Farmers Report

Corn and cotton were
down; wheat was up; and
soybeans were mixed
for the week. Drought
remains at the forefront
of US corn and soybean
markets. As of July 25,
59% of the US corn crop
was estimated to be in
drought (1% exceptional
drought, 7% extreme
drought, 14% severe
drought, and 36% moderate
drought) and 53%
of the soybean crop was
in drought (1% exceptional
drought, 7% extreme
drought, 13% severe
drought, and 33%
moderate drought). With
limited precipitation (less
than 1 inch in most locations)
in the seven-day
NOAA forecast and
high temperatures, further
crop stress is likely
to occur. The weather
uncertainty and sporadic
rainfall has contributed to
price volatility. Over, the
past ten trading days, December
corn has closed
the day: -7 ¾, +28 ½, +18
½, -6 ¾, -10, +32, -3, -17,
-6, and -12 cents. The net
move over the ten-day
period was +11 cents
but the daily price volatility
has the perception
of a larger overall move.
Since the start of July, the
December cotton futures
contract increased 9.88
cents, from 78.51 cents
to a high of 88.39 cents
on Thursday, July 27.
The December contract
declined 3.67 cents at the
end of Thursday and Friday
settling back into the
7-month trading range of
77 to 87 cents. Weak export
sales were a contributor
to the decline. Currently,
only 20% of cotton
areas are in drought with
19% in the moderate or
severe category. Kansas,
Missouri, New Mexico,
and Oklahoma comprise
the most drought-stricken
area in the Cotton
Belt. High temperatures
could change the drought
picture over the next
few weeks, particularly
in Texas. Based on recent
market moves and
weather uncertainty, August
is setting up for a potential
breakout in cotton
markets.
Corn
Ethanol production for
the week ending July 21
was 1.094 million barrels
per day, up 24,000
barrels from the previous
week. Ethanol stocks
were 23.228 million barrels,
up 0.062 million
compared to last week.
Corn net sales reported
by exporters for July 14-
20 were net sales of 12.4
million bushels for the
2022/23 marketing year
and 13.2 million bushels
for the 2023/24 marketing
year. Exports for the
same period were up 7%
compared to last week
at 16.2 million bushels.
Corn export sales and
commitments were 96%
of the USDA estimated
total annual exports for
the 2022/23 marketing
year (September 1 to
August 31) compared to
the previous 5-year average
of 102%. Across
Tennessee, average corn
basis (cash price-nearby
futures price) was unchanged
at West, Northwest,
West-Central,
North-Central, and Mississippi
River elevators
and barge points. Overall,
basis for the week
ranged from 20 under to
10 over, with an average
of 7 under the September
futures at elevators
and barge points. The
Crop Progress report estimated
corn condition
at 57% good-to-excellent
and 13% poor-tovery
poor; corn silking
at 68% compared to 47%
last week, 58% last year,
and a 5-year average of
65%; and corn dough
at 16% compared to
7% last week, 12% last
year, and a 5-year average
of 14%. In Tennessee,
corn condition was
71% good-to-excellent
and 8% poor-to-very
poor; corn silking was
91% compared to 84%
last week, 91% last year,
and a 5-year average of
89%; and corn dough at
52% compared to 34%
last week, 46% last year,
and a 5-year average of
50%. New crop cash
prices ranged from $4.95
to $5.53 at elevators and
barge points. September
2023 corn futures closed
at $5.21, down 6 cents
since last Friday. For the
week, September 2023
corn futures traded between
$5.16 and $5.64.
Sep/Dec and Sep/Mar
future spreads were 9 and
20 cents. December 2023
corn futures closed at
$5.30, down 6 cents since
last Friday. Downside
price protection could be
obtained by purchasing
a $5.40 December 2023
Put Option costing 50
cents establishing a $4.90
futures floor. March 2024
corn futures closed at
$5.41, down 6 cents since
last Friday.
Soybeans
Across Tennessee average
soybean basis
weakened or remained
unchanged at West,
Northwest, West-Central,
North-Central, and Mississippi
River elevators
and barge points. Basis
ranged from 25 under to
15 over, with an average
basis of 25 under the
August futures contract.
Soybean net weekly sales
reported by exporters
were 7.3 million bushels
for the 2022/23 marketing
year and 20 million
bushels for the 2023/24
marketing year. Exports
for the same period were
up 58% compared to
last week at 13.9 million
bushels. Soybean export
sales and commitments
were 98% of the USDA
estimated total annual
exports for the 2022/23
marketing year (September
1 to August 31),
compared to the previous
5-year average of 103%.
