mar 21

Change

Price

$3.68

$0.10

$3.78

$0.10

Support

$3.61

$0.12

$3.71

$0.10

Resistance

$3.73

$0.12

$3.82

$0.11

20 Day MA

$3.52

$0.07

$3.64

$0.07

50 Day MA

$3.42

$0.02

$3.53

$0.02

100 Day MA

$3.39

$0.01

$3.51

$0.01

4-Week High

$3.69

$0.05

$3.79

$0.06

4-Week Low

$3.20

$0.00

$3.31

$0.00

Technical Trend

Up

=

Up

=

Nationally the Crop Progress report estimated corn condition at 61% good-to-excellent and 14% poor-to-very poor; corn dough at 97% compared to 94% last week, 87% last year, and a 5-year average of 94%; corn dented at 79% compared to 63% last week, 51% last year, and a 5-year average of 71%; and corn mature at 25% compared to 12% last week, 10% last year, and a 5-year average of 19%. In Tennessee, the Crop Progress report estimated corn condition at 71% good-to-excellent and 5% poor-to-very poor; corn dough at 100% compared to 97% last week, 99% last year, and a 5-year average of 99%; corn dented at 88% compared to 77% last week, 92% last year, and a 5-year average of 94%; corn mature at 45% compared to 22% last week, 57% last year, and a 5-year average of 62%; and corn harvested at 4% compared to 1% last week, 13% last year, and a 5-year average of 14%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Mississippi River, West-Central, North-Central, Northwest, and West elevators and barge point. Overall, basis for the week ranged from 25 under to 11 over, with an average of 7 under the December futures. December 2020 corn futures closed at $3.68, up 10 cents since last Friday. For the week, December 2020 corn futures traded between $3.56 and $3.69. Dec/Mar and Dec/Dec future spreads were 10 and 21 cents. Downside price protection could be obtained by purchasing a $3.70 December 2020 Put Option costing 15 cents establishing a $3.55 futures floor. In Tennessee, new crop cash corn contracts ranged from $3.33 to $3.93. March 2021 corn futures closed at $3.78, up 10 cents since last Friday. December 2021 corn futures closed at $3.89, up 5 cents since last Friday.

Soybeans

Net sales reported by exporters were up compared to last week with net sales of 116.2 million bushels for the 2020/21 marketing year. Exports for the same period were up 91% compared to last week at 61.6 million bushels. A total of 93.3 million bushels in sales were carried over from the 2019/2020 marketing year, which ended August 31.  Accumulated exports totaled 1.651 billion bushels, down 4 percent from the prior year’s total of 1.719 billion bushels.  Soybean export sales and commitments were 67% of the USDA estimated total annual exports for the 2020/21 marketing year (September 1 to August 31), compared to the previous 5-year average of 32%.

Soybeans

Nov 20

Change

Jan 21

Change

Price

$9.96

$0.28

$9.99

$0.26

Support

$9.66

$0.13

$9.71

$0.11

Resistance

$10.12

$0.38

$10.14

$0.34

20 Day MA

$9.41

$0.20

$9.47

$0.20

50 Day MA

$9.10

$0.09

$9.15

$0.08

100 Day MA

$8.85

$0.05

$8.89

$0.05

4-Week High

$9.98

$0.29

$10.00

$0.25

4-Week Low

$8.67

$0.02

$8.72

$0.01

Technical Trend

Up

=

Up

=

Nationally the Crop Progress report estimated soybean condition at 65% good-to-excellent and 10% poor-to-very poor; and soybeans dropping leaves at 20% compared to 8% last week, 7% last year, and a 5-year average of 16%. In Tennessee, soybean condition was estimated at 74% good-to-excellent and 6% poor-to-very poor; soybeans setting pods at 94% compared to 91% last week, 93% last year, and a 5-year average of 95%; and soybeans dropping leaves at 15% compared to 8% last week, 24% last year, and a 5-year average of 19%. Across Tennessee, average soybean basis weakened at North-Central and Northwest and strengthened at West-Central, West, and Mississippi River elevators and barge points. Basis ranged from 14 under to 30 over the November futures contract. Average basis at the end of the week was 9 over the November futures contract. November 2020 soybean futures closed at $9.96, up 28 cents since last Friday. For the week, November 2020 soybean futures traded between $9.60 and $9.98. Nov/Jan and Nov/Nov future spreads were 3 and -45 cents. November/December soybean-to-corn price ratio was 2.71 at the end of the week. Downside price protection could be achieved by purchasing a $10.00 November 2020 Put Option which would cost 28 cents and set a $9.72 futures floor. In Tennessee, new crop soybean cash contracts ranged from $9.59 to $10.13. January 2021 soybean futures closed at $9.99, up 26 cents since last Friday. November 2021 soybean futures closed at $9.51, up 1 cent since last Friday. Nov/Dec 2021 soybean-to-corn price ratio was 2.44 at the end of the week.

