Corn: Corn has been trading sideways this week. However, corn prices are still above the recent lows that we saw take place at the end of March. Better corn sales has contributed to the increase in corn prices. According to the today’s USDA export report, net sales of 2.2 million metric tons established a marketing year high for 2015/2016. This is an increase of 80% over the previous week. Actual exports were a tad lower than last week’s levels.
Planting is advancing rapidly across the U.S. According to the April 25, 2016 Crop Progress 30% of the U.S. corn crop is planted. This is almost double the planting progress that we saw at the end of April of 2015. The planting progress in key growing states, like Iowa and Illinois, is much further along this year when compared to last year. The Tennessee crop is reported to be 65% planted. Another contributing factor to higher corn prices is Brazil is importing corn in order to satisfy domestic demand. Brazil exported too much corn and have now passed tariff reductions on imported corn in order to meet domestic needs.
September corn futures were a penny higher from last week and new crop basis decreased by $0.02.
Soybeans: Soybean prices have come off of the recent highs that were established at the end of last week. Futures price continue to hover near the $10 mark. Currently, November futures are still much higher than what we have seen since the first of the year. Many local elevators are offering a positive new crop basis for soybeans, which translates into a forward contracted price north of $10. The U.S. dollar was weaker today as the Bank of Japan appears to relinquishing quantitative easing practices. Due to the lower dollar, the Brazilian real is a bit stronger, which is bullish news for U.S. exports. There continues to be concerns as the actual quality of Argentina’s soybean crop. Any dismal news for their crop will be bullish for our prices. However, as of now, all we have is concerns and nothing concrete.
According to the April 21, 2016 Crop Progress Report, only 3% of the U.S. crop is planted. November soybean futures gave back some of today’s early gains after soybean technical entered into overbought territory. November soybean futures increased by $0.18 while harvest basis remained relatively unchanged. Harvest basis for West TN averaged -$0.09 as of market close.
Wheat: The U.S. wheat crop continues to be rated 59% good-to-excellent. In wheat sales, net sales equaled 351,900 metric tons in the USDA report released this morning. That is an increase of 19% from the previous week. Actual exports totaled 440,000 metric tons and that is a decline of 6% when compared to last week’s exports. In regard to futures prices, wheat continues to tag along with other crops. The fundamentals remain unchanged though. Global wheat supplies are still at adequate levels and demand is relatively weak for wheat. Unless we see production issues in wheat producing regions, the fundamentals for wheat do not truly support higher prices. This makes wheat more susceptible to market price fluctuations.
July wheat futures decreased by $0.18 since last Thursday while the harvest basis averaged -$0.08 for West TN. Harvest basis remained relatively unchanged from last week’s levels.
Cotton: December cotton futures closed at 62.61. Cotton futures continue to trend upward. The recent rally appears to have been fueled by speculative trading in the Chinese market. The total volume for the December cotton futures contract on the China’s ZCE exchange equaled about 3.6 million contracts on Friday. This is the second largest daily volume in the exchange’s history. We have seen speculative funds enter back into the grain market due to low interest rates. The resurgence of speculative trading has been a boost to commodity prices, but how long this lasts is unknown at this point. For cotton, demand has not yet truly followed the rally. With the recent rally in cotton prices, the cotton that China plans to sell from reserves will likely sell at a discount. The quality of this cotton will be a concern, but the price differential may spur millers to buy this cotton versus imports. Cotton loan options (equities) continue to be between $0.10 to $0.12.
Take Home Message: Producers should continue to consider pricing soybeans because prices are near or above the $10.00 mark. Wheat prices have declined below the $5 target price over the past week. This just exemplifies what I have been saying about monitoring these crop markets as prices can decrease just as fast, or faster, than they increased. I would encourage farmers to review their cost structure to see if these price levels can provide you the opportunity to lock in some profit on a few bushels.
West TN Grain Prices can be viewed here: Grain Newsletter 4-28-2016