USDA Projects Soybean Exports At 2.09 Billion Bushels

DR. AARON SMITH

KNOXVILLE, TENN.

   The USDA projects Tennessee to have record corn production in 2021. 

   September estimates from the USDA Crop Production report are for 970,000 acres harvested and average yield of 172 bushels per acre, resulting in state production of 166.84 million bushels. This would exceed the previous record, set in 2019 of 161.07 million bushels. As a result of projected record production, access to farm and commercial storage may be limited in some counties/regions. Also, it is likely that basis will be weaker in the short term (September-November). 

   Strong in-state demand for corn will likely make weakened basis a short-term phenomenon and basis will strengthen as winter progresses.

   USDA projects soybean exports at 2.09 billion bushels for the 2021/22 marketing year, down 170 million bushels compared to last year. The projected decrease in soybean exports is partially reflective of tighter beginning stocks – 525 million bushels in 2020 versus 175 million bushels in 2021. If late season rains in the Northern Plains increased yield, exports will likely be able to absorb the increased production due to strong global demand. If USDA revises US production up in future WASDE reports, the likely corresponding increase in exports and domestic crush will likely keep 2021/22 ending stocks below 200 million bushels, which would be supportive for prices. China soybean import demand is forecast to be up 2 percent year-over-year.

   December cotton futures prices have been locked in a sideways trading range since August 19 – trading between 91.80 and 95.17. A breakout one direction or another seems likely over the next month. The two likely candidates to trigger a bullish breakout are reductions in US yield, due to storm/hurricane losses, and strong export sales. A bearish breakout would potentially be triggered by increased US production or a reduction in global demand. Reduced global demand could manifest through erosion of cotton market share by synthetic fibers (due to price competition) or reduced export purchases. Given the robust pace of cotton demand, over the past year, there is currently some concern that a portion of current demand has borrowed from future demand.

   Corn

   Ethanol production for the week ending September 10 was 0.937 million barrels per day, up 14,000 from the previous week. Ethanol stocks were 20.01 million barrels, down 0.380 million compared to last week. Corn net sales reported by exporters for September 3-9, 2021, were down compared to last week with net sales of 9.7 million bushels for the 2021/22 marketing year and 0.09 million bushels for the 2022/23 marketing year. Exports for the same period were down 55 percent from last week at 7.6 million bushels. Corn export sales and commitments were 39 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 26 percent. Nationally, this week’s Crop Progress report estimated corn condition at 58 percent good-to-excellent and 15 percent poor-to-very poor; corn dented at 87 percent compared to 74 percent last week, 88 percent last year, and a 5-year average of 81 percent; corn mature at 37 percent compared to 21 percent last week, 39 percent last year, and a 5-year average 31 percent; and corn harvested at 4 percent compared to 5 percent last year and a 5-year average of 5 percent. In Tennessee, corn condition was estimated at 79 percent good-to-excellent and 4 percent poor-to-very poor; corn dented at 95 percent compared to 91 percent last week, 95 percent last year, and a 5-year average of 96 percent; corn mature at 60 percent compared to 38 percent last week, 59 percent last year, and a 5-year average of 76 percent; and corn harvested at 15 percent compared to 7 percent last week, 11 percent last year, and a 5-year average of 29 percent. 

   Across Tennessee, average corn basis (cash price-nearby futures price) weakened or remained unchanged at West, North-Central, and Mississippi River; and strengthened at Northwest and West-Central elevators and barge points. Overall, basis for the week ranged from 20 under to 62 under, with an average of 34 under the December futures at elevators and barge points. December 2021 corn futures closed at $5.27, up 10 cents since last Friday. Downside price protection could be obtained by purchasing a $5.30 December 2021 Put Option costing 23 cents establishing a $5.07 futures floor. For the week, December 2021 corn futures traded between $5.07 and $5.37. In Tennessee, new crop cash corn prices at elevators and barge points ranged from $4.68 to $5.14. Dec/Mar and Dec/May future spreads were 7 and 11 cents. March 2022 corn futures closed at $5.34, up 7 cents since last Fri-day. May 2022 corn futures closed at $5.34, up 8 cents since last Friday.

   Soybeans

   Net sales reported by exporters were down compared to last week with net sales of 46.5 million bushels for the 2021/22 marketing year and 0.07 million bushels for the 2022/23 marketing year. Exports for the same period were down 18 percent compared to last week at 9.0 million bushels. Soybean export sales and commitments were 39 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 38 percent. Nationally, this week’s Crop Progress report estimated soybean condition at 57 percent good-to-excellent and 14 percent poor- to-very poor; and soybeans dropping leaves at 38 percent compared to 18 percent last week, 35 percent last year, and a 5-year average of 29 percent. In Tennessee, soybean condition was estimated at 75 percent good-to-excellent and 6 percent poor-to-very poor; soybeans dropping leaves at 26 percent compared to 16 percent last week, 23 percent last year, and a 5-year average of 31 percent; and soybeans harvested at 1 percent compared to 0 percent last week, 2 percent last year, and a 5- year average of 3 percent. Across Tennessee, average soybean basis weakened or remained unchanged at West, Northwest, West-Central, and Mississippi River; and strengthened at North-Central elevators and barge points. Basis ranged from 19 under to 57 under the November futures contract. Average basis at the end of the week was 41 under the November futures contract. November 2021 soybean futures closed at $12.84, down 2 cents since last Friday. For the week, November 2021 soybean futures traded between $12.76 and $13.08. Downside price protection could be achieved by purchasing a $12.90 November 2021 Put Option which would cost 31 cents and set a $12.59 futures floor. Nov/ Dec 2021 soybean-to-corn price ratio was 2.44 at the end of the week. In Tennessee, new crop cash soybean prices at elevators and barge points ranged from $12.23 to $12.70.

   Nov/Jan and Nov/Mar future spreads were 9 and 13 cents. January 2022 soybean futures closed at $12.93, down 1 cent since last Friday. March 2022 soybean futures closed at $12.97, down 2 cents since last Friday.  March 2022 soybean-to-corn price ratio was 2.43 at the end of the week.

   Cotton

   Net sales reported by exporters were down compared to last week with net sales 284,800 bales for the 2021/22 marketing year. Exports for the same period were up 53 percent compared to last week at 237,500 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 51 percent.  Delta upland cotton spot price quotes for September 16 were 91.66 cents/lb (41-4-34) and 93.91 cents/lb (31-3-35). Adjusted world price decreased 0.58 cents to 79.53 cents.

   Nationally, this week’s Crop Progress report estimated cotton condition at 64 percent good-to-excellent and 6 percent poor-to-very poor; cotton setting bolls at 96 percent compared to 94 percent last week, 99 percent last year, and a 5-year average of 99 percent; cotton bolls opening at 36 percent compared to 29 percent last week, 46 percent last year, and a 5-year average of 43 percent; and cotton harvested at 5 percent compared to 6 percent last year and a 5-year average of 8 percent. In Tennessee, cotton condition was estimated at 64 percent good-to-excellent and 17 percent poor-to-very poor; and cotton bolls opening at 11 percent compared to 7 percent last week, 27 percent last year, and a 5-year average of 46 percent. December 2021 cotton futures closed at 92.33 cents, down 1.17 cents since last Friday. Downside price protection could be obtained by purchasing a 93 cent December 2021 Put Option costing 3.95 cents establishing an 89.05 cent futures floor. For the week, December 2021 cotton futures traded between 92.13 and 93.97 cents. Dec/Mar and Dec/May cotton futures spreads were -0.74 cents and -1.09 cents. March 2022 cotton futures closed at 91.59 cents, down 1.14 cents since last Friday. May 2022 cotton futures closed at 91.24 cents, down 1.07 cents since last Friday.

   Wheat

Wheat net sales reported by exporters were up compared to last week with net sales of 22.7 million bushels for the 2021/22 marketing year – a marketing year high. Exports for the same period were up 32 percent from last week at 18.9 million bushels. Wheat export sales were 44 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 50 percent. In Tennessee, spot wheat prices at elevators and barge points ranged from $6.11 to $6.76. December 2021 wheat futures closed at $7.08, up 20 cents since last Friday. December 2021 wheat futures traded between $6.79 and $7.16 this week. December wheat-to-corn price ratio was 1.34. Dec/Mar and Dec/Jul future spreads were 11 and -5 cents. March 2022 wheat futures closed at $7.19, up 20 cents since last Friday. March wheat-to-corn futures price ratio was 1.35.

Nationally, the Crop Progress report estimated winter wheat planted at 12 percent compared to 5 percent last week, 9 percent last year, and a 5-year average of 8 percent. In Tennessee, winter wheat planted was estimated at 4 percent compared to 1 percent last week and 1 percent last year. New crop wheat cash prices at elevators and barge points ranged from $6.53 to $6.80. July 2022 wheat futures closed at $7.03, up 14 cents since last Friday. Downside price protection could be obtained by purchasing a $7.10 July 2022 Put Option costing 58 cents establishing a $6.52 futures floor. ∆

   DR. AARON SMITH: Assistant Professor, Crop Marketing Specialist, University of Tennessee

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