Corn: Over the past week, September corn futures increased by $0.06 while the average local harvest basis increased by $0.02 in West TN. The increase in corn prices can be attributed to the recent weakness in the U.S. dollar. The U.S. dollar has shown signs of weakness due to sluggish economic news. In fact, the Federal Reserve Chair, Janet Yellen, stated this week that the Fed will not raise interest rates as high as previously thought. Prior to this week, the Fed was expected to raise interest rates up to four times throughout 2016. However, due to lackluster economic data within the U.S., it seems that the Fed will only raise rates twice this year.
Soybeans: November soybean futures increased by $0.09 since last Thursday’s market close. In that same time frame, the average local harvest basis remained unchanged at -$0.11 in West TN. Soybean futures have benefited from the recent weakness in the U.S. dollar. The weakness in the dollar does allow our exports to be more competitive in the market place. However, farmer should be ever mindful of the fact that South America is still projected to raise a crop that exceed 100 million metric tons, or 3.674 billion bushels. Either way you carve it, that is a large crop for the U.S. to contend with. New crop prices are beginning to trade near or above the $9.00 range for 2016. Producers should be mindful of these price levels and review their costs structure to see if it is feasible to sell at these levels. On March 31, 2016, the USDA will release the latest crop report with acre estimations. We do not know the impact that this will have on soybean prices. However, we do know any increase over current projections for U.S. soybean acres would be bearish. Producers should be mindful of that.
Wheat: July wheat futures declined by $0.13 over the past week. The decline can be attributed to favorable growing conditions in the Southern Plains. The weather forecast for key growing areas in the U.S. is for warmer temperatures next week. This takes the fear of any winterkill out of the equation for now. That along with the recent decrease in French wheat prices has placed downward pressure on U.S. wheat prices. The average local harvest basis remained unchanged from last week at -$0.10. New crop wheat prices in West TN ranged between $4.40 and $4.85 as of market close today.
Cotton: December cotton futures closed at 58.04. Cotton loan options (equities) continue to be approximately $0.10 to $0.13 per lb. The price direction for cotton is still likely to be impacted by what China does with its cotton stocks. A few news reports are indicating that China is thought to be considering selling cotton from reserves at prices that will entice mills to begin purchasing. If that happens, we will see pressure placed on cotton prices. Currently, China is halting cotton imports, which drives up their domestic price while simultaneously lowering the global price of cotton. Much like the grain markets, there is an abundance of cotton that has to be dealt with before we see any significant movement in cotton prices .
Take Home Message: Farmers should review their cost structure and see if selling at current price levels is feasible. If so, producers may contemplate booking a portion of their crop before the report on March 31, 2016. It is important that producer compare price levels to their cost of production in order to determine the price target they need to obtain to be profitable.
Grain prices are as of approximately 4:00 PM CST on 3/17/2016. Grain bids, futures, and basis are subject to change. Producers should stay in contact with their local grain buyers and/or cotton brokers for the most updated commodity price information. The information contained in this newsletter is for informational purposes only and does not constitute any offer to buy/sell any commodity.