AgWatch


Weather Poses No Concerns About Disrupted Planting

DR. AARON SMITH

KNOXVILLE, TENN.
   Corn, soybeans, and wheat were down; cotton was up for the week. Corn and wheat tumbled this week due to favorable weather conditions and increased projected global supplies. Weather forecasts for April-May provide no major concerns that would disrupt planting across most of the Corn Belt. The USDA estimated that over ¼ of the projected corn acres in Tennessee have been planted to date.
   November soybean prices have moved mostly sideways ($9.40 to $9.65) since the beginning of April after steep ($10.20 to $9.50) declines in March. Weekly soybean export sales have tapered off as foreign buyers have turned to the record South American crop as for supply. Planting conditions will be closely monitored by soybean markets as most believe that good planting conditions early in the season translate into increased corn acreage, potentially to the detriment of soybean acreage.
   The July cotton contract continues to flirt with the 80 cent range. For the last three months cotton continues to approach, and marginally exceed, 80 cents, however at present the market has been unable to sustain 80 cents for more than a couple of trading days. Three plus trading days above 80 cents could see a short term move into the 82-84 cent range. December cotton has traded between 72 and 76 cents since February 2nd.
   July wheat dropped below $4.20 on Friday before rebounding to $4.21 at the close of the day. Wheat prices will likely establish a bottom in the next 1-2 months; however a substantial rebound in prices remains unlikely due to abundant global supplies and price completion from the Black Sea Region.
   Corn
   May 2017 corn futures closed at $3.57 down 14 cents since last Friday. For the week, May 2017 corn futures traded between $3.54 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 6 under to 29 over the May futures contract with an average of 6 over at the end of the week. Corn net sales reported by exporters from April 7-13 were above expectations with net sales of 29.8 million bushels for the 2016/17 marketing year and 3.6 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 52.4 million bushels. Corn export sales and commitments were 89 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 86 percent. Ethanol production for the week ending April 14 was 0.993 million barrels per day down 7,000 from last week. Ethanol stocks were 23.034 million barrels, up 131,000 barrels. May/Jul and May/Dec future spreads were 6 and 25 cents, respectively. July 2017 corn futures closed at $3.63 down 15 cents since last Friday.
   Nationally, the Crop Progress report estimated corn planted at 6 percent compared to 3 percent last week, 12 percent last year, and a 5-year average of 9 percent. In Tennessee, the Crop Progress report estimated corn planted at 26 percent compared to 7 percent last week, 32 percent last year, and a 5-year average of 30 percent. In Tennessee, September 2017 cash forward contracts averaged $3.66 with a range of $3.37 to $3.91. December 2017 corn futures closed at $3.82 down 12 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2017 Put Option costing 32 cents establishing a $3.58 futures floor..
   Soybeans
   May 2017 soybean futures closed at $9.51 down 4 cents since last Friday. For the week, May 2017 soybean futures traded between $9.39 and $9.62. Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, and Northwest Tennessee and weakened at Upper-middle and Lower-middle Tennessee. Basis ranged from 36 under to 7 over the May futures contract at elevators and barge points. Average basis at the end of the week was 13 under the May futures contract. Net sales reported by exporters were below expectations with net sales of 7.8 million bushels for the 2016/17 marketing year and 0.5 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 15.8 million bushels. Soybean export sales and commitments were 101 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 95 percent. May soybean-to-corn futures price ratio was 2.66 at the end of the week. May/Jul and May/Nov future spreads were 9 cents and 8 cents, respectively. July 2017 soybean futures closed at $9.60 down 6 cents since last Friday.
   In Tennessee, October / November 2017 soybean cash contracts average $9.44 with a range of $9.14 to $9.64.  November/December 2017 soybean-to-corn price ratio was 2.51 at the end of the week. November 2017 soybean futures closed at $9.59 down 2 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2017 Put Option which would cost 50 cents and set a $9.10 futures floor.
   Cotton 
   May 2017 cotton futures closed at 78.99 cents up 3.37 cents since last Friday. For the week, May 2017 cotton futures traded between 75.18 and 80.67 cents. Delta upland cotton spot price quotes for April 19 were 75.82 cents/lb (41-4-34) and 77.07 cents/lb (31-3-35). Adjusted world price (AWP) increased 2.26 cents to 68.97 cents per pound. Net sales reported by exporters were down from last week with net sales of 226,300 bales for the 2016/17 marketing year and 117,100 bales for the 2017/18 marketing year. Exports for the same period were down from last week at 358,700 bales. Upland cotton export sales were 101 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 95 percent. July 2017 cotton futures closed at 79.33 up 2.79 cents since last Friday. May/Jul and May/Dec cotton futures spreads were 0.34 cents and -4.03 cents, respectively.
   Nationally, the Crop Progress report estimated cotton planted at 8 percent compared to 6 percent last week, 7 percent last year, and a 5-year average of 9 percent. December 2017 cotton futures closed at 74.96 up 1.54 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2017 Put Option costing 3.95 cents establishing a 71.05 cent futures floor.
   Wheat
   May 2017 wheat futures closed at $4.05 down 24 cents since last Friday. May 2017 wheat futures traded between $4.00 and $4.31 this week. May wheat-to-corn price ratio was 1.13.Wheat net sales reported by exporters were within expectations with net sales of 15.2 million bushels for the 2016/17 marketing year and 5.0 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 27.2 million bushels. Wheat export sales were 100 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 101 percent. In Memphis, old crop cash wheat ranged from $4.26 to $4.42. May/Jul and May/Sep future spreads were 16 cents and 30 cents, respectively.
   Nationally, the Crop Progress report estimated winter wheat condition at 54 percent good-to-excellent and 13 percent poor-to-very-poor; winter wheat headed at 19 percent compared to 9 percent last week, 11 percent last year, and a 5-year average of 13 percent; and spring wheat planted at 13 percent compared to 9 percent last week, 31 percent last year, and a 5-year average of 21 percent. In Tennessee, winter wheat condition was reported at 52 percent good-to-excellent and 15 percent poor-to-very poor; winter wheat jointed at 88 percent compared to 77 percent last week, 68 percent last year, and a 5-year average of 66 percent; and winter wheat headed at 34 percent compared to 7 percent last week and 2 percent last year. In Tennessee, June/July 2017 cash wheat ranged from $4.01 to $4.62. July 2017 wheat futures closed at $4.21 down 21 cents from last Friday. Downside price protection could be obtained by purchasing a $4.25 July 2017 Put Option costing 18 cents establishing a $4.07 futures floor. July 2017 wheat-to-corn price ratio was 1.16. September 2017 wheat futures closed at $4.35 down 20 cents since last Friday. ∆
   DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee

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