Weather Will Continue To Provide The Primary Motivation For Price Direction

DR. AARON SMITH

KNOXVILLE, TENNESSEE

December corn futures continued their string of daily price declines from last week. The past six trading days have seen corn prices close lower. Over that time corn prices have dropped from $4.56 1⁄2 on May 22 to $4.38 1⁄2 on May 30. Improved soil moisture conditions for a large portion of the corn belt combined with planting progress (USDA estimated 87% planted as of May 27) have contributed to price declines. Long term weather forecasts still have a bias towards drier conditions in July and August, however forecasts outside of ten days have low accuracy. The December contract has price support at $4.30. A move below $4.30 would leave $4.00 as the next major level of support. Weather will continue to provide the primary motivation for price direction with export sales providing a more muted influence for now. 

Nearby wheat futures prices continue to languish below $5.50. Selling wheat below $5.50 will be an unattractive option for many producers, but what is the alternative? Deferred futures contracts (Dec $5.71 or Mar $5.91) offer higher prices but utilize storage and incur interest and other storage costs. Storing wheat until December or March will utilize bin space that may be better used for corn or soybeans harvested this fall. Additionally, storage is not without risk of quality deterioration. Lastly, carrying inventory in storage rather than immediate sales incurs an interest cost. $5.50 wheat incurs 4 cents per month in interest at an 8.5% interest rate ($5.50 x 8.5% / 12). This is in addition to any additional storage costs (additional handling, capital recovery, electricity/energy etc.). So, does it make sense to store wheat? Based on current information, it probably does not. Storing wheat until December would cost 20 cents interest expense, leaving almost nothing to cover additional storage costs and risk. Improvements in basis or futures prices could provide returns to storage but there is no certainty that futures prices will improve between now and December. Potential changes in basis will be a localized decision that farmers will need to evaluate based on historical movements and current production estimates. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened 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 10 over the July futures at elevators and barge points. Ethanol production for the week ending May 23 was 1.056 million barrels per day, up 20,000 compared to the previous week. Ethanol stocks were 24.281 million barrels, down 0.663 million barrels compared to last week. Corn net sales reported by exporters for May 16-22 were net sales of 36.1 million bushels for the 2024/25 marketing year and 1.2 million bushels for the 2025/26 marketing year. Exports for the same period were up 1% compared to last week at 62.9 million bushels. Corn export sales and commitments were 97% 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 97%. Cash prices ranged from $4.22 to $4.90 at elevators and barge points. July 2025 corn futures closed at $4.44, down 15 cents since last Friday. For the week, July 2025 corn futures traded between $4.43 and $4.63. September 2025 corn futures closed at $4.23, down 14 cents since last Friday. Jul/Sep and Jul/Dec future spreads were -21 and -6 cents. 

Nationally, the Crop Progress report estimated corn condition at 68% good-to-excellent and 5% poor-to-very poor; corn plant- ed at 87% compared to 78% last week, 81% last year, and a 5-year average of 85%; and corn emerged at 67% compared to 50% last week, 55% last year, and a 5-year average of 60%. In Tennessee, corn condition was estimated at 68% good-to-excellent and 8% poor-to-very poor; corn planted at 87% compared to 83% last week, 86% last year, and a 5-year average of 92%; and corn emerged at 76% compared to 65% last week, 71% last year, and a 5-year average of 76%. December 2025 corn futures closed at $4.38, down 12 cents since last Friday. Downside price protection could be obtained by purchasing a $4.40 December 2025 Put Option costing 27 cents establishing a $4.13 futures floor. This week, Oct/Nov cash contracts ranged from $4.13 to $4.60 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 1 over the July futures contract, with an average basis at the end of the week of 13 under. Soybean net weekly sales reported by exporters were net sales of 5.4 million bushels for the 2024/25 marketing year and 1.2 million bushels for the 2025/26 marketing year. Exports for the same period were down 17% compared to last week at 7.7 million bushels – a marketing year low. Soybean export sales and commitments were 96% 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 99%. Cash soybean prices at elevators and barge points ranged from $9.97 to $10.63. July 2025 soybean futures closed at $10.41, down 19 cents since last Friday. For the week, July 2025 soybean futures traded between $10.40 and $10.67. The July soybean-to-corn price ratio was 2.34 at the end of the week. August 2025 soybean futures closed at $10.36, down 20 cents since last Friday. Jul/Aug and Jul/Nov future spreads were -5 and -15 cents. 

