Corn: Both corn exports and new crop sales were lower this week. The lower sales contributed to the bearish tone in the corn markets. Speculative trading has been part of the driving force behind the lower corn prices this week. Funds have become sellers of the corn market which puts pressure on prices. In regard to planting progress, 45% of the crop has been planted as of the 5/1/2016 USDA crop progress report. September corn futures closed $0.16 lower over the past week while harvest basis remains in negative territory.

Soybeans: November soybean futures declined by $0.15 since last Thursday while harvest basis remained unchanged. Profit tacking by speculative trades has been the main contributing factor to the decline in soybean futures. Soybean prices increased quite a bit over the past few weeks as traders were long the soybean market due to the excess rainfall that negatively impacted Argentina’s crop. Soybean exports were exceeded traders’ expectations for old and new crop sales. Only 8% of the U.S. crop has been planted as of 5/1/2016.

Wheat: Wheat prices are under pressure as the condition of the wheat crop is expected to remain favorable. In fact, the 5/1/2016 crop progress report indicated that the condition of the U.S. crop is improving as 61% of the winter wheat is rated as being good-to-excellent.  July wheat futures declined by $0.22 since last Thursday while the local harvest basis for West TN averaged -$0.07.

Cotton: As of 5/1/2016, 16% of the U.S. cotton crop has been planted. Due to soybean prices improving, some producers are reporting that they plan to switch cotton acres over to soybeans. The continuance of a wet forecast for West TN may also contribute to cotton acres being switched over to soybeans. Cotton equities (loan options) continue to be between $0.10 and $0.12. December cotton futures closed at 61.40.

Take Home Message: The decline in commodity prices can be attributed to funds closing out position and moving to the sidelines. The recent run-up in prices was due to spec trading and not due to market fundamentals. These type of rallies go as quickly as they come. Farmers can still price beans at profitable levels. If we continue to have a wet spring and soybean prices stay at these levels, we should expect to see more and more acres switch from cotton or corn over to beans.

West TN Grain Prices: Grain Newsletter 5-5-2016