Soybean Exports Are Positioned To Close The 2020/21 Marketing Year Very Strong
DR. AARON SMITH
KNOXVILLE, TENN.
Since the contract high of $6.38 on May 7, the December corn contract has been achieving lower highs and higher lows, thus consolidating the trading range. Highs since May 7 include, $6.28 ¼ on June 10; $6.11 ¼ on July 1; and $5.94 ¼ on August 12. Lows since May 7 include, $5.00 ¼ on May 26; $5.07 on July 9; and $5.29 ½ on August 23. The trend has focused the December contract trading range to $5.40 to $5.70. It is likely that the market will continue to trade in this range until updated yield information is released on September 10.
Soybean exports are positioned to close the 2020/21 marketing year very strong. As of August 19, total export commitments were 2.28 billion bushels. Of the total export commitments only 81 million bushels were recorded as outstanding sales. With less than two weeks of data left to report in the marketing year, it is likely that the USDA WASDE estimate of 2.26 billion bushels of exports will be achieved. For the next marketing year, sales are lower than the same time last year, 574 million bushels compared to 1.08 billion bushels.
The 2021/22 marketing year projection by the USDA is for US soybean exports to reach 2.055 billion bushels. There is still plenty of time for export sales to meet the USDA target. Given the low ending stocks and reduced production, due to the drought in the Northern Plains, it is likely that 2021/22 marketing year exports could be 200-300 million bushels lower than the 2020/21 marketing year.
Last week December cotton set a new contract high of 96.71 cents before retreating to 91.8 cents. Additional volatility should be expected as markets monitor yield projections, storm activity from the Gulf of Mexico, and export demand. Significant un-certainty remains with the US crop and the strength of export demand in 2022, so establishing a price floor or making addition-al sales on unpriced production with prices near 95 cents should be strongly considered.
Corn
Ethanol production for the week ending August 20 was 0.933 million barrels per day, down 40,000 from the previous week. Ethanol stocks were 21.223 million barrels, down 0.335 million barrels compared to last week. Corn net sales reported by exporters for August 13-19, 2021, were down compared to last week with net sales of 0.3 million bushels for the 2020/21 marketing year and 26.9 million bushels for the 2021/22 marketing year. Exports for the same period were down 8 percent from last week at 29.9 million bushels. Corn export sales and commitments were 100 percent of the USDA estimated total exports for the 2020/21 marketing year (September 1 to August 31) compared to the previous 5-year average of 104 percent. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest, West-Central, and Mississippi River and weakened at West and North-Central elevators and barge points.
Overall, basis for the week ranged from 25 over to 40 over, with an average of 31 over the September futures at elevators and barge points at the end of the week. September 2021 corn futures closed at $5.58, up 20 cents since last Friday. For the week, September 2021 corn futures traded be-tween $5.31 and $5.58. Sep/Dec and Sep/Mar future spreads were -5 and 2 cents.
Nationally, this week’s Crop Progress report estimated corn condition at 60 percent good-to-excellent and 14 percent poor-to-very poor; corn dough at 85 percent compared to 73 percent last week, 86 percent last year, and a 5-year average of 81 percent; corn dented at 41 percent compared to 22 percent last week, 41 percent last year, and a 5-year average of 38 percent; and corn mature at 4 percent compared to 5 percent last year and a 5-year average 4 percent. In Tennessee, corn condition was estimated at 76 percent good-to-excellent and 6 percent poor-to-very poor; corn dough at 95 percent compared to 89 percent last week, 93 percent last year, and a 5-year average of 96 percent; corn dent at 70 percent compared to 58 percent last week, 59 percent last year, and a 5-year average of 73 percent; and corn mature at 7 percent compared to 5 percent last year and a 5-year average of 16 percent. In Tennessee, new crop cash corn prices at elevators and barge points ranged from $5.15 to $5.65. December 2021 corn futures closed at $5.53, up 16 cents since last Friday. Downside price protection could be obtained by purchasing a $5.70 December 2021 Put Option costing 39 cents establishing a $5.31 futures floor. March 2022 corn futures closed at $5.60, up 16 cents since last Friday.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 2.8 million bushels for the 2020/21 marketing year and 64.3 million bushels for the 2021/22 marketing year. Exports for the same period were up 1 percent compared to last week at 9.6 million bushels. Soybean export sales and commitments were 101 percent of the USDA estimated total annual exports for the 2020/21 marketing year (September 1 to August 31), compared to the previous 5-year average of 104 percent. Across Tennessee, average soybean basis weakened or remained unchanged at West, Northwest, West-Central, North-Central, and Mississippi River elevators and barge points. Basis ranged from 31 under to 36 over the September futures contract. Average basis at the end of the week was 13 under the September futures contract. September 2021 soybean futures closed at $13.59, up 66 cents since last Friday. For the week, September 2021 soybean futures traded between $12.90 and $13.73. Sep/Nov and Sep/Jan future spreads were -32 and -36 cents. September 2021 soybean-to-corn price ratio was 2.38 at the end of the week.
