Corn: December corn futures were able to increase by $0.05 over the course of the week. Corn futures have been dampened over the past few weeks due to the extremely large size of the 2016 corn crop. With a national yield of 175.3 bushels per acre, the supply of corn is quite abundant. However, the demand for corn has begun to show some signs of improvement over the past week. Ethanol production is reportedly higher this week as ethanol futures rose to a two-week high. Corn exports have also been better than expected given the recent strengthening of the U.S. dollar. Over the past week, the average cash basis for corn has increased by $0.01.
Soybeans: January soybean futures increased by $0.06 since the market’s open on Monday morning. Soybean supplies continue to remain at very high levels given the record crop that we had this year. In fact, the 2016 crop appears to be the largest soybean crop that the U.S. has ever had. Production records that date back to 1960 indicate that no other year comes close to the size of this year’s crop. If the 2016 crop was the largest on record, then why have soybean futures not collapsed since harvest? The answer to that question is the strong demand for U.S. soybeans. So far this marketing year, soybeans exports are up 25% from last year’s levels. This is due to a strong demand from China for U.S. soybeans. The U.S. is still partially able to capitalize on the crop shortfall that Brazil experienced earlier this year. However, a strengthening U.S. dollar and a weakening Brazilian real will dictate how long this trend will last in the soybean market. Over the past week, the average cash basis for soybeans has decreased by $0.01.
Wheat: Winter wheat futures closed higher due to drought like conditions persisting key wheat producing states. According to the USDA, 25% of the winter wheat crop is in a drought area. The world is full of wheat and prices are limited on their upside potential. Basis at the local level remained unchanged for the week.
Cotton: December cotton futures closed today at 73.40. Cotton equities, or loan options, for Tennessee producers continue to be approximately $0.13 to $0.14.
Take Home Message: Producers with corn in the bin continue to see some positive gains in basis at the local level. We should expect to see that as we come off of harvest lows. The soybean market will be dependent upon demand from the export market. For producers with soybeans still in the field or in the bin, currency valuations of the U.S. dollar and the Brazilian real will have a direct impact on U.S. soybean exports and the overall demand for U.S. soybeans. Producers should remember that the latest WASDE report was not friendly for corn or soybean futures; however, the forecast for cotton prices does look favorable.
West Tennessee Grain Elevator Bids: grain-newsletter-11-18-2016
