Corn: December corn futures have increased since the beginning of the week. This is a continuation of the upward trend we have seen in corn futures since the beginning of September. This is due in part to the realization that the USDA’s yield forecasts were a bit overzealous. That being said, we still do not know the total size of the U.S. corn crop just yet. We are still a ways off from knowing that. The USDA did indicate that the ending stocks as of 9/1/2016 were smaller than expected. A decrease in supplies is bullish for prices. However, harvest pressure is still bearing down on the markets and keeping any major rallies at bay. As we enter into October, the focus will begin to switch to harvest progress in the Midwest. Iowa, Illinois, and Indiana will begin harvesting their corn crop very soon. The market will be looking to see yield data out of those states to further determine the size of the 2016 corn crop. December futures traded $0.02 higher for the week while local harvest basis continues to weaken.
Soybeans: November soybean futures have increased since the start of the week. Since the beginning of the month, soybean futures have been on an upwards trend. However, that is not saying much when compared to the overall decline we have seen over the past 2 to 3 months. Since July, November soybean futures have declined by $1.50 per bushel. The USDA reported ending stocks as of September 1, 2016, totaling 197 million bushels, which was in line with trade expectations. Exports numbers were strong this week due to strong demand from China. As harvest progresses, the focus will begin to turn to the demand side of things. Currently, the trade is focused on just how large of a soybean crop we have to contend with. November soybean futures have traded $0.03 higher this week while local harvest basis continues to weaken. Yield reports from the field are better than expected with many farmers stating that yields are ranging between 45 to 50 bushels.
Wheat: The latest stock report that was released by the USDA was bearish for wheat futures. Although production figures were lower, ending stocks continue to remain relatively high. In global news, the Australian wheat crop is being harvested and yield reports will begin to trickle in. Brazil is also currently harvesting their wheat crop. However, quality and yields have not yet been reported. Wheat futures continue to look rather dismal with many local elevators not yet even posting a bid for 2017. At these price levels, it can be a challenge to produce a profit with wheat. Some producers are beginning to contemplate sowing cover crops instead of planting wheat this fall. July wheat futures declined by $0.02 for the week while local new crop basis continues to remain low.
Cotton: Cotton harvest is really starting to pick up here in West Tennessee. Most producers are reporting good yields so far. A few local producers are thinking they will see an average yield of 1,100 pounds per acre for their operation. In the futures market, new export business and technical buying provided support to cotton futures. China ended trading out of the Chinese Reserves for this year and over 64,000 tons of cotton was sold in their domestic market. The price range for cotton continues to be between $0.65 and $0.70 and it seems that will be the trading range for the near future. December cotton futures closed at 68.11 while cotton equities continue to average $0.10 in West Tennessee.
Take Home Message: Producers are still facing low commodity prices, which is expected during harvest. For those with unsold commodities, pricing will likely be delayed as long as possible. Farmers will be forced to either accept the price across the scale or try to put the grain in the bin. Both of which have an opportunity cost. The cost of either storing the grain and not selling now or selling now and forgoing any potential price increase. All of this is a hard decision to make as a farm manager. However, that decision can be made more easily if you know what price level you have to receive in order to generate a profit. This is where farm managers have to have a financial plan in place to assist in developing a marketing plan. If you need assistance in developing such a plan, contact your local UT Extension Farm Management Specialist.
West TN Grain Elevator Bids: grain-newsletter-9-30-2016
