Corn: Corn futures have traded $0.13 higher since the market’s open on Monday morning. Corn futures have closed higher for six days straight. The USDA report from last week left room for the market to become more bearish with a projected national yield of 175.1 bushels per acre. However, after sifting through the report, it appeared that the trade was already trading the expectations of a high national yield. Some analysts are beginning to question the methods that USDA used to come up with their yield figures. Many are pointing to the fact that the estimate is based on a record ear size that excludes a kernel count.
Time will tell what the national yield will be. However, we do know that favorable conditions are forecasted for most of the Midwest. The USDA continues to rate the corn crop in a very favorable light with 74% being rated as good-to-excellent. With that good of a crop, demand will have to be strong to keep prices from declining to levels below $3.00. Exports will be likely remain strong for U.S. corn due to the short crop that Brazil has had in 2016. Basis for new crop corn averaged -$0.06 for West TN. The FSA pegs the TN corn crop at 818,245 acres as of August 1, 2016.
Soybeans: Soybean futures have traded $0.23 higher for the week. Soybean futures have been on an upward trend since August 2, 2016. In fact, November soybean futures have increased by $0.44 since August 2. Basis has also really turned around for soybeans here in West Tennessee. The average basis for river facilities as of market close today averaged $0.25. However, when you factor in basis for inland elevators that average drops to $0.01. The increase in basis is attributed to improvements in demand for soybeans. The USDA did project the crop to be very large for 2016 in last week’s report. However, exports have been very strong which indicates that demand is still good for soybeans. On Monday, the USDA rated 72% of the soybean crop as being good-to-excellent with 80% of the crop already setting pods. The FSA reported 1,562,591 acres of soybeans being certified as of 8/1/2016 in TN.
Wheat: FSA indicated that TN had 347,782 acres of wheat certified as of 8/1/2016. USDA has raised global wheat production by 5 million metric tons due to increased production in Australia, Russia, Canada, and Ukraine. Russia is posed to become the world’s leading exporter of wheat. USDA did cut total European production by 6% due to drier growing conditions in key growing areas. Wheat futures are struggling to climb higher due to big crops in Australia and the Black Sea region.
Cotton: December cotton futures closed at 68.05. On August 5, 2016, December cotton futures peaked at 78.00, but have declined by 10.00 as of today’s close. The run up in prices was fueled by a weather scare in Texas and the strong buying of Chinese reserves. However, that buying has started to slow down to a certain degree, which took the winds out of the sails of the futures market. That combined with the reduced weather scare in parts of Texas has caused prices to be pushed lower. As a result, cotton equities are lower as well. Cotton equities are currently near $0.12. The USDA rated 48% of the crop as good-to-excellent, which is down from a rating of 55% good-to-excellent as of this time last year. The USDA crop progress report also indicated that 80% has begun to set bolls with 12% of the bolls already opening.
Take Home Message: Producers should continue to look at their crop budgets to see if they can lock in a profit if we continue on this upward trend. Producers will likely be able to lock in some profit on soybeans at these levels. Corn is a much different story and most of it will likely go in the bin unless things turn around. Cotton equities have come off their recent highs and some money may have been left on the table if equities were not sold during the past few weeks. All markets will remain volatile between now and harvest. However, once harvest gets here, we will have to contend with harvest pressure.