December Corn Futures Fell 8 Cents After The July WASDE Report Was Released


omy due to COVID-19 or trade with China could facilitate a sharp rever- sal in cotton prices. Wheat was the big


winner for the week with futures contracts up 25- 42 cents. Similar to cot- ton, wheat’s gains for the day (9 cents) are not attributable


to


Corn and soybeans re- acted bearish and wheat and cotton mildly bull- ish. December corn fu- tures fell 8 cents after the report was released. US acreage and stocks adjustments were al- ready factored in to the market due to the re- lease of the Acreage and Grain Stocks reports last week. US ending stocks are now projected at 2.648 billion bushels or a stocks to use ratio of 18.1 percent – which is still very high. Next week it will be important for corn futures to hold last week’s gains other- wise a test of contract lows may occur. Changes to the soy-


T


bean balance sheet in- cluded increased crush of 15 million bushels and


increased US


stocks. Global ending stocks were projected 46 million bushels lower. November


soybeans


were moving lower be- fore the report release, however the report am- plified losses for the day closing down 10 ¾ cents. Soybeans will continue to be subject to swings as new export and COVID-19 informa- tion is revealed. Obtain- ing some downside protection against sub- stantial price declines should be considered. U.S. cotton production


and stocks were both re- vised lower this month. Yield was lowered 5 lb/acre amplifying the acreage revisions from last weeks planted acreage estimate. Daily gains in cotton future occurred before the WASDE report release. Cotton has now gained over 14 cents since the contract low on April 2 of 50.18 cents. If no 2020 production is priced,


producers


should consider locking in some production near 65 cents or at least es- tablishing a futures floor. Any major flare ups in the global econ-


DR. AARON SMITH KNOXVILLE, TENN.


he USDA has re- leased the July WASDE


report. the


WASDE report as most of the increase occurred prior to the report re- leased.


September


wheat is up almost 60 cents in the past 2 weeks. Weather con- cerns in Europe and Russia are driving prices higher. Corn Ethanol production for


the week ending July 3 was 0.914 million bar- rels per day, up 14,000 barrels from the previ- ous week. Ethanol stocks were 20.620 mil- lion barrels, up 0.456 million barrels com- pared to last week. Corn net sales reported by ex- porters for June 26-July 2 were up compared to last week with net sales of 23.6 million bushels for the 2019/20 market- ing year and 16.1 mil- lion bushels for the 2020/21 marketing year. Exports for the same time period were down 25 percent from last week at 42.7 million bushels. Corn export sales and commitments were 95 percent of the USDA estimated total exports for the 2019/20 marketing year (Septem- ber 1 to August 31) com- pared to the previous 5-year average of 101 percent. Across Ten- nessee, average corn basis (cash price-nearby futures price) strength- ened at Northwest Barge Points and Northwest Tennessee and weak- ened at Memphis and Upper-middle


Ten-


nessee. Overall, basis for the week ranged from 1 under to 27 over, with an average of 15 over the September fu- tures at elevators and barge points. September 2020 corn futures closed at $3.37, down 6 cents since last Friday. For the week, September 2020 corn futures traded between $3.36 and $3.55. Sep/Dec and Sep/Mar future spreads were 7 and 18 cents.


Nationally the Crop


Progress report esti- mated corn condition at 71 percent good-to- excellent and 6 percent poor-to-very poor; and corn silking at 10 per-


cent compared to 4 per- cent last week, 7 percent last year, and a 5-year average of 16 percent. In Tennessee,


the Crop


Progress report esti- mated corn condition at 73 percent good-to- excellent and 4 percent poor-to-very poor; corn silking at 43 percent compared to 17 percent last week, 62 percent last year, and a 5-year average of 64 percent; and corn dough at 6 percent compared to 14 percent last year and a 5-year average of 8 per- cent. In Tennessee, new crop cash corn contracts ranged from $3.27 to $3.65. December 2020 corn futures closed at $3.44, down 9 cents since last Friday. Down- side price protection could be obtained by purchasing a $3.50 De- cember 2020 Put Option costing 21 cents estab- lishing a $3.29 futures floor. March 2021 corn futures closed at $3.55, down 10 cents since last Friday. Soybeans Net sales reported by


exporters were up com- pared to last week with net sales of 35.0 million bushels for the 2019/20 marketing year and 14.0 million bushels for the 2020/21 marketing year. Exports for the same period were up 20 percent compared to last week at 17.2 million bushels. Soybean export sales and commitments were 102 percent of the USDA estimated total annual exports for the 2019/20 marketing year (September 1 to August 31), compared to the previous 5-year average of 102 percent. Average soybean basis weakened at Memphis and North- west Barge Points and strengthened at Upper- middle and Northwest Tennessee. Basis ranged from 8 under to 34 over the August futures con- tract at elevators and barge points. Average basis at the end of the week was 19 over the August futures contract. August 2020 soybean futures closed at $8.87, down 4 cents since last Friday. For the week, August 2020 soybean futures traded between $8.83


and $9.04.


