It Is A Critical Time Of Year For Row Crop Producer Policy Decisions

DR. AARON SMITH

KNOXVILLE, TENNESSEE

The spread between old crop and new crop corn prices has changed dramatically. On October 1, the March-December corn futures price spread was -11 (March was 11 cents lower than December). On February 13 that spread flipped to +21, a 32-cent change in the spread. Strong U.S. export sales and adverse weather in South America, that could affect Argentina’s corn production and Brazil’s second crop corn plantings, have pushed old crop prices higher. New crop prices have advanced but are being held back by the potential for greater corn plantings in the U.S., due to a beneficial price spread compared to soybeans. Currently, November soybean-to- December corn price ratio is 2.22. The current price ratio may favor a 3-5 million acre increase in corn plantings in 2025, mostly at the expense of soybeans. 

It is a critical time of year for row crop producer policy decisions. ARC and PLC decisions will need to be made before March 15 for the 2025 crop. Farmers need to make sure to arrange a meeting or sign up online with USDA Farm Service Agency to ensure program participation. Payments are not guaranteed, but the program is free to enroll and may result in payments, for producers with base acres, if the national marketing year average price falls below the effective reference price or county revenue for 2025 falls below the county revenue guarantee for the specified base acres on a farm. For most Tennessee producers, based on current price projections ARC-co has a higher probability of payments for corn, soybean, and wheat base acres, while seed cotton base acres have a higher payment probability if enrolled in PLC. For ARC and PLC program payments are made on base acres, not panted. Signups will vary by farm and county, so it is important to look at your specific circumstances. 

In February Tennessee projected crop insurance prices are set for corn, cotton, and soybeans. The projected crop insurance price is the average daily close for the harvest contract from February 1-28. The projected price assists in setting the revenue guarantee for revenue protection crop insurance. As of February 14, the projected price for corn was $4.69, soybean was $10.58, and cotton was $0.69. With two weeks left in the price determination period crop insurance prices favor corn over soybeans and cotton. This will impact planted acreage, financial risk, and the starting point for 2025 production for all three crops.

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 15 under to 28 over, with an average of 13 over the March futures at elevators and barge points. Ethanol production for the week ending February 7 was 1.082 million barrels per day, down 30,000 compared to the previous week. Ethanol stocks were 25.692 million barrels, down 0.720 million barrels compared to last week. Corn net sales reported by exporters for January 31- February 6 were net sales of 64.9 million bushels for the 2024/25 marketing year and 13.8 million bushels for the 2025/26 marketing year. Exports for the same period were up less than 1% compared to last week at 53.3 million bushels. Corn export sales and commitments were 75% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to Au- gust 31) compared to the previous 5-year average of 72%. Cash prices ranged from $4.56 to $5.22 at elevators and barge points. March 2025 corn futures closed at $4.96, up 9 cents since last Friday. For the week, March 2025 corn futures traded between $4.81 and $4.99. May 2025 corn futures closed at $5.08, up 8 cents since last Friday.

Mar/May and Mar/Dec future spreads were 16 and 16 cents. December 2025 corn futures closed at $4.73, up 7 cents since last Friday. Downside price protection could be obtained by purchasing a $4.80 December 2025 Put Option costing 42 cents establishing a $4.38 futures floor. 

Soybeans

Across Tennessee the average soybean basis weakened or remained unchanged at West, Northwest, North-Central, West- Central, and Mississippi River elevators and barge points. Average basis ranged from 33 under to 12 over the March futures contract, with an average basis at the end of the week of 5 under. Soybean net weekly sales reported by exporters were net sales of 6.8 million bushels for the 2024/25 marketing year and 0.9 million bushels for the 2025/26 marketing year. Exports for the same period were down 8% compared to last week at 40.5 million bushels. Soybean export sales and commitments were 87% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31), compared to the previous 5-year average of 87%. Cash soybean prices at elevators and barge points ranged from $9.94 to $10.76. March 2025 soybean futures closed at $10.36, down 13 cents since last Friday. For the week, March 2025 soybean futures traded between $10.24 and $10.57. The March soybean-to-corn price ratio was 2.12 at the end of the week. May 2025 soybean futures closed at $10.52, down 13 cents since last Friday. 

Mar/May and Mar/Nov future spreads were 16 and 16 cents. November 2025 soybean futures closed at $10.52, down 5 cents since last Friday. Downside price protection could be achieved by purchasing a $10.60 November 2025 Put Option which would cost 65 cents and set a $9.95 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.22 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for February 13 were 64.84 cents/lb (41-4-34) and 66.83 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.81 cents to 53.99 cents. Cotton net weekly sales reported by exporters were net sales of 244,700 bales for the 2024/25 marketing year and 19,100 bales for the 2025/26 marketing year. Exports for the same period were up 18% compared to last week at 260,900 bales – a marketing year high. Upland cotton export sales were 89% of the USDA estimated total annual exports for the 2024/25 marketing year (August 1 to July 31), compared to the previous 5-year average of 90%. March 2025 cotton futures closed at 67.11 cents, up 1.48 cents since last Friday. For the week, March 2025 cotton futures traded between 65.73 and 67.97 cents. May 2025 cotton futures closed at 68.31 cents, up 1.49 cents since last Friday. 

Mar/May and Mar/Dec cotton futures spreads were 1.20 cents and 2.28 cents. December 2025 cotton futures closed at 69.39 cents, up 0.78 cents since last Friday. Downside price protection could be obtained by purchasing a 70 cent December 2025 Put Option costing 4.4 cents establishing a 65.6 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 20.9 million bushels for the 2024/25 marketing year and 1.4 million bushels for the 2025/26 marketing year. Exports for the same period were up 118% compared to last week at 21.2 million bushels. Wheat export sales were 84% of the USDA estimated total annual exports for the 2024/25 marketing year (June 1 to May 31), compared to the previous 5-year average of 92%. Wheat cash prices at elevators and barge points ranged from $5.34 to $5.44. March 2025 wheat futures closed at $6.00, up 18 cents since last Friday. The March wheat-to-corn price ratio was 1.21. March 2025 wheat futures traded between $5.71 and $6.02 this week. May 2025 wheat futures closed at $6.13, up 

18 cents since last Friday. 

Mar/May and Mar/Jul future spreads were 13 and 25 cents. July cash contracts at elevators and barge points ranged from $5.34 to $5.95. July 2025 wheat futures closed at $6.25, up 19 cents since last Friday. Downside price protection could be obtained by purchasing a $6.30 July 2025 Put Option costing 50 cents establishing a $5.80 futures floor.  ∆

DR. AARON SMITH: University of Tennessee