Corn: So far this week, September corn futures have traded lower by $0.11. Corn futures have traded lower for the past 15 trading days. Weather forecasts for the Midwest are indicating higher temperatures with adequate rain. The rainfall could offset any potential damage caused by the increase in temperatures. Private estimates of the national corn yield are ranging between 169 to 175 bushels per acre. If we do realize a national average north of 170 bushels per acre, we very well could see $3.00 corn futures. The USDA continues to rate 76% of the crop as being good-to-excellent with 91% of the crop silking. Futures prices will continue to fluctuate based on the weather forecast for the Midwest. Local new crop basis has begun to move as harvest approaches. West Tennessee river facilities experienced a decline in new crop basis while inland elevators increased their basis over the past week.
Soybeans: November soybean futures have traded $0.35 lower since the market opened on Monday morning. Soybeans face a similar fate to that of corn. A large crop is still forecasted and is placing downward pressure on U.S. soybean prices. The USDA continues to rate 72% of the crop as being good-to-excellent with 54% of the crop already setting pods, which is ahead of the 5 year average by 10%. Local new crop basis remained unchanged from last week’s levels.
Wheat: July 2017 wheat futures has declined by $0.05 so far this week. The decline in wheat futures is likely a result of a decline in nearby wheat futures and a partial spillover effect from the corn and soybean trade. Producers should be mindful that wheat planting is less than 3 months away and begin to monitor July 2017 wheat futures.
Cotton: December cotton futures closed at 75.82. Weather has been the driving force behind cotton futures for the most part this week. The cotton trade is wanting to see the market trade lower for fear of higher prices killing demand for cotton. Cotton prices have increased while crude oil prices have declined. As crude oil prices decline, so does the cost of polyester, which is the main competitor for cotton. Traders are fearful that higher cotton prices could force textile mills to continue to blend more polyester. Cotton equities, or loan options, have increased to $0.17.
Take Home Message: Grain futures are struggling to rally due to what looks to be a very large corn crop and a potentially large bean crop. This year is setting itself up to be a year where grain may predominantly go into storage. Many farmers are unwilling to price corn and soybeans at these levels as a profit cannot be easily locked in, particularly in corn. Producers should keep in mind that as harvest approaches we should expect to see futures trend lower. I want to reiterate what I said last week about the different price scenarios we could see come harvest. We are likely to see prices trend lower if growing conditions continue to remain favorable and harvest pressure sets in or we could see prices rally if the crop is smaller than we thought. Right now, it is looking that we will have a very large crop to contend with, which means lower prices. Producers should continue to monitor their costs of production and evaluate prices. Producers are likely more willing to be aggressive sellers now since many have a good feeling of what their corn yields will be as we have made it through pollination. However, price levels are preventing those sales from being made. Another option if you do not have storage is deferred pricing. Talk to your local elevators to see if deferred pricing is suitable for you. It does come at a cost per bushel, but it allows you to deliver grain and price the grain at a future date. It allows you to market your grain as if you have storage.
West TN Grain Elevator Bids: Grain Newsletter 8-4-2016