Nationally, this week’s Crop Progress report estimated soybean condition at 56 percent good-to-excellent and 16 percent poor-to-very poor; soybeans blooming at 97 percent compared to 94 percent last week, 99 percent last year, and a 5-year average of 97 percent; soybeans setting pods at 88 percent compared to 81 percent last week, 91 percent last year, and a 5-year average of 87 percent and soybeans dropping leaves at 3 percent compared to 4 percent last year and a 5- year average of 3 percent. In Tennessee, soybean condition was estimated at 70 percent good-to-excellent and 8 percent poor-to-very poor; soybeans blooming at 95 percent compared to 91 percent last week, 95 percent last year, and a 5-year average of 96 percent; soybeans setting pods at 82 percent compared to 74 percent last week, 81 percent last year, and a 5-year average of 85 percent; and soybeans dropping leaves at 3 percent compared to 2 percent last year and a 5- year average of 1 percent. In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $12.68 to $13.50. November 2021 soybean futures closed at $13.23, up 33 cents since last Friday. Down-side price protection could be achieved by purchasing a $13.30 November 2021 Put Option which would cost 46 cents and set a $12.84 futures floor. Nov/Dec 2021 soybean-to-corn price ratio was 2.39 at the end of the week. January 2022 soybean futures closed at $13.27, up 32 cents since last Friday.
Cotton
Net sales reported by exporters were up compared to last week with net sales 245,100 bales for the 2021/22 marketing year and 67,900 bales for the 2022/23 marketing year. Exports for the same period were down 9 percent compared to last week at 201,700 bales. Upland cotton export sales were 39 percent of the USDA estimated total annual exports for the 2021/22 marketing year (August 1 to July 31), compared to the previous 5-year average of 48 percent. Delta upland cotton spot price quotes for August 26 were 93.61 cents/lb (41-4-34) and 95.86 cents/lb (31-3-35). Adjusted world price decreased 0.18 cents to 79.12 cents.
Nationally, this week’s Crop Progress report estimated cotton condition at 71 percent good-to-excellent and 6 percent poor-to-very poor; cotton squaring at 97 percent compared to 93 percent last week, 100 percent last year, and a 5-year average of 100 percent; cotton setting bolls at 79 percent compared to 75 percent last week, 87 percent last year, and a 5-year average of 89 percent; and cotton bolls opening at 14 percent compared to 10 percent last week, 21 percent last year, and a 5-year average of 19 percent. In Tennessee, cotton condition was estimated at 67 percent good-to-excellent and 13 percent poor-to-very poor; cotton squaring at 100 percent compared to 95 percent last week, 100 percent last year, and a 5-year average of 100 percent; cotton setting bolls at 93 percent compared to 75 percent last week, 94 percent last year, and a 5-year average of 97 percent; and cotton bolls opening at 4 percent compared to 3 percent last week, 2 percent last year, and a 5-year average of 9 percent. December 2021 cotton futures closed at 94.84 cents, up 1.74 cents since last Friday.
Downside price protection could be obtained by purchasing a 95 cent December 2021 Put Option costing 5.21 cents establishing an 89.79 cent futures floor. For the week, December 2021 cotton futures traded between 91.91 and 94.98 cents. Dec/Mar and Dec/May cotton futures spreads were -1.01 cents and -1.66 cents. March 2022 cotton futures closed at 93.83 cents, up 1.57 cents since last Friday. May 2022 cotton futures closed at 93.18 cents, up 1.49 cents since last Friday.
Wheat
Wheat net sales reported by exporters were down compared to last week with net sales of 4.3 million bushels for the 2021/22 marketing year – a marketing year low. Exports for the same period were up 14 percent from last week at 24.8 million bushels – a marketing year high. Wheat export sales were 39 percent of the USDA estimated total annual exports for the 2021/22 marketing year (June 1 to May 31), compared to the previous 5-year average of 44 percent. Nationally, the Crop Progress report estimated spring wheat harvested at 77 percent compared to 58 percent last week, 46 percent last year, and a 5-year average of 55 percent. In Tennessee, spot wheat prices at elevators and barge points ranged from $6.81 to $7.21. September 2021 wheat futures closed at $7.18, up 4 cents since last Friday. September 2021 wheat futures traded between $7.04 and $7.31 this week. September wheat-to-corn price ratio was 1.29. Sep/Dec and Sep/Jul future spreads were 14 and 0 cents. December wheat-to-corn futures price ratio was 1.32. December 2021 wheat futures closed at $7.32, up 4 cents since last Friday. New crop wheat cash prices at elevators and barge points ranged from $6.83 to $7.23. July 2022 wheat futures closed at $7.18, up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $7.20 July 2022 Put Option costing 63 cents establishing a $6.57 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee