Ethanol Production For The Week Ending April 25 Was 1.040 Million Barrels Per Day

DR. AARON SMITH

KNOXVILLE, TENNESSEE

It may be worthwhile for farmers to consider an option fence on a portion of their projected 2025 corn production. As of May 2, a December $4.20 corn put option could be purchased for 16 cents and a $5.00 corn call option sold for 16 cents. This would result in no out of pocket premium expense to the farmer – the money paid for the put option premium would be offset by the premium received from sale of the call option. By purchasing a put option and selling a call option, a futures market price between $4.20 and $5.00 could be secured. If the December futures contract falls below $4.20, the put option would be in-the-money, creating a financial benefit to offset lower cash prices when corn is sold in the fall. If the December futures contract is above $5.00, the call would cost the farmer money, but this would be offset by gains in the cash market when the crop is sold in the fall. This strategy would require the farmer to meet margin requirements to maintain the option positions. 

This strategy may be attractive to farmers due to corn futures price uncertainty resulting from unknown trade outcomes and the potential for a large U.S. corn crop if weather cooperates. The USDA projected 95.3 million acres of corn to be planted in the March Prospective Planting report, however relative prices between spring planted crops and favorable planting conditions so far this spring could push corn acreage higher. Having a $4.20 futures price floor and a positive basis will provide many Tennessee producers with the opportunity to cover at least cash expenses (not necessarily total economic costs of production). The downside to this strategy is covering potential margin calls if prices rally, particularly if a widespread drought occurs in key corn producing areas. High interest rates necessitate sufficient liquidity should the futures market rally and additional margin needs to be posted to maintain positions. 

Marketing and price risk management decisions involve being fully aware of the advantages and disadvantages of any strategy and being comfortable with the potential outcomes. The goal at this point in the production year should be to strategically eliminate a portion of price risk while maintaining some upside potential in the market. 

Corn 

Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at West, Northwest, North-Central, West-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 25 under to 30 over, with an average of 6 over the July futures at elevators and barge points. Ethanol production for the week ending April 25 was 1.040 million barrels per day, up 7,000 compared to the previous week. Ethanol stocks were 25.389 million barrels, down 0.092 million barrels compared to last week. Corn net sales reported by exporters for April 18-24 were net sales of 39.9 million bushels for the 2024/25 marketing year and 9.6 million bushels for the 2025/26 marketing year. Exports for the same period were down 10% compared to last week at 62.9 million bushels. Corn export sales and commitments were 91% 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 94%. Cash prices ranged from $4.45 to $5.14 at elevators and barge points. July 2025 corn futures closed at $4.69, down 16 cents since last Friday. For the week, July 2025 corn futures traded between $4.68 and $4.85. September 2025 corn futures closed at $4.40, down 5 cents since last Friday. Jul/Sep and Jul/Dec future spreads were -29 and -19 cents. 

Nationally, the Crop Progress report estimated corn emerged at 5% compared to 2% last week, 6% last year, and a 5-year average of 4% and corn planted at 24% compared to 12% last week, 25% last year, and a 5-year average of 22%. In Tennessee, corn planted was estimated at 41% compared to 25% last week, 41% last year, and a 5-year average of 44% and corn emerged at 15% compared to 4% last week, 16% last year, and a 5-year average of 16%. December 2025 corn futures closed at $4.50, down 5 cents since last Friday. Downside price protection could be obtained by purchasing a $4.60 December 2025 Put Option costing 37 cents establishing a $4.23 futures floor. This week, Oct/Nov cash contracts ranged from $4.19 to $4.79 at elevators and barge points. 

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 40 under to 15 over the July futures contract, with an average basis at the end of the week of 16 under. Soybean net weekly sales reported by exporters were net sales of 15.7 million bushels for the 2024/25 marketing year and 1.8 million bushels for the 2025/26 marketing year. Exports for the same period were up 19% compared to last week at 21.6 million bushels. Soybean export sales and commitments were 95% 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 96%. Cash soybean prices at elevators and barge points ranged from $10.10 to $10.77. July 2025 soybean futures closed at $10.58, down 1 cent since last Friday. For the week, July 2025 soybean futures traded between $10.36 and $10.64. The July soybean-to-corn price ratio was 2.26 at the end of the week. August 2025 soybean futures closed at $10.51, down 2 cents since last Friday. Jul/Aug and Jul/Nov future spreads were -7 and -28 cents. 