Cotton

Net sales reported by exporters were up compared to last week with net sales of 126,700 bales for the 2020/21 marketing year and 70,400 bales for the 2021/22 marketing year. Exports for the same time period were down 16% compared to last week at 230,500 bales. Upland cotton export sales were 51% of the USDA estimated total annual exports for the 2020/21 marketing year (August 1 to July 31), compared to the previous 5-year average of 49%. Delta upland cotton spot price quotes for September 10 were 59.46 cents/lb (41-4-34) and 61.71 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.67 cents to 49.77 cents.

Cotton

Dec 20

Change

Mar 21

Change

Price

64.81

-0.18

65.78

-0.19

Support

64.01

0.51

65.03

0.50

Resistance

66.01

0.47

66.95

0.14

20 Day MA

64.58

0.31

65.51

0.35

50 Day MA

63.54

0.30

64.33

0.33

100 Day MA

61.10

0.36

61.87

0.35

4-Week High

66.45

0.00

67.30

0.00

4-Week Low

62.11

0.10

63.08

0.18

Technical Trend

Down

-

Up

=

Nationally, the Crop Progress report estimated cotton condition at 45% good-to-excellent and 27% poor-to-very poor; cotton setting bolls at 96% compared to 93% last week, 98% last year, and a 5-year average of 97%; and cotton bolls opening at 37% compared to 29% last week, 41% last year, and a 5-year average of 34%. In Tennessee, cotton condition was estimated at 64% good-to-excellent and 19% poor-to-very poor; cotton setting bolls at 100% compared to 97% last week, 100% last year, and a 5-year average of 99%; and cotton bolls opening at 15% compared to 9% last week, 23% last year, and a 5-year average of 33%. December 2020 cotton futures closed at 64.81, down 0.18 cents since last Friday. For the week, December 2020 cotton futures traded between 63.4 and 65.61 cents. Dec/Mar and Dec/Dec cotton futures spreads were 0.97 cent and 0.39 cents. Downside price protection could be obtained by purchasing a 65 cent December 2020 Put Option costing 2.2 cents establishing a 62.8 cent futures floor. March 2021 cotton futures closed at 65.78 cents, down 0.19 cents since last Friday. December 2021 cotton futures closed at 65.2 cents, down 0.48 cents since last Friday.

Wheat

Wheat net sales reported by exporters were down compared to last week with net sales of 17.8 million bushels for the 2020/21 marketing year. Exports for the same time period were up 50% from last week at 26.7 million bushels. Wheat export sales were 49% of the USDA estimated total annual exports for the 2020/21 marketing year (June 1 to May 31), compared to the previous 5-year average of 49%.

Wheat

Dec 20

Change

Jul 21

Change

Price

$5.42

-$0.08

$5.57

-$0.04

Support

$5.32

-$0.12

$5.49

-$0.06

Resistance

$5.57

-$0.08

$5.69

-$0.05

20 Day MA

$5.39

$0.08

$5.52

$0.08

50 Day MA

$5.30

$0.04

$5.41

$0.04

100 Day MA

$5.25

$0.00

$5.35

$0.01

4-Week High

$5.68

$0.00

$5.76

$0.00

4-Week Low

$4.97

$0.00

$5.14

$0.00

Technical Trend

Up

=

Up

=

Nationally the Crop Progress report estimated spring wheat harvested at 82% compared to 69% last week, 66% last year, and a 5-year average of 87%. In Tennessee, September 2020 wheat cash contracts ranged from $5.43 to $5.58. December 2020 wheat futures closed at $5.42, down 8 cents since last Friday. December 2020 wheat futures traded between $5.39 and $5.56 this week. December wheat-to-corn price ratio was 1.47. Dec/Mar and Dec/Jul future spreads were 8 and 15 cents. March 21 wheat futures closed at $5.50, down 8 cents since last Friday. July 2021 wheat futures closed at $5.57, down 4 cents since last Friday. Downside price protection could be obtained by purchasing a $5.60 July 2021 Put Option costing 32 cents establishing a $5.28 futures floor.

Source : tennessee.edu