Corn: Since the first of July, September corn futures have declined by $0.10. The decline can be attributed to a partial loss of the weather premium that was built into the corn market. During this time of year, the corn market is volatile due to it being a weather market. On Monday, the USDA reported that 67% of the crop is already silking with 64% of the crop being rated as good-to-excellent. Now, these ratings are lower than what we had during this same time frame last year. In 2016, the USDA rated 74% of the crop as being good-to-excellent. So far, these ratings are pointing to a good national yield.The market seems to be pricing in a yield that is in line with the 5-year average. The extended forecast for the Midwest is mild and dry with seasonal temperatures. That being said, any weather pattern that poses a threat of a lower national yield will result in a rally. However, it seems that the largest rally has come and gone. The reduction of corn acreage in 2017 combined with concerns over rainfall in the Midwest led to the rally we saw a few weeks ago. Any rally between now and harvest, no matter how slight, will be a selling opportunity for producers. The average basis for new crop corn in West Tennessee equaled -$0.16.
Soybeans: Since the first of July, November soybean futures have increased by $0.50. The increase can be attributed to the strong demand for soybeans. The latest USDA World Agricultural Supply and Demand Estimate projected that soybean crush and exports would be higher in 2017 than in 2016. The USDA also reported on Monday that 69% of the crop is blooming with 29% of the crop already setting pods. The condition of the soybean crop is rated 61% as being good-to-excellent. In 2016, the crop was rated as 71% being good-to-excellent during this same time frame. So, will we see a rally in soybeans going forward?
The potential for a rally is mostly weather dependent at this time. The soybean crop is made later in the year than corn. Therefore, soybean rallies appear later in the marketing year. Again, that is all weather dependent. Currently, the extended forecast for the Midwest is mild temperatures to slightly drier. As we get closer to pod filling, rains will be crucial to the national yield. We do have to keep in mind that we have planted the largest soybean crop on record. With that in mind, any change in yield potential, whether positive or negative, will have a major impact on soybean prices. The average basis for new crop soybeans in West Tennessee equaled -$0.19.
Wheat: July has been a very volatile period for wheat prices. Right after harvest, we experienced a large run-up in wheat prices. Unfortunately, some producers were not able to capitalize on this. Almost as soon as the grain trucks had rolled across the grain pits, the wheat prices rallied. The one positive of the rally in wheat prices is 2018 wheat prices are well above $5.00. In fact, some elevators are paying near $5.50. For producers that know they will plant wheat in 2018, this is very likely to be a selling point. In 2017, many producers were holding out for $5.00. For now, we are above that price point for 2018. Farmers should review their rental arrangements on farms that they intend to plant wheat and see if $5.50 wheat and $10.00 soybeans pencils out for you. Farmers should keep in mind that the world continues to be full of wheat. Therefore, lower wheat prices is always a possibility. The basis for new crop wheat in West Tennessee averaged -$0.13.
Cotton: On Monday, the USDA reported that 77% of the crop was squaring with 36% of the crop already setting bolls. Also, the USDA rated 64% of the crop as being good-to-excellent. The latest USDA WASDE report was bearish for cotton due to an increase in planted acres and a projected increase in overall supply. On a positive note, the USDA did report the continuing decline in Chinese stocks. The USDA projected an average season price of $0.54 to $0.68 per pound. Cotton equities, or loan options, in West Tennessee continue to average $0.135.
Local Grain Bids: West Tennessee Grain Bids 7-28-2017
Take Home Message: Farmers should continue to watch the markets for any signs of a rally in either corn or beans to book additional sales. Wheat producers should evaluate their cost structure to consider booking a portion of the 2018 crop.