November USDA WASDE Report Fueled A Sharp Rally In Corn And Soybean Futures


corn and soybean fu- tures. Both national av- erage


yields were T


DR. AARON SMITH KNOXVILLE, TENN.


he November USDA WASDE report fu- eled a sharp rally in


decreased compared to last month. Corn de- creased 2.6 bpa, to 175.8 bpa and soybeans de- creased 1.2 bpa to 50.7 bpa. The other major re- vision for corn was an in- crease in exports of 325 million bushels to 2.65 billion for the 2020/21 marketing year. Soybean exports were left un- changed at 2.2 billion


bushels, in spite of the strong export sales pace year-to-date. With soy- bean ending stocks now projected at 190 million bushels,


the lowest


amount in seven years, it would be challenging for USDA to increase pro- jected exports unless crush is reduced or pro- duction is increased. The report was received by markets as very bullish with corn futures up about 15 cents and soy- bean futures up 35 cents for the day. Soybean futures have


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now had back-to-back weeks with 40+ cent in- creases and with the new USDA supply and de- mand ending stocks pro- jection of 190 million, a reasonable argument can be made for $12.00 soy- beans (however a pull- back in the short term is also a distinct possibil- ity). With U.S. stocks tightening and Brazil/Ar- gentina production un- certain, volatility should be expected. Cotton futures have


slid 3-4 cents off the highs three weeks ago. U.S. stocks (7.2 million bales) and global stocks (101.44 million bales) re- main problematic for higher prices. Addition- ally, COVID-19 lock- downs, domestically and globally, create an uncer- tain demand picture as we move into the holiday season. Improvement in demand seems to be the only path toward higher cotton prices, but that is challenging to project given current circum- stances. July wheat


futures


have moved mostly side- ways over the past four weeks between $5.85 and $6.25. Currently, markets are weighing drought in the US plains, weather concerns in Ar- gentina, Russia, EU, and


Ukraine, and record global stocks. Corn Ethanol production for


the week ending Novem- ber 6 was 0.977 million barrels per day, up 16,000 barrels from the previous week. Ethanol stocks were 20.159 mil- lion barrels, up 0.484 million barrels compared to last week. Corn net sales reported by ex- porters for October 30- November 5 were down compared to last week with net sales of 38.5 million bushels for the 2020/21 marketing year. Exports for the same time period were up less than 1 percent from last week at 28.8 million bushels. Corn export sales and commitments were 51 percent of the USDA estimated total ex- ports for the 2020/21 marketing year (Septem- ber 1 to August 31) com- pared to the previous 5-year average of 38 per- cent. Nationally the Crop


Progress report esti- mated corn harvested at 91 percent compared to 82 percent last week, 62 percent last year, and a 5-year average of 80 per- cent. In Tennessee, the Crop Progress report es- timated corn harvested at 97 percent compared to 94 percent last week, 100 percent last year, and a 5-year average of 99 percent. Across Ten- nessee, average corn basis (cash price-nearby futures price) strength- ened or remained un- changed at Northwest and North-Central and weakened at Mississippi River, West-Central, and West elevators and barge point. Overall, basis for the week ranged from 20 under to 13 over, with an average of 7 under the December futures. De- cember 2020 corn fu-


tures closed at $4.10, up 4 cents since last Friday. For the week, December 2020 corn futures traded between $4.01 and $4.28. Dec/Mar and Dec/Dec future spreads were 9 and -6 cents. March 2021 corn futures closed at $4.19, up 6 cents since last Friday. December 2021 corn fu- tures closed at $4.04, up 9 cents since last Friday. Downside price protec- tion could be obtained by purchasing a $4.10 De- cember 2021 Put Option costing 31 cents estab- lishing a $3.79 futures floor. Soybeans Net sales reported by


exporters were down compared to last week with net sales of 54.0 million bushels for the 2020/21 marketing year. Exports for the same pe- riod were up 27 percent compared to last week at 117.9 million bushels (a marketing year high). Soybean export sales and commitments were 83 percent of the USDA esti- mated total annual ex- ports for the 2020/21 marketing year (Septem- ber 1 to August 31), com- pared to the previous 5-year average of 55 per- cent. Nationally the Crop


Progress report esti- mated soybeans har- vested at 92 percent compared to 87 percent last week, 82 percent last year, and a 5-year aver- age of 90 percent. In Ten- nessee,


soybeans


harvested at 71 percent compared to 58 percent last week, 79 percent last year, and a 5-year aver- age of 78 percent. Across Tennessee, average soy- bean basis weakened at Mississippi River, West, West-Central, North- Central, and Northwest elevators and barge points. Basis ranged


from 37 under to even the January futures con- tract. Average basis at the end of the week was 27 under the January fu- tures contract. January 2021 soybean futures closed at $11.48, up 47 cents since last Friday. For the week, January 2021 soybean futures traded between $10.99 and $11.62. Jan/Mar and Jan/Nov future spreads were 0 and -108 cents. March 2021 soy- bean futures closed at $11.48, up 49 cents since last Friday. Novem- ber 2021 soybean fu- tures closed at $10.40, up 34 cents since last Friday. Downside price protection could be achieved by purchasing a $10.60 November 2021 Put Option which would cost 90 cents and set a $9.70 futures


floor.


Nov/Dec 2021 soybean- to-corn price ratio was 2.57 at the end of the week. Cotton Net sales reported by


exporters were up com- pared to last week with net sales of 236,800 bales for the 2020/21 marketing year and 14,800 bales for the 2021/22 marketing year. Exports for the same time period were up 9 percent compared to last week at 293,000 bales. Upland cotton export sales were 67 percent of the USDA estimated total annual exports for the 2020/21 marketing year (August 1 to July 31), compared to the previous 5-year average of 59 per- cent. Delta upland cotton spot price quotes for No- vember 12 were 66.23 cents/lb (41-4-34) and 68.46 cents/lb (31-3-35). Adjusted World Price (AWP)


increased 0.7


cents to 56.71 cents. Nationally, the Crop


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November 20, 2020 www.mafg.net / MidAmerica Farmer Grower • 3


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