Corn: December corn futures ended the week one penny lower than where it began on Monday morning. This week has been light as far as trading news goes for the grains. Last week, the USDA released their latest estimate on the global supply of all commodities along with the projected demand for all commodities. Harvest is advancing across most of the Midwest. As we begin to get a better feel on the overall size of the corn crop, we can expect to see the market reflect the yield data into future prices. Basis for corn is starting to weaken as the new supplies from harvest are hitting the supply chain. Futures have been increasing since August. In fact, we have seen an increase in December futures are up by almost $0.40. The increase in corn futures has occurred at time of the year when futures prices are usually retreating lower and not climbing higher. However, strong demand from the ethanol industry and the continuous need for corn to feed the growing U.S. beef herd has helped lift corn prices.
Soybeans: November soybean futures have increased by $0.22 since the market’s open on Monday morning. The demand for soybeans continues to be strong as evidenced by good export sales. Exports continue to remain strong despite a strengthening U.S. dollar. A higher dollar does make U.S. soybeans more expensive to foreign buyers. However, that has done little to temper the demand for U.S. soybeans. After the production issues in Brazil earlier this year, the U.S. has been able to secure a large portion of export sales to leading soybean buying nations like China. China has announced that they intend to increase their domestic production of soybeans and reduce their corn acreage. It will be interesting to see how this changes the dynamics of the soybean market. Basis for soybeans has been weakening over the past few weeks as the 2016 crop is beginning to hit the open market.
Wheat: July wheat futures have increased by $0.05 since the market’s open on Monday. Wheat prices are still limited by the sheer amount of wheat in storage around the world. Foreign competitors are benefiting from lower currency values. The USDA will begin to rate the U.S. winter wheat crop next week. Winter wheat acres will likely be lower compared to last year in West Tennessee due to lower wheat prices. However, the need for a winter cover crop and crop rotation will force some producers to stick to planting wheat.
Cotton: December cotton futures closed at 69.07 today. The market traded lower today due to a stronger U.S. dollar and harvest pressure. Export demand has slowed down, which also contributes to lower cotton prices. Analysts are stating that the overbought long position of spec traders is behind part of this week’s market correction. Cotton equities for West Tennessee producers continue to range between $0.10 and $0.12.
Take Home Message: The increasing prices during harvest is not a seasonal trend that we expect to see. Producers should keep an eye on the market to see if the upward trend in commodity prices continues. This may allow for some profitable pricing points for soybean producers.
West Tennessee Grain Elevator Bids: grain-newsletter-10-21-2016
