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USDA Agricultural Outlook Forum Announces 2017 Acreage Estimates
DR. AARON SMITH
KNOXVILLE, TENN.
At this week’s USDA Agricultural Outlook Forum acreage estimates for 2017 were: 88 million acres of soybeans – up 4.6 million from last year; 90 million acres of corn – down 4.0 million from last year; and wheat 46 million acres- down 4.2 million from last year.
For corn, 2017 estimates were: yield of 170.7 bu/acre (down 3.9 bu/acre from 2016); production at 14.065 billion bushels (down 1.083 billion bushels from 2016); and ending stocks at 2.215 billion bushels (down 105 million bushels 2016).
For soybeans, 2017 estimates were: yield of 48 bu/acre (down 4.1 bu/acre from 2016); production at 4.18 billion bushels (down 127 million bushels from 2016); and ending stocks at 420 million bushels (unchanged from 2016).
For cotton, 2017 estimates were: yield of 816 lbs/acre (down 39 lbs/acre from 2016); production at 17 million bales (up 40,000 from 2016); and ending stocks at 5.2 million bales (up 400,000 from 2016).
For wheat, 2017 estimates were: yield of 47.1 bu/acre (down 5.5 bu/acre from 2016); production at 1.837 billion bushels (down 473 million bushels from 2016); and ending stocks at 905 million bushels (down 234 million bushels from 2016).
The above are very early estimates and should be cautiously interpreted for the upcoming season.
In addition to commodity outlooks, the three primary discussion points at this week’s USDA Agricultural Outlook Form were trade, tax reform, and regulatory changes. Unfortunately, at present, there are no specific details that can be examined. However, in general, the tone was reduced regulations for farmers are forth coming, tax reform is a wild card, and trade has some warning signals for agriculture.
Corn
March 2017 corn futures closed at $3.65 down 3 cents since last Friday. For the week, March 2017 corn futures traded between $3.65 and $3.72. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Overall, basis for the week ranged from 5 under to 40 over the March futures contract with an average of 16 over at the end of the week. Corn net sales reported by exporters from February 10-16 were below expectations with net sales of 29.3 million bushels for the 2016/17 marketing year and 10.4 million bushels for the 2017/18 marketing year. Exports for the same time period were down from last week at 47.5 million bushels. Corn export sales and commitments were 76 percent of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31) compared to a 5-year average of 72 percent. Ethanol production for the week ending February 17 was 1.034 million barrels per day down 6,000 from last week. Ethanol stocks were 22.669 million barrels, up 169,000 barrels. Mar/May and Mar/Dec future spreads were 7 and 26 cents, respectively. May 2017 corn futures closed at $3.72 down 3 cents since last Friday.
In Tennessee, September 2017 cash forward contracts averaged $3.80 with a range of $3.66 to $4.01. December 2017 corn futures closed at $3.91 down 3 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2017 Put Option costing 37 cents establishing a $3.63 futures floor.
Soybeans
March 2017 soybean futures closed at $10.11 down 21 cents since last Friday. For the week, March 2017 soybean futures traded between $10.10 and $10.44. Average soybean basis weakened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Lower-middle Tennessee and strengthened at Upper-middle Tennessee. Basis ranged from 31 under to 13 over the March futures contract at elevators and barge points. Average basis at the end of the week was 5 under the March futures contract. Net sales reported by exporters were below expectations with net sales of 15.2 million bushels for the 2016/17 marketing year and 1.1 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 38.7 million bushels. Soybean export sales and commitments were 93 percent of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31), compared to a 5-year average of 89 percent. March soybean-to-corn futures price ratio was 2.77 at the end of the week. Mar/May and Mar/Nov future spreads were 11 cents and -7 cents, respectively. May 2017 soybean futures closed at $10.22 down 21 cents since last Friday.
In Tennessee, October / November 2017 soybean cash contracts average $10.20 with a range of $9.65 to $10.03. November/December 2017 soybean-to-corn price ratio was 2.57 at the end of the week. November 2017 soybean futures closed at $10.04 down 14 since last Friday. Downside price protection could be achieved by purchasing a $10.20 November 2017 Put Option which would cost 73 cents and set a $9.47 futures floor.
Cotton
March 2017 cotton futures closed at 75.02 up 1.54 cents since last Friday. For the week, March 2017 cotton futures traded between 73.37 and 75.39 cents. Delta upland cotton spot price quotes for February 23 were 73.60 cents/lb (41-4-34) and 74.85 cents/lb (31-3-35). Adjusted world price (AWP) decreased 1.61 cents to 65.58 cents per pound. Net sales reported by exporters were up from last week with net sales of 367,200 bales for the 2016/17 marketing year and 128,400 bales for the 2017/18 marketing year. Exports for the same period were down from last week at 340,600 bales. Upland cotton export sales were 90 percent of the USDA estimated total annual exports for the 2016/17 marketing year (August 1 to July 31), compared to a 5-year average of 87 percent. May 2017 cotton futures closed at 76.10 up 0.58 cents since last Friday. Mar/May and Mar/Dec cotton futures spreads were 1.08 cents and -1.13 cents, respectively.
December 2017 cotton futures closed at 73.89 up 0.13 cents since last Friday. Downside price protection could be obtained by purchasing a 74 cent December 2017 Put Option costing 4.55 cents establishing a 69.45 cent futures floor.
Wheat
March 2017 wheat futures closed at $4.38 down 3 cents since last Friday. March 2017 wheat futures traded between $4.35 and $4.44 this week. March wheat-to-corn price ratio was 1.20.Wheat net sales reported by exporters were above expectations with net sales of 16.7 million bushels for the 2016/17 marketing year and 9.4 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 23.1 million bushels. Wheat export sales were 88 percent of the USDA estimated total annual exports for the 2016/17 marketing year (June 1 to May 31), compared to a 5-year average of 90%. In Memphis, old crop cash wheat ranged from $4.44 to $4.49. Mar/May and Mar/Jul future spreads were 15 cents and 29 cents, respectively. May 2017 wheat futures closed at $4.53 down 2 cents since last Friday. May 2017 wheat-to-corn price ratio was 1.22.
In Tennessee, June/July 2017 cash wheat ranged from $4.44 to $4.94. July 2017 wheat futures closed at $4.67 down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $4.70 July 2017 Put Option costing 28 cents establishing a $4.42 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee
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