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USDA Acreage And Grain Stocks Reports Decreased Estimated Corn Planting Acreage 50,000 Acres
DR. AARON SMITH
KNOXVILLE, TENN.
Corn, cotton, soybeans, and wheat were down for the week. The USDA’s
Acreage and Grain Stocks reports released June 30th provided fuel for a
dramatic decrease in futures prices for corn, soybeans, cotton, and
wheat. Estimated corn planted acreage was decreased 50,000 acres
however stocks as of June 1st were increased 39 percent from 2013 to
3.85 billion bushels. The increase in corn stocks signals a greater
carry over into the next marketing year. Both new crop and old crop
soybeans received bearish information in the reports. The Acreage report
indicated an increase of 3.346 million acres of soybeans to a total of
84.839 million. This is an estimated 8.3 million acres more planted to
soybeans in 2014 than 2013. The combination of record acreage and
excellent growing conditions year-to-date could lead to record
production this fall. The Grain Stocks report estimated quarterly
soybean stocks at 405 million bushels as of June 1st, larger ending
stocks than most analysts anticipated. All wheat acreage planted was up
659,000 acres from the March Prospective Plantings report, exceeding
most expectations. Wheat ending stocks as of June 1st were close to what
many were anticipating. Cotton acreage was up 248,000 from the March
report and with improved conditions in Texas many are anticipating a
reduction in abandonment acres this fall. Summary and analysis of both
reports can be found here.
Corn
July 2014 corn futures closed at $4.17 down 26 cents from last week
with support at $4.13 and resistance at $4.21. Cash prices this week
were only available for Memphis due to the July 4th Holiday. Basis in
Memphis for the week ranged from 21 over to 30 over the July futures
contract. Basis at the end of the week was 21 over. Corn net sales
reported by exporters from June 20th to 26th were within expectations at
11.4 million bushels for the 2013/14 marketing year and above
expectations at 18.7 million bushels for the 2014/15 marketing year.
Exports for the same time period were down from last week at 35.8
million bushels. Corn export sales and commitments are 98 percent 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 percent.
Ethanol production for the week ending June 27th was 953,000 barrels per
day up 15,000 barrels per day. Ending ethanol stocks were 18.204
million barrels up 21,000 barrels. July/Sept and July/Dec future spreads
were -8 cents and -2 cents, respectively.
September 2014 corn futures closed at $4.09 down 33 cents from last
week with support at $4.05 and resistance at $4.26. December futures
closed at $4.15. Nationally, the June 30th Crop Progress report
estimated corn silking at 5 percent compared to 3 percent last year and a
5-year average of 9 percent and corn condition at 75 percent good to
excellent 5 percent poor to very poor. In Tennessee, corn silking was
estimated at 25 percent compared to 8 percent last week, 31 percent last
year, and a 5-year average of 51 percent and corn condition at 78
percent good to excellent and 5 percent poor to very poor. This week
September and December 2014 corn futures prices traded between $4.09 and
$4.44. September cash forward contracts at Memphis for the week
averaged $4.11 with a range of $4.07 to $4.14. Downside price protection
could be obtained by purchasing a $4.10 September 2014 Put Option
costing 14 cents establishing a $3.96 futures floor.
Soybeans
July 2014 soybean futures closed at $13.87 down 45 cents for the week
with support at $13.78 and resistance at $14.04. Nearby soybean to corn
price ratio was 3.33 at the end of the week. Basis in Memphis for the
week ranged from 12 over to 14 under the July futures contract. Net
sales reported by exporters were within expectations with net sales of
1.5 million bushels for the 2013/14 marketing year and within
expectations for the 2014/15 marketing year with net sales of 15.8
million bushels. Exports for the same period were up from last week at
4.6 million bushels. Soybean export sales and commitments are 105
percent 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 102 percent. August 2014 soybean futures were trading at $12.99.
July/Aug and July/Nov future spreads were -88 cents and -254 cents.
November 2014 soybean futures closed at $11.33 down 95 cents from
last week with support at $11.23 and resistance at $11.52. The Crop
Progress report estimated soybeans emerged at 94 percent compared to 90
percent last week, 90 percent last year, and a 5-year average of 94
percent; soybeans blooming at 10 percent compared to 3 percent last year
and a 5-year average of 10 percent; and soybean condition at 72 percent
good to excellent 5 percent poor to very poor. In Tennessee, soybeans
emerged were estimated at 71 percent compared to 62 percent last week,
65 percent last year, and a 5-year average of 81 percent; and soybean
condition at 79 percent good to excellent 3 percent poor to very poor.
This week November 2014 soybean futures traded between $11.32 and
$12.36. Harvest soybean to corn price ratio was 2.77. November cash
forward contracts in Memphis ranged between $11.59 and $11.75. Downside
price protection could be achieved by purchasing an $11.40 November 2014
Put Option which would cost 53 cents and set a $10.87 futures floor.
Cotton
July 2014 cotton futures closed at 76.22 down 4.67 cents for the week
with support at 73.09 and resistance at 77.46. Net sales reported by
exporters were up from last week at 34,900 bales of upland cotton for
the 2013/14 marketing year and 59,700 bales for the 2014/15 marketing
year. Exports for the same period were up from last week at 170,600
bales. Cotton export sales and commitments are 106 percent of the USDA
estimated total annual exports for the 2013/14 marketing year (August 1
to July 31), compared to a 5-year average of 108 percent. Oct 2014
cotton futures are trading at 71.79. July/Oct and July/Dec future
spreads were -4.43 cents and -4.16 cents.
December 2014 cotton futures closed at 72.06 down 2.79 cents for the
week with support at 70.97 and resistance at 73.17. The Crop Progress
report estimated cotton squaring at 36 percent compared to 25 percent
last week, 35 percent last year, and a 5-year average of 42 percent;
cotton setting bolls at 7 percent compared to 3 percent last week, 6
percent last year, and a 5-year average 10 percent; and cotton condition
at 53 percent good to excellent 13 percent poor to very poor. In
Tennessee, cotton squaring at 50 percent compared to 39 percent last
week, 27 percent last year and a 5-year average of 45 percent; cotton
setting bolls at 4 percent compared to 2 percent last week and a 5-year
average of 1 percent; and cotton condition at 68 percent good to
excellent 7 percent poor to very poor. December cotton futures traded
between 71.52 and 75.07 cents this week. Downside price protection could
be obtained by purchasing a 73 cent December 2014 Put Option costing
3.62 cents establishing a 69.38 cent futures floor.
Wheat
July 2014 wheat futures closed at $5.68 down 17 cents from last week
with support at $5.56 and resistance at $5.74. Net sales reported by
exporters were above expectations at 20.9 million bushels for the
2014/15 marketing year. Exports for the same period were up from last
week at 12.3 million bushels. Wheat export sales are 31 percent of the
USDA estimated total annual exports for the 2014/15 marketing year (June
1 to May 31), compared to a 5-year average of 25 percent. The Crop
Progress report estimated winter wheat harvested at 43 percent compared
to 33 percent last week, 40 percent last year, and a 5-year average of
48 percent; and winter wheat condition at 30 percent good to excellent
and 44 percent poor to very poor. In Tennessee, winter wheat condition
was estimated at 80 percent good to excellent and 2 percent poor to very
poor; winter wheat mature at 97 percent compared to 89 percent last
week, 97 percent last year, and a 5-year average of 99 percent; and
wheat harvested at 57 percent compared to 33 percent last week, 74
percent last year, and a 5-year average of 90 percent. July wheat
futures traded between $5.55 and $5.84 this week. July wheat to corn
price ratio was 1.36. In Memphis, June/July cash forward contracts
averaged $5.60 with a range of $5.54 to $5.65. July/Sept and July/July
future spreads were 11 cents and 84 cents.
September 2014 wheat futures closed at $5.79 down 14 cents from last
week with support at $5.65 and resistance at $5.82. The Crop Progress
report estimated spring wheat headed at 26 percent compared to 10
percent last week, 16 percent last year, and a 5-year average of 29
percent; and spring wheat condition at 70 percent good to excellent 5
percent poor to very poor. September wheat to corn price ratio was 1.42.
July 2015 wheat futures closed at $6.52. Downside price protection
could be obtained by purchasing a $6.60 July 2015 Put Option costing 55
cents establishing a $6.05 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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