Aug/Sep and Aug/Nov future spreads were -2 and 3 cents. September 2020 soybean futures closed at $8.85, down 5 cents since last Friday. August/September soy- bean-to-corn price ratio


was 2.63 at the end of the week. Nationally the Crop


Progress report esti- mated soybean condi- tion at 71 percent good-to-excellent and 5 percent


poor-to-very


poor; soybeans bloom- ing at 31 percent com- pared to 14 percent last week, 8 percent last year, and a 5-year aver- age of 24 percent; and soybeans setting pods at 2 percent compared to 1 percent last year and a 5-year average of 4 per- cent. In Tennessee, soy- bean condition was estimated at 73 percent good-to-excellent and 5 percent


poor-to-very


poor; soybeans planted at 98 percent compared to 92 percent last week, 96 percent last year, and a 5-year average of 95 percent; soybeans emerged at 91 percent


marketing year (August 1 to July 31), compared to the previous 5-year average of 108 percent. Delta upland cotton spot price quotes for July 9 were 61.84 cents/lb (41- 4-34)


and 64.09


cents/lb (31-3-35). Ad- justed World Price (AWP) increased 1.35 cents to 51.48 cents. Nationally, the Crop


Progress report esti- mated cotton condition at 43 percent good-to- excellent and 23 percent poor-to-very poor; cot- ton squaring at 47 per- cent compared to 35 percent last week, 44 percent last year, and a 5-year average of 48 per- cent; and cotton setting bolls at 13 percent com- pared to 9 percent last week, 11 percent last year, and a 5-year aver- age of 13 percent. In Tennessee, cotton con-


marketing year. Exports for the same time period were down 19 percent from last week at 15.1 million bushels. Wheat export sales were 30 percent of the USDA es- timated total annual ex- ports for the 2020/21 marketing year (June 1 to May 31), compared to the previous 5-year av- erage of 31 percent. Nationally the Crop


Progress report esti- mated winter wheat con- dition at 51 percent good-to-excellent and 17 percent


poor-to-very


poor; winter wheat har- vested at 56 percent compared to 41 percent last week, 42 percent last year, and a 5-year average of 55 percent; spring wheat condition at 70 percent good-to- excellent and 6 percent poor-to-very poor; and spring wheat headed at


Next week it will be important for corn futures to hold last week’s gains otherwise a test of contract lows may occur.


compared to 82 percent last week, 89 percent last year, and a 5-year average of 90 percent; soybeans blooming at 19 percent compared to 8 percent last week, 22 percent last year, and a 5-year average of 24 per- cent; and soybeans set- ting pods at 2 percent compared to 2 percent last year and a 5-year average of 3 percent. In Tennessee, new crop soybean cash contracts ranged from $8.81 to $9.28. Nov/Dec 2020 soybean-to-corn price ratio was 2.59 at the end of the week. Novem- ber 2020 soybean fu- tures closed at $8.90, down 6 cents since last Friday. Downside price protection could be achieved by purchasing a $9.00 November 2020 Put Option which would cost 34 cents and set an $8.66 futures floor. Cotton Net sales reported by


exporters were down compared to last week with net sales of 43,800 bales for the 2019/20 marketing year and 6,700 bales for the 2020/21 marketing year. Exports for the same time period were up 19 percent compared to last week at 329,300 bales. Upland cotton ex- port sales were 122 per- cent of


the USDA


estimated total annual exports for the 2019/20


dition was estimated at 62 percent good-to- excellent and 11 percent poor-to-very poor; cot- ton squaring at 52 per- cent compared to 29 percent last week, 51 percent last year, and a 5-year average of 60 per- cent; and cotton setting bolls at 16 percent com- pared to 3 percent last week, 5 percent last year, and a 5-year aver- age of 8 percent. Decem- ber 2020 cotton futures closed at 64.31, up 1.36 cents since last Friday. For the week, December 2020 cotton futures traded between 62.45 and


64.9 cents.


Dec/Mar and Dec/Dec cotton futures spreads were -0.27 cent and 0.52 cent. Downside price protection could be obtained by purchasing a 65 cent December 2020 Put Option costing 3.37 cents establishing a 61.63 cent futures floor. March 2021 cotton futures closed at 64.83 cents, up 1.16 cents since last Friday. De- cember 2021 cotton fu- tures closed at 64.83 cents, up 2.07 cents since last Friday. Wheat Wheat net sales re-


ported by exporters were down compared to last week with net sales of 12.0 million bushels for the 2020/21 marketing year and 2.8 million bushels for the 2021/22


63 percent compared to 36 percent last week, 47 percent last year, and a 5-year average of 68 per- cent. In Tennessee, win- ter wheat mature was estimated at 99 percent compared to 97 percent last week; and winter wheat harvest at 97 per- cent compared to 88 percent last week, 96 percent last year, and a 5-year average of 96 per- cent. In Tennessee, July 2020 cash contracts ranged from $4.77 to $5.44. September 2020 wheat futures closed at $5.34, up 42 cents since last Friday. September 2020 wheat


futures


traded between $4.87 and $5.39 this week. September wheat-to- corn price ratio was 1.58. Sep/Dec and Sep/Jul future spreads were 4 and 5 cents. De- cember 2020 wheat fu- tures closed at $5.39 up 40 cents since last Fri- day. December wheat- to-corn price ratio was 1.57. July 2021 wheat futures closed at $5.38, up 25 cents since last Friday. Downside price protection could be ob- tained by purchasing a $5.40 July 2021 Put Op- tion costing 39 cents es- tablishing


futures floor.


a $5.01 ∆


sistant Professor, Crop Marketing


University of Tennessee July 17, 2020 www.mafg.net / MidAmerica Farmer Grower • 3


DR. AARON SMITH: As- Specialist,


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