Nationally, the Crop Progress report estimated soybeans planted at 76% compared to 66% last week, 66% last year, and a 5- year average of 68%; and soybeans emerged at 50% compared to 34% last week, 37% last year, and a 5-year average of 40%. In Tennessee, soybeans planted were estimated at 59% compared to 53% last week, 59% last year, and a 5-year average of 56%; and soybeans emerged at 44% compared to 34% last week, 43% last year, and a 5-year average of 36%. Oct/Nov cash prices at elevators and barge points were $9.97 to $10.68 for the week. November 2025 soybean futures closed at $10.26, down 24 cents since last Friday. Downside price protection could be achieved by purchasing a $10.40 November 2025 Put Option which would cost 51 cents and set a $9.89 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.34 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for May 29 were 63.09 cents/lb (41-4-34) and 65.09 cents/lb (31-3-35). Cotton net weekly sales reported by exporters were net sales of 118,700 bales for the 2024/25 marketing year and 13,800 bales for the 2025/26 marketing year. Exports for the same period were up 10% compared to last week at 275,400 bales. Upland cotton export sales were 110% 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 111%. July 2025 cotton futures closed at 65.06 cents, down 1.05 cents since last Friday. For the week, July 2025 cotton futures traded between 64.51 and 66.79 cents. Jul/Dec and Jul/Mar cotton futures spreads were 2.69 cents and 4.16 cents. 

Nationally, the Crop Progress report estimated cotton planted at 52% compared to 40% last week, 57% last year, and a 5-year average of 56%; and cotton emerged at 3% compared to 4% last year and a 5-year average of 4%. In Tennessee, cotton condition was estimated at 64% compared to 4%; and cotton planted at 67% compared to 49% last week, 66% last year, and a 5-year average of 70%. December 2025 cotton futures closed at 67.75 cents, down 0.88 cents since last Friday. Downside price protection could be obtained by purchasing a 68 cent December 2025 Put Option costing 3.53 cents establishing a 64.47 cent futures floor. March 2026 cotton futures closed at 68 cents, down 0.78 cents since last Friday. 

Wheat 

Wheat net weekly sales reported by exporters were net sales cancelations of 4.7 million bushels for the 2024/25 marketing year and net sales of 26.1 million bushels for the 2025/26 marketing year. Exports for the same period were up 14% compared to last week at 18.4 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 105%. Wheat cash prices at elevators and barge points ranged from $4.48 to $4.69. 

Nationally, the Crop Progress report estimated winter wheat condition at 50% good-to-excellent and 19% poor-to-very poor; winter wheat headed at 75% compared to 64% last week, 76% last year, and a 5-year average of 70%; spring wheat condition at 45% good-to-excellent and 18% poor-to-very poor; spring wheat planted was estimated at 87% compared to 82% last week, 87% last year, and a 5-year average of 80%; and spring wheat emerged at 60% compared to 45% last week, 58% last year, and a 5-year average of 53%. In Tennessee, winter wheat condition was estimated at 70% good-to-excellent and 6% poor-to-very poor; winter wheat headed at 94% compared to 91% last week, and 97% last year; winter wheat coloring at 43% compared to 76% last year and a 5-year average 61%; and winter wheat mature at 3%. July 2025 wheat futures closed at $5.34, down 8 cents since last Friday. July 2025 wheat futures traded between $5.26 and $5.44 this week. Downside price protection could be obtained by purchasing a $5.35 July 2025 Put Option costing 13 cents establishing a $5.22 futures floor. Jul/Sep and Jul/Dec future spreads were 14 and 37 cents. The July wheat-to-corn price ratio was 1.20. July cash contracts at elevators and barge points ranged from $4.93 to $5.37. September 2025 wheat futures closed at $5.48, down 10 cents since last Friday. December 2025 wheat futures closed at $5.71, down 9 cents since last Friday.   ∆

DR. AARON SMITH: University of Tennessee