Weekly Crop Comments, June 7, 2013

Overview Soybeans and cotton were up, wheat was down, and corn was mixed for the week. Of note, this week’s crop comments were completed using closing market numbers for Thursday (June 6) instead of Friday. This was due to a personal scheduling conflict, I apologize for this inconvenience. Wet weather continues to delay corn and soybean planting in several parts of the Corn Belt; however the moisture will be beneficial to crop already in the ground. Prevented planting record numbers were in 2011 at 8 million acres with 2 million acres last year. This year’s number will most likely fall between the two with initial estimates on the higher side of the range. The 5-day forecast is for cooler temperatures with showers in much of the Midwest. The 10 to15-day forecast has a warmer dryer trend moving into the area. Wheat currently has a great deal of uncertainty with drought conditions persisting in the southern plains and planting delays in the north. Lack of precipitation in west Texas continues to be a concern for cotton producers.

Producers have many pricing options which they can utilize. Establishing a floor price using Put Options is quoted and used as an example in this publication as one possible marketing alternative and should not be deemed as a strategy for all marketers. Advanced marketing alternatives should be entered into carefully by producers and consultation with a marketing specialist is recommended to fully understand the risks and benefits of each strategy.

Corn Weekly exports were within expectations for old crop and below expectations for new crop with net sales of 6.2 million bushels (4.2 million bushels for the 2012/13 marketing year and 2 million bushels for the 2013/14 year). Last week ethanol production increased 22,000 barrels per day to 885,000 barrels per day. May 31st ending ethanol stocks increased to 16.4 million barrels from 16 million. Jul/Sep and Jul/Dec future spreads were -85 cents and -115 cents, respectively.

Corn planted reported June 3rd was 91% compared to 86% last week, 100% last year, and a 5-year average of 95%. Corn emerged was 74% compared to 54% last week, 96% last year, and 82% for the 5-year average. In Tennessee corn planted was 97% (5-year average 98%), corn emerged was 84% (5-year average 93%), and corn condition was 74% good to excellent 6% poor to very poor. Producers should consider having 35% of their crop priced at this point. Sept/Dec Corn futures prices have backed off from last weeks close due partially to improved planting numbers and more favorable forecasts. From a price risk management standpoint a $5.80 September Put Option costing 34 cents would establish a $5.46 futures floor or a $5.50 December Put Option costing 42 cents would establish a $5.08 futures floor.

Soybeans Weekly exports were within expectations with net sales of 23.4 million bushels (1.8 million bushels for 2012/13 and 21.6 million bushels for 2013/14). Low soybean supplies continue to contribute to volatility in price. Jul/Nov future spread was -$2.22.

Soybean planting estimates as reported June 3rd were 57% compared to 44% last week, 93% last year, and a 5-year average of 74%. Soybeans emerged were 31% compared to 14% last week, 76% last year, and a 5-year average of 49%. In Tennessee soybeans planted was 36% (5-year average 52%) and soybeans emerged was 17% (5-year average 33%). November soybean prices have backed off from beginning of the week highs on concerns over acreage shifts from corn and improved planting weather in the 6-10 day forecast. However concerns over limited stocks could push prices higher if new crop production does not meet anticipated levels. Having 35% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $13.20 November Put Option which would cost 79 cents and set a $12.41 futures floor.

Cotton All cotton weekly export net sales were higher than last week at 323,600 running bales (184,200 bales of Upland cotton for 2012/13; 138,400 bales of Upland cotton for 2013/14; and 1,000 running bales of Pima cotton for 2012/13. June 6th adjusted world price (AWP) decreased 1.34 cents to 70.33 cents. Cotton equities on 2013 loan cotton are in the 26.50 cent range. Jul/Dec future spread was 0.52 cents.

Cotton planted reported June 3rd was 82% this week compared to 59% last week, 87% last year, and the 5-year average of 83%. Cotton squaring was reported for the first time this year at 4% compared to 11% last year and a five year average of 7%. Tennessee was 77% planted compared to 37% last week, 97% last year and a 5-year average of 88%. Cotton prices posted increases for the first time in two weeks. Rallies in December cotton should be looked at as a potential opportunity for producers to price additional crop or obtain downside protection on a portion of their production. Purchasing an 86 cent December Put Option costing 5.83 cents would establish an 80.17 futures floor.

WheatWeekly exports were below expectations for old crop and above expectations for new crop with net sales reductions for 2012/13 of 1.2 million bushels and net sales of 24.4 million bushels for 2013/14. Jul/Sep future spread was 8 cents.

Nationally, winter wheat heading as of June 3rd was reported at 73% compared to 60% last week, 88% last year, and the 5-year average of 80%. Crop condition ratings for winter wheat as reported June 3rd were 32% good to excellent compared to 31% last week and 52% last year. Poor to very poor was 43%, compared to 42% last week and 18% last year. In Tennessee winter wheat turning color was reported at 75% (5-year average 88%) and crop condition was reported as 80% good to excellent and 4% poor to very poor. Spring wheat planting reported June 3rd was at 80% compared to 79% last week, 100% last year, and a 5-year average of 92%. Spring wheat emerged reported June 3rd was 61% compared to 42% last week, 99% last year, and a 5-year average of 80%. Spring wheat condition was released for the first time this year and was reported as 64% good to excellent and 8% poor to very poor. Currently producers should consider having at least 40% of the 2013 crop priced and look to increase the amount priced if prices strengthen as we move towards harvest. A $7.10 September Put Option would cost 36 cents and set a $6.74 futures floor.

Additional Information Senators on Thursday morning voted 75 to 22 to limit debate on the Farm Bill and schedule a final vote on June 10th. Upcoming dates Tennessee farmers should be aware of are: the CRP general sign up (ending June 14) and the Tennessee Agriculture Enhancement Program application period (completed June 7), Important crop insurance dates in the next two months are: corn – late planting period ends June 14; soybeans – final planting date June 15th (late planting period ends July 5th), soybeans behind wheat – final planting date June 25th (late planting period ending July 15th), and Cotton – late planting period ending June 5th. Contact your crop insurance representative if clarification on your current insurance position is required or prior to any changes in planting decisions.   If you require further information, clarification, or would like to be added to our email list please contact me at aaron.smith@utk.edu.

Source: Dr. Aaron Smith, University of Tennessee Institute of Agriculture

Jefferson Farmers Co-op 08112014