Estimated National Average Corn Yield Was Increased 1.7 Bu/Acre
DR. AARON SMITH
KNOXVILLE, TENN.
On Friday the USDA released updated supply and demand estimates for principal row crops. Estimated national average corn yield was increased 1.7 bu/acre to 176.3 bu/acre (Tennessee - 172 bu/acre; down 1 bu/acre). Harvested acres were also projected to increase 600,000 to 85.1 million acres. Increased exports and feed and residual use partially offset the production increase, however projected ending stocks were increased 166 million bushels. The national marketing year average price was revised down 30 cents to $5.45/bu, $1.00/bu higher than last year’s estimated average.
Soybean yield was estimated at 50.6 bu/acre, up 0.6 bu/acre compared to last month (Tennessee -48 bu/acre; down 1 bu/acre). Harvested acres were decreased 300,000 to 86.4 million acres. US marketing year ending stocks are now projected at 185 million bushels, up 30 million compared to the previous month. The marketing year average price is now projected at $12.90, down 80 cents compared to the August projection.
National upland cotton yield was projected up 96 lb/acre at 890 lb/ acre (Tennessee – up 18 lb/acre at 1,049 lb/acre). Harvested acres were projected to fall 440,000 to 9.92 million acres. We are at the mid-point of the storm season, so a lot can still change with US cotton production in terms of harvested acres, yield, and quality.
Increased export sales helped mitigate a portion of the increased production, however US ending stocks were projected to increase 700,0000 bales to 3.7 million bales.
The only major revision to the US wheat balance sheet was a decrease in imports of 10 million bushels. Internationally wheat stocks were increased for Canada, Australia, EU, and India, putting downward pressure on prices.
Overall, the report provided bearish revisions to USDA estimates, however the revisions were smaller than many analysts had projected so markets reacted neutral-to slightly positively.
Corn
Ethanol production for the week ending September 3 was 0.923 million barrels per day, up 18,000 from the previous week. Ethanol stocks were 20.39 million barrels, down 0.720 million compared to last week. Corn net sales reported by exporters for August 27-September 2, 2021, were up compared to last week with net sales of 35.7 million bushels for the 2021/22 marketing year. Exports for the same period were down 20 percent from last week at 16.7 million bushels. A total of 117.2 million bushels in sales were carried over from the 2020/2021 marketing year, which ended August 31. Total exports for the 2020/21 marketing year were reported at 2.672 billion bushels, up 55 percent compared to the previous marketing year. Corn export sales and commitments were 35 percent of the USDA estimated total exports for the 2021/22 marketing year (September 1 to August 31) compared to the previous 5-year average of 25 percent. Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at Northwest, West, West-Central, and North-Central; and strengthened at Mississippi River elevators and barge points. Overall, basis for the week ranged from 70 under to 40 under, with an average of 50 under the December futures at elevators and barge points at the end of the week. December 2021 corn futures closed at $5.17, down 7 cents since last Friday. Downside price protection could be obtained by purchasing a $5.20 December 2021 Put Option costing 25 cents establishing a $4.95 futures floor. For the week, December 2021 corn futures traded between $4.97 and $5.26. Dec/Mar and Dec/May future spreads were 9 and 14 cents. In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.50 to $4.76.
Nationally, this week’s Crop Progress report estimated corn condition at 59 percent good-to-excellent and 14 percent poor-to-very poor; corn dough at 95 percent compared to 91 percent last week, 97 percent last year, and a 5-year average of 94 percent; corn dented at 74 percent compared to 59 percent last week, 77 percent last year, and a 5-year average of 69 percent; and corn mature at 21 percent compared to 9 percent last week, 23 percent last year, and a 5-year average 19 percent. In Tennessee, corn condition was estimated at 75 percent good- to-excellent and 5 percent poor-to-very poor; corn dough at 100 percent compared to 98 percent last week, 100 percent last year, and a 5-year average of 99 percent; corn dented at 91 percent compared to 80 percent last week, 86 percent last year, and a 5-year average of 92 percent; corn mature at 38 percent compared to 25 percent last week, 42 percent last year, and a 5-year average of 59 percent; and corn harvested at 7 percent compared to 1 percent last week, 4 percent last year, and a 5-year average of 12 percent. March 2022 corn futures closed at $5.26, down 7 cents since last Friday. May 2022 corn futures closed at $5.31, down 7 cents since last Friday.
Soybeans
Net sales reported by exporters were down compared to last week with net sales of 54.1 million bushels for the 2021/22 marketing year. Exports for the same period were down 8 percent compared to last week at 10.9 million bushels. A total of 66.4 million bushels in sales were carried over from the 2020/2021 marketing year, which ended August 3. Total exports for the 2020/21 marketing year were 2.22 billion bushels, up 35 percent compared to the prior marketing year. Soybean export sales and commitments were 34 percent of the USDA estimated total annual exports for the 2021/22 marketing year (September 1 to August 31), compared to the previous 5-year average of 36 percent. Across Tennessee, average soybean basis weakened or remained unchanged at West, Northwest, West-Central, and North-Central; and strengthened at Mississippi River elevators and barge points. Basis ranged from 59 under to 35 under the November futures contract. Average basis at the end of the week was 47 under the November futures contract. November 2021 soybean futures closed at $12.86, down 6 cents since last Friday.
