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
MidAmerica Farm Publications, Inc
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