UT Commodity Market Update

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Corn: Over the last 30 days, December corn futures have decreased by $0.07. The decrease can be attributed to harvest pressure. Locally, corn yields have been phenomenal. Yields have ranged between 170 to 230 bushels per acre on dry land acres. It may indeed be a record year for corn yields in Tennessee. On a national scale, only 17% of the crop had been harvested as of Monday. The USDA reported that the corn crop is in good shape.

On Monday, the USDA stated that 64% of the crop is good-to-excellent. This translates into a good crop, which will likely result in an above average national yield. Many producers are putting their corn in the bin and elevators will have to up their bids to get it out on the open market. Locally, cash basis for corn averaged -$0.30 as of market close.

Soybeans: Over the last 30 days, November soybean futures have increased by $0.05. The USDA projections of a national yield of 49.9 BPA, which is a relatively large crop. The average trade estimate is that the 2017 soybean crop will total 4.4 billion bushels, which is in line with USDA’s September report. Crop ratings for the soybean crop have been very favorable with 60% of the crop being rated as good-to-excellent. The fact that Argentina is receiving too much rain and that Brazil is dry is favorable for the U.S. crop. Over the next few weeks, soybean harvest will be in full swing and harvest pressure will become more of a threat. Locally, soybean basis has been very weak. Some producers are considering storing their beans to try to wait for better marketing opportunities. Yields on early beans have been averaging near 60 BPA. Locally, cash basis for beans averaged -$0.40 as of market close.

Wheat: Over the last 30 days, July wheat futures have decreased by $0.03. Wheat reserves continue to be high. That is keeping a lid on higher wheat prices. Wheat production in Russia has been increased to a total production of 3.05 billion bushels. Locally, wheat basis for new crop wheat averaged -$0.10 as of market close.

Cotton: Equities continue to be between $0.12 and $0.13 for West Tennessee. December cotton closed at 68.84. Cotton futures have continued to trade sideways after the recent run-up in prices that was caused by the hurricanes.

Take Home Message: The large crops will be beneficial in a low price environment. However, it creates some challenges for producers. Many farmers will find themselves with unpriced commodities. With high yields and low prices, there are many bushels that are currently unpriced. Producers with storage can store their grain to try and wait out the market. Those without storage are looking at renting space from others or bagging their grain. Farmers with storage can also consider placing their grain in the USDA’s CCC loan. The USDA is currently paying $2.07 on corn, $5.07 on soybeans, and $0.495 on cotton. The interest rate on the loan is 2.25%. The loan can be used up to 9 months. Some producers may be able to place their crop in the loan and pay down debts with higher interest rates to lower their overall expenses.

Those without storage can look into what is known as deferred pricing, or price later, contracts to buy themselves more time to price their grain. However, farmers must realize that these type of contracts often come with a per bushel expense. Farmers can talk to their local elevators about these contracts. If current prices and yields are below breakeven points, this may be an option to consider. If your higher yields allow you to be profitable at these lower prices, this type of contract may not be beneficial to you.

Local Grain Bids: West Tennessee Grain Bids 10-06-2017


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