For the week, November 2021 soybean futures traded between $12.62 and $13.05. Nov/Jan and Nov/Mar future spreads were 8 and 13 cents. Downside price protection could be achieved by purchasing a $12.90 November 2021 Put Option which would cost 34 cents and set a $12.56 futures floor. Nov/Dec 2021 soybean-to-corn price ratio was 2.49 at the end of the week. In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $12.09 to $12.45.
Nationally, this week’s Crop Progress report estimated soybean condition at 57 percent good-to-excellent and 14 percent poor-to-very poor; soybeans setting pods at 96 percent compared to 93 percent last week, 98 percent last year, and a 5-year average of 96 percent; and soybeans dropping leaves at 18 percent compared to 9 percent last week; 18 percent last year, and a 5-year average of 15 percent. In Tennessee, soybean condition was estimated at 72 percent good-to- excellent and 7 percent poor-to-very poor; soybeans setting pods at 95 percent compared to 90 percent last week, 94 percent last year, and a 5-year average of 95 percent; and soybeans dropping leaves at 16 percent compared to 10 percent last week, 14 percent last year, and a 5-year average of 17 percent. January 2022 soybean futures closed at $12.94, down 7 cents since last Friday. March 2022 soybean futures closed at $12.99, down 8 cents since last Friday. March 2022 soybean- to-corn price ratio was 2.47 at the end of the week.
Cotton
Net sales reported by exporters were up compared to last week with net sales 453,000 bales for the 2021/22 marketing year and 19,500 bales for the 2022/23 marketing year. Exports for the same period were down 8 percent compared to last week at 155,300 bales. Upland cotton export sales were 43 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 50 percent. Delta upland cotton spot price quotes for September 9 were 92.81 cents/lb (41-4-34) and 95.06 cents/ lb (31-3-35). Adjusted world price increased 0.6 cents to 80.11 cents.
Nationally, this week’s Crop Progress report estimated cotton condition at 61 percent good-to-excellent and 7 percent poor-to-very poor; cotton setting bolls at 94 percent compared to 86 percent last week, 96 percent last year, and a 5-year average of 97 percent; and cotton bolls opening at 29 percent compared to 21 percent last week, 36 percent last year, and a 5-year average of 34 percent. In Tennessee, cotton condition was estimated at 63 percent good-to- excellent and 17 percent poor-to-very poor; cotton setting bolls at 100 percent compared to 96 percent last week, 100 percent last year, and a 5-year average of 100 percent; and cotton bolls opening at 7 percent compared to 5 percent last week, 14 percent last year, and a 5- year average of 29 percent. December 2021 cotton futures closed at 93.5 cents, down 0.52 cents since last Friday. Downside price protection could be obtained by purchasing a 94 cent December 2021 Put Option costing 4.68 cents establishing an 89.32 cent futures floor. For the week, December 2021 cotton futures traded between 92.01 and 95.17 cents. Dec/Mar and Dec/May cotton futures spreads were -0.77 cents and -1.19 cents. March 2022 cotton futures closed at 92.73 cents, down 0.53 cents since last Friday. May 2022 cotton futures closed at 92.31 cents, down 0.36 cents since last Friday.
Wheat
Wheat net sales reported by exporters were up compared to last week with net sales of 14.3 million bushels for the 2021/22 marketing year. Exports for the same period were down 7 percent from last week at 14.3 million bushels. Wheat export sales were 42 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 48 percent.
Nationally, the Crop Progress report estimated spring wheat harvested at 95 percent compared to 88 percent last week, 80 percent last year, and a 5-year average of 83 percent; and winter wheat planted at 5 percent compared to 5 percent last year and a 5-year average of 3 percent. In Tennessee, winter wheat planted was estimated at 1 percent. In Tennessee, spot wheat prices at elevators and barge points ranged from $6.12 to $6.80. December 2021 wheat futures closed at $6.88, down 38 cents since last Friday. December 2021 wheat futures traded between $6.77 and $7.33 this week. December wheat-to-corn price ratio was 1.33. Sep/Dec and Sep/Jul future spreads were 11 and 1 cents. March 2022 wheat futures closed at $6.99, down 38 cents since last Friday. December wheat-to-corn futures price ratio was 1.33. New crop wheat cash prices at elevators and barge points ranged from $6.51 to $6.80. July 2022 wheat futures closed at $6.89, down 26 cents since last Friday. Downside price protection could be obtained by purchasing a $6.90 July 2022 Put Option costing 54 cents establishing a $6.36 futures floor. ∆
DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee