Weekly Crop Comments : Corn Planting Is Almost Complete

By Dr. Aaron Smith

Overview

Wheat and soybeans were down; cotton and corn were mixed for the week. Corn planting is almost complete. North Dakota, Wisconsin, and Minnesota made good progress this past week, however there still could be some acreage move to soybeans if weather does not cooperate. Harvest corn futures closed down for the 4th consecutive week, good weather and completion of planting in many areas were contributing factors. Nationally, soybean planting is ahead of the 5-year average as good conditions have allowed farmers to get in the fields in most areas. Old crop soybean supplies remain tight. Strong exports and limited cancelations of shipments have caused imports from South America to help fill demand domestically. Nearby soybean futures prices dropped almost a $1.00 from the high two weeks ago. The price spread between domestic soybeans and South American soybeans has narrowed substantially however there is still a premium for domestic soybeans. The June WASDE report will be released next week and many will be looking at how the USDA deals with ending stocks numbers. Cotton prices have appeared to establish a new futures trading range of 76 to 79 cents for harvest and 84 to 89 for the nearby. This is after the substantial drop in futures prices two weeks ago. We may still see a return to harvest futures prices above 80 cents this summer; however it will largely depend on weather conditions and Chinese policy. July wheat futures prices have declined over $1.10 in May. The situation in Russia and Ukraine has cooled substantially and there is little to no indication that any logistical or production problems have occurred on a large scale. The winter wheat crop in Tennessee is a week or two behind average but overall crop condition is excellent.

Corn

July 2014 corn futures closed at $4.59 down 6 cents from last week with support at $4.42 and resistance at $4.68. Across Tennessee basis (cash price- nearby future price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened in Upper-middle Tennessee. Overall basis for the week ranged from 6 under to 30 over the July futures contract with an average of 16 over at the end of the week. Corn net sales reported by exporters from May 23rd to 29th were above expectations at 21.7 million bushels for the 2013/14 marketing year and below expectations at 0.7 million bushels for the 2014/15 marketing year. Exports for the same time period were down from last week at 45.6 million bushels. Corn export sales and commitments are 96% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31) compared to a 5-year average of 95%. Ethanol production for the week ending May 30th was 938,000 barrels per day up 11,000 barrels per day. Ending ethanol stocks were 18.25 million barrels up 761,000 barrels. July/Sept and July/Dec future spreads were -3 cents and -2 cents, respectively.

September 2014 corn futures closed at $4.56 down 2 cents from last week with support at $4.37 and resistance at $4.66. December futures closed at $4.57. Nationally, the June 2nd Crop Progress report estimated corn planting at 95% compared to 88% last week, 90% last year, and a 5-year average of 94%; corn emerged at 80% compared to 60% last week, 71% last year and a 5-year average of 80%; and corn condition at 76% good to excellent 2% poor to very poor. In Tennessee, corn planted was estimated at 99% compared to 97% last week, 96% last year, and a 5-year average of 97%; corn emerged at 94% compared to 87% last week, 82% last year, and a 5-year average of 90%; and corn condition at 82% good to excellent and 2% poor to very poor. This week September and December 2014 corn futures prices traded between $4.42 and $4.61. September cash forward contracts at elevators and barge points for the week averaged $4.41 with a range of $4.12 to $4.79. Downside price protection could be obtained by purchasing a $4.60 September 2014 Put Option costing 26 cents establishing a $4.34 futures floor.

Soybeans

July 2014 soybean futures closed at $14.57 down 36 cents for the week with support at $14.42 and resistance at $14.96. Nearby soybean to corn price ratio was 3.17 at the end of the week. For the week, average soybean basis weakened at Memphis, Northwest Barge Points, and Northwest Tennessee and strengthened in Lower-middle and Upper-middle Tennessee. Basis ranged from 13 under to 40 over the July futures contract at elevators and barge points. Average basis at the end of the week was 11 over the July futures contract. Net sales reported by exporters from May 23rd to 29th were within expectations with net sales of 1.5 million bushels for the 2013/14 marketing year and below expectations for the 2014/15 marketing year with net sales of 8.4 million bushels. Exports for the same period were up from last week at 7.8 million bushels. Soybean export sales and commitments are 103% of the USDA estimated total annual exports for the 2013/14 marketing year (September 1 to August 31), compared to a 5-year average of 100%. August 2014 soybean futures were trading at $14.01. July/Aug and July/Nov future spreads were -56 cents and -239 cents.

November 2014 soybean futures closed at $12.18 down 15 cents from last week with support at $11.87 and resistance at $12.37. The Crop Progress report estimated soybean planting at 78% compared to 59% last week, 55% last year, and a 5-year average of 70%; and soybeans emerged at 50% compared to 25% last week, 29% last year, and a 5-year average of 45%. In Tennessee, soybeans planted were estimated at 54% compared to 39% last week, 34% last year, and a 5-year average of 47%; and soybeans emerged at 32% compared to 21% last week, 16% last year, and a 5-year average of 28%. This week November 2014 soybean futures traded between $12.01 and $12.34. Harvest soybean to corn price ratio was 2.67. November cash forward contracts averaged $12.18 with a range of $11.81 to $12.46. Downside price protection could be achieved by purchasing a $12.20 November 2014 Put Option which would cost 61 cents and set an $11.59 futures floor.

Wheat

July 2014 wheat futures closed at $6.18 down 9 cents for the week with support at $5.97 and resistance at $6.30. Net sales reported by exporters from May 23rd to 29th were within expectations at 0.07 million bushels for the 2013/14 marketing year and within expectations at 12.5 million bushels for the 2014/15 marketing year. Exports for the same period were down from last week at 18.1 million bushels. Wheat export sales are 99% of the USDA estimated total annual exports for the 2013/14 marketing year (June 1 to May 31), compared to a 5-year average of 104%. The Crop Progress report estimated winter wheat condition at 30% good to excellent and 44% poor to very poor; and winter wheat headed was 79% compared to 70% last week, 71% last year, and a 5-year average of 78%. In Tennessee, winter wheat condition was estimated at 82% good to excellent and 2% poor to very poor; winter wheat headed was estimated at 98% compared to 97% last week, 100% last year, and a 5-year average of 100%. July wheat futures traded between $6.03 and $6.26 this week. July wheat to corn price ratio was 1.35. In Tennessee, June/July cash forward contracts averaged $6.00 with a range of $5.56 to $6.36 at elevators and barge points. July/Sept and July/Jul future spreads were 12 cents and 69 cents.

September 2014 wheat futures closed at $6.30 down 9 cents from last week with support at $6.07 and resistance at $6.42. The Crop Progress report estimated spring wheat planted at 88% compared to 74% last week, 80% last year, and a 5-year average of 88%; and spring wheat emerged was 67% compared to 43% last week, 58% last year, and a 5-year average of 72%. September wheat to corn price ratio was 1.38. July 2015 wheat futures closed at $6.87. Downside price protection could be obtained by purchasing a $6.90 July 2015 Put Option costing 70 cents establishing a $6.20 futures floor.