Nationally, the Crop Progress report estimated soybeans planted at 18% compared to 8% last week, 17% last year, and a 5-year average of 12%. In Tennessee, soybeans planted were estimated at 25% compared to 15% last week, 26% last year, and a 5- year average of 14%. Oct/Nov cash prices at elevators and barge points were $9.84 to $10.43 for the week. November 2025 soybean futures closed at $10.30, down 5 cents since last Friday. Downside price protection could be achieved by purchasing a $10.40 November 2025 Put Option which would cost 60 cents and set a $9.80 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.29 at the end of the week. 

Cotton 

North Delta upland cotton spot price quotes for May 1 were 63.91 cents/lb (41-4-34) and 65.91 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.06 cents to 54.94 cents. Cotton net weekly sales reported by exporters were net sales of 108,400 bales for the 2024/25 marketing year and 32,900 bales for the 2025/26 marketing year. Exports for the same period were up 25% compared to last week at 366,000 bales. Upland cotton export sales were 108% 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 106%. July 2025 cotton futures closed at 68.41 cents, down 0.39 cents since last Friday. For the week, July 2025 cotton futures traded between 65.53 and 68.86 cents. October 2025 cotton futures closed at 69.91 cents, down 0.41 cents since last Friday. Jul/Oct and Jul/ Dec cotton futures spreads were 1.5 cents and 1.3 cents. 

Nationally, the Crop Progress report estimated cotton planted at 15% compared to 11% last week, 14% last year, and a 5-year average of 14%. In Tennessee, cotton planted was estimated at 6% compared to 2% last week, 4% last year, and a 5-year average of 3%. December 2025 cotton futures closed at 69.71 cents, down 0.26 cents since last Friday. Downside price protection could be obtained by purchasing a 70 cent December 2025 Put Option costing 4.16 cents establishing a 65.84 cent futures floor. 

Wheat 

Wheat net weekly sales reported by exporters were net sales of 2.6 million bushels for the 2024/25 marketing year and 8.8 million bushels for the 2025/26 marketing year. Exports for the same period were up 3% compared to last week at 18.1 million bushels. Wheat export sales were 97% 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 104%. Wheat cash prices at elevators and barge points ranged from $4.49 to $4.66. 

Nationally, the Crop Progress report estimated winter wheat condition at 49% good-to-excellent and 19% poor-to-very poor; winter wheat headed at 27% compared to 15% last week, 28% last year, and a 5-year average of 22%; spring wheat planted was estimated at 30% compared to 17% last week, 31% last year, and a 5-year average of 21%; and spring wheat emerged at 5% compared to 2% last week, 5% last year, and a 5-year average of 5%. In Tennessee, winter wheat condition was estimated at 68% good-to-excellent and 8% poor-to-very poor; winter wheat jointing at 89% compared to 80% last week, 91% last year, and a 5-year average of 91%; and winter wheat headed at 49% compared to 22% last week, 57% last year, and a 5-year average of 49%. July 2025 wheat futures closed at $5.43, down 2 cents since last Friday. July 2025 wheat futures traded between $5.23 and $5.46 this week. Downside price protection could be obtained by purchasing a $5.45 July 2025 Put Option costing 26 cents establishing a $5.19 futures floor. Jul/Sep and Jul/Dec future spreads were 13 and 35 cents. The July wheat-to-corn price ratio was 1.16. July cash contracts at elevators and barge points ranged from $4.81 to $5.28. September 2025 wheat futures closed at $5.56, down 3 cents since last Friday. December 2025 wheat futures closed at $5.78, down 4 cents since last Friday.  ∆

DR. AARON SMITH: University of Tennessee