Corn and cotton were down; soybeans and wheat were up for the week.

Dryness has crept into Tennessee. As of June 8th, the U.S. drought monitor indicated that 49% of Tennessee was abnormally dry and 9% was in moderate drought. However, the NOAA precipitation forecast for June 10 to June 17 projects 2 to 5 inches of rain in the next seven days for most of Tennessee. Additionally, rain in the seven-day forecast is projected for a large portion of the Corn Belt, with greater quantities in the southern portions. If realized, the rains should help alleviate the abnormally dry or moderate drought conditions, that currently cover a large portion of the primary US corn and soybean producing regions. Continue reading at Tennessee Market Highlights.

Corn, soybeans, and wheat were up; cotton was down for the week.

Corn and soybean planting progress has outpaced last year and the five-year average while
cotton is slightly behind. Getting the crop planted in a timely manner is beneficial but it does not necessarily translate into above average yields. Weather from June-August will dictate if the U.S. achieves above or below trend line yield. Currently, the USDA projects weather adjusted trendline yield at 181.5 bu/acre for corn, 52 bu/acre for soybeans, and 854 lbs/acre for cotton. Moving forward, weather will determine price direction. As such, for those with limited 2023 production priced, rallies should be viewed as opportunities to establish a price or price floor on some production. Continue reading at Tennessee Market Highlights.

Corn, cotton, soybeans, and wheat were down for the week.

The May 12 USDA WASDE report provided bearish projections for 2023 corn and soybean
supply and demand estimates. There remains a great deal of uncertainty with the 2023 crop, however if USDA projections are realized corn and soybean prices will be near $4.00 and $12.00 per bushel. Improved weather forecasts have national average trendline yield projected at 52 bu/acre and 181.5 bu/acre, both would be records if realized. U.S. ending stocks for the 2023/24 marketing year are projected at 2.222 billion bushels for corn (up 805 million bushels compared to the current marketing year) and 335 million bushels for soybeans (up 120 million compared to this year). The bearishness in soybeans is more prevalent internationally than domestically. Foreign soybean stocks are projected to increase 669 million bushels. Largely due to Brazil’s record production and a projected drought recovery in Argentina. As mentioned, there is still a lot of time and uncertainty embedded in this year’s crop but the USDA WASDE’s initial estimates for the 2023/24 marketing set a decidedly bearish tone. Continue reading at Tennessee Market Highlights.

Corn, cotton, soybeans, and wheat were up for the week.

On Wednesday the Federal Reserve raised interest rates by 0.25%. The change was the 10th
increase in interest rates in 14 months. The Federal Reserve has been raising interest rates to reduce the annual inflation rate to closer to its target of around 2%. Annualized monthly inflation peaked at 9.06% in June 2022 and has since declined to the most recent estimate of 4.98% on March 31, 2023. The bank prime lending rate is now at 8.25%, up 5% compared to March 15, 2022. The increase in interest rates has numerous implications for agricultural producers – increased interest expense on operating capital, reduced access to credit, and higher capital recovery rates on medium-to-long term capital investments (machinery, livestock, land etc.). Continue reading at Tennessee Market Highlights.

Corn, soybeans, and wheat were down; cotton was up last week.

The December corn futures contract compared to the previous 10 years, from the start of January to the end of April, experienced its largest decline in 2023. The December 2023 contract decreased 79 cents – opening the year at $6.06 ¾ and closing April at $5.27 ¾. The next largest decline was 67 ¼ cents in 2020 when prices experienced rapid declines, due to the on set of the COVID-19 pandemic. 2022 had the largest gain in the previous 10 years with prices rising a remarkable $2.03 ¾ ($5.47 ½ to $7.51 ¼), due primarily to Russia’s invasion of Ukraine on February 24, 2022. Volatility has been a feature in corn markets over the past three growing seasons and is likely to continue in 2023. There remains a large amount of uncertainty for the 2023 crop, however with greater acreage in Brazil and the U.S. expected the bias in corn markets is for further price weakness, in the absence of a weather-related production disruption.

Corn and wheat were up; soybean was mixed; and cotton was down for the week.

On Friday, April 14, the old crop–new crop corn futures spread expanded to $1.06 ¼ per bushel the largest spread between the May and December futures contracts since May 16, 2022. The price spread is amplified in cash markets in Tennessee, due to strong old crop basis compared to current new crop basis offerings. There remains a large amount of uncertainty in price direction for new crop corn. However, based on current market information there continues to be a bearish undertone in new crop prices. Managing price risk through purchase of out-of-the money put option contracts, for the new crop, is worth considering at this juncture. This strategy can be used to mitigate a portion of the futures price risk and buy time until more information is known about the 2023 crop. If new crop prices rise, the option position can be exited and a portion of the premium recovered. Continue reading at Tennessee Market Highlights.

Corn was mixed; cotton was down; soybeans and wheat were up for the week.

For corn and soybean producers, activity in futures markets in February is very important. For Tennessee producers, projected crop insurance prices and volatility factors are determined from February 1-28. The projected price will set revenue guarantees and potentially affect planting decisions. At the start of February 2023, December 2023 corn futures were slightly above ($5.94) last years projected crop insurance price of $5.90 per bushel and November 2023 soybean futures ($13.65) were well below last year’s futures price of $14.40. The direction of prices from now until the end of February will be key for producers when examining risk management and marketing strategies for the 2023 crop. Continue reading at Tennessee Market Highlights.

Cotton was up; wheat and soybeans were down; and corn was mixed for the week.

Compared to the previous five years, 2021 and 2022 corn and soybean harvest futures prices experienced increased trading ranges. December 2022 corn futures, from December 1, 2021 to contract expiration, had a trading range of $2.23 ($5.43 to $7.66). November 2022 soybean futures, from November 1, 2021 to contract expiration, had a trading range of $3.81 ($12.02 to $15.81). Tight U.S. stocks, the Russia-Ukraine conflict, global inflation, supply chain disruptions, and drought in the U.S. and South America have propelled prices higher but have also increased volatility. The 2021 and 2022 December contracts had 49 and 65 trading days with moves of more than 10 cents up or down. The previous five years had a total of 54 trading days with a greater than 10-cent move. Similarly, in 2021 and 2022, the November soybean contract had 45 and 74 trading days with a greater than 20-cent up or down move. For the previous five years, the November soybean contract had a total of 64 days with a greater than 20-cent up or down move. Continue reading at Tennessee Market Highlights.