Corn: Over the past month, corn futures have been trading in a relatively sideways pattern. However, the past few days have allowed cash bids for new crop corn to be near $4.00 levels. Based on the UT Extension Crop Budgets, a producer could potentially lock in a profit at this price level, assuming an average yield of 150 bushels per acre. Private estimates are currently projecting corn acres to be lower in 2017 compared to last year’s levels. If that is the case, ending stocks could see a reduction that could push prices higher. Oversea news worth noting is the pending harvest of Argentina’s and Brazil’s corn crop. This crop will hit the export market either later this month and on into April and May. The additional supply will likely take away U.S. export business due to currency exchange rates. The USDA will release an updated WASDE report next week. This report will not likely contain any major updates, but producers should watch for the market’s reaction just in case. Local basis for new crop corn averaged -$0.13 for West Tennessee.
Soybeans: Brazil is currently harvesting their soybean crop. A private analyst firm has estimated the total crop size to be 108 million metric tons. This is 4 million metric tons higher than the latest USDA estimate. This does provide a bearish tone for the soybean market. In the U.S., current prices are pointing to a larger soybean crop for 2017. Farmers that are evaluating their crop mix are seeing profit potential at $10 soybeans. That comment has been repeated again and again at the county crop production meetings that UT Extension has held this winter. Estimates for the 2017 soybean acreage range between 85.5 million acres to 88 million acres, which is a sizeable crop. Local basis for new crop soybeans averaged -$0.11.
Wheat: It is very hard to get excited about wheat at these current price levels. However, over the past month, wheat prices have increased by $0.12. The increase has been primarily a spillover effect from the corn and soybean market. The fact is global wheat supplies continue to remain high. Local prices have started to increase due to an increase in basis at local river facilities. Inland grain elevators continue to have negative basis levels. Local basis for new crop wheat averaged -$0.07. For wheat to be profitable, producers will need to have good yields, a low cost structure, and prices contracted at prices closer to $5.00. Currently, a few elevators are offering prices near $4.75.
Cotton: Cotton equities are currently approximately $0.185 to $0.1920 in West Tennessee. The Memphis Farm and Gin Show is this weekend and the mood was mostly optimistic for cotton going into 2017. Many producers are saying that they will plant more cotton due to good yields in the past few years along with projected prices holding near the $0.70 to $0.72 levels. These prices include the cotton loan price, equities, and an estimated ginning and seed rebate. The National Cotton Council released their March 2017 Industry Update. This report projected that Tennessee will experience a 16.6% increase in cotton acres. Their report indicated that Tennessee will plant 297,000 acres of cotton in 2017 compared to 255,000 acres in 2016. Producers should be mindful that profitability in cotton at these price levels will be dependent upon yield. The National Cotton Council contained a cotton economic update that included a clear warning for farmers: “At current futures prices and average yields, losses [will] continue for 2017.” The key point here is average yields. Producers should closely evaluate their cost structure and yield potential in planning for 2017.
Take Home Message: There is a lot of price risk in every commodity as we head in the 2017 growing season. Producers should look at supplier budgets, UT Extension Budgets, and historical records when planning their crop mix for 2017. A strong farm plan and marketing plan will be needed in 2017 to be profitable. If you need any assistance with either of these, feel free to contact your local Farm Management Specialist for assistance at your local UT Extension office.
West Tennessee Grain Bids: Grain Newsletter 3-3-2017
