Corn: December corn futures traded $0.07 for the week. Corn futures were higher due to good export sales as indicated by the USDA. For the year, corn exports are 16% higher to date when compared to the previous year. The trade agreement between the United States, Mexico, and Canada (USMCA) was signed by all three nations’ leaders. However, the agreement will have to ratified by each nation’s legislatures. Also, the G20 trade summit will take place this weekend and the markets reflected a sense of optimism that these meetings will bode well for U.S. agriculture. Market analysts are predicting that the size of the Brazilian corn crop will be 1.1 billion bushels, which is 3.6% higher than the previous year. For producers with corn either in storage or on a deferred pricing contract, the increase in futures for the week is a sign of hope. However, the weakening in local basis has the potential to erase the gains found on the futures side of things. Farmers with unsold bushels should continue to monitor the current optimism from the corn market and decide if it is indeed a good selling point for sales that need to be made before year-end.
Soybeans: Since the market’s open on Monday, January soybean futures have increased by $0.16. The optimism found in the corn market was especially felt in the soybean market with hopes that the agreement between the U.S., Mexico, and Canada will be a win-win for agriculture. In South America, Brazil is reported to harvest a record-setting soybean crop of nearly 4.5 billion bushels, which is a 1.2% increase over last year’s levels. The reported cause of the increase is due to a 2.8% increase in total planted acres in Brazil. The total acreage for Brazil’s 2018/2019 soybean crop is 89 million acres. Locally, cash basis for soybeans remains very weak, averaging -$0.40 as of today. The weak basis will make it difficult to entice producers with beans in the bin to sell them.
Wheat: For the week, July wheat futures increased by $0.05. December wheat futures skyrocketed today and closed $0.19 higher. The increase in the nearby futures month is due to short covering. Wheat exports remain below last year’s levels and are currently trending below the USDA’s projections for total wheat sales for the year. Globally, wheat crops appear to be in good shape which could translate into relatively high ending stocks. Locally, new crop bids for wheat continue to hover above $5.00 with some elevators paying close to $5.40, accounting for a positive basis.
Cotton: March futures closed today at 78.91 while December 2019 futures closed at 77.03. Old crop equities are ranging between $0.17 and $0.19 for West Tennessee. New crop equities are averaging $0.185. Producers with unpriced equities should stay in contact with their local cotton broker to see what direction equity levels appear to be going, especially regarding year-end marketing decisions.
Take Home Message: Commodity prices continue to remain low and will cause net farm income levels to be low for 2018. The USDA reported that net farm income dropped 12.1% in 2018 to $66 billion. This is very close to 2016’s net farm income levels, which was the lowest reported since 2002. The cause of the decline in net farm income is mainly commodity prices. However, the USDA did indicate that production expenses increased by 4.2% in 2018 due to higher fuel costs, feed expenses, labor, and rising interest rates.