August 2023 soybean
futures closed at $14.86,
down 15 cents since last
Friday. For the week,
August 2023 soybean
futures traded between
$14.83 and $15.80. Aug/
Sep and Aug/Nov future
spreads were -53 and
-104 cents. September
2023 soybean futures
closed at $14.33, up 4
cents since last Friday.
September soybean-tocorn
price ratio was 2.75
at the end of the week.
The Crop Progress report
estimated soybean condition
at 54% good-to-excellent
and 14% poorto-
very poor; soybeans
blooming at 70% compared
to 56% last week,
62% last year, and a
5-year average of 66%;
and soybeans setting
pods at 35% compared
to 20% last week, 24%
last year, and a 5-year
average of 31%. In Tennessee,
the Crop Progress
report estimated soybean
condition at 70%
good-to-excellent and
7% poor-to-very poor;
soybeans blooming at
73%, compared to 64%
last week, 67% last year,
and a 5-year average of
63%; and soybeans setting
pods at 43% compared
to 30% last week,
35% last year, and a
5-year average of 33%.
November 2023 soybean
futures closed at $13.82,
down 19 cents since last
Friday. New crop cash
soybean prices at elevators
and barge points
ranged from $13.51
to $14.11. Downside
price protection could
be achieved by purchasing
a $13.90 November
2023 Put Option which
would cost 56 cents and
set a $13.34 futures floor.
Nov/Dec 2023 soybeanto-
corn price ratio was
2.61 at the end of the
week.
Cotton
North Delta upland cotton
spot price quotes
for July 27 were 83.62
cents/lb (41-4-34) and
85.87 cents/lb (31-3-35).
Adjusted world price
(AWP) was up 3.56 cents
at 69.74 cents. Cotton net
weekly sales reported by
exporters were net sales
cancellations of 18,700
bales for the 2022/23
marketing year and net
sales of 80,600 bales
for the 2023/24 marketing
year. Exports for the
same period were down
15% compared to last
week at 197,800 bales.
Upland cotton export
sales were 115% of the
USDA estimated total
annual exports for the
2022/23 marketing year
(August 1 to July 31),
compared to the previous
5-year average of 115%.
The Crop Progress report
estimated cotton
condition at 46%
good-to-excellent and
24% poor-to-very poor;
cotton squaring at 78%
compared to 64% last
week, 79% last year, and
a 5-year average of 79%;
and cotton setting bolls at
37% compared to 25%
last week, 46% last year,
and a 5-year average of
39%. In Tennessee, the
Crop Progress report estimated
cotton condition
at 64% good-to-excellent
and 12% poor-to-very
poor; cotton squaring at
89% compared to 83%
last week, 84% last year,
and a 5-year average of
84%; and cotton setting
bolls at 43% compared
to 30% last week, 49%
last year, and a 5-year
average of 40%. December
2023 cotton futures
closed at 84.26 cents,
down 0.22 cents since
last Friday. For the week,
December 2023 cotton
futures traded between
84.01 and 88.39 cents.
Downside price protection
could be obtained
by purchasing an 85 cent
December 2023 Put Option
costing 4.4 cents
establishing an 80.6 cent
futures floor. March 2024
cotton futures closed at
84.41 cents, down 0.02
cents since last Friday.
May 2023 cotton futures
closed at 84.45 cents,
down 0.03 cents since
last Friday. Dec/Mar and
Dec/May cotton futures
spreads were 0.15 cents
and 0.19 cents.
Wheat
Wheat net weekly sales
reported by exporters
were net sales of 8.6
million bushels for the
2023/24 marketing year.
Exports for the same period
were up 67% compared
to last week at 14.5
million bushels. Wheat
export sales were 28%
of the USDA estimated
total annual exports for
the 2023/24 marketing
year (June 1 to May 31),
compared to the previous
5-year average of 37%.
Wheat cash prices at elevators
and barge points
ranged from $6.32 to
$7.13. The Crop Progress
report estimated winter
wheat harvested at 68%
compared to 56% last
week, 76% last year, and
a 5-year average of 77%;
spring wheat condition at
49% good-to-excellent
and 16% poor-to-very
poor; and spring wheat
headed at 94% compared
to 86% last week, 83%
last year, and a 5-year
average of 93%. September
2023 wheat futures
closed at $7.04, up
7 cents since last Friday.
September 2023 wheat
futures traded between
$6.89 and $7.77 this
week. September wheatto-
corn price ratio was
1.35. Sep/Dec and Sep/
Jul future spreads were
24 and 50 cents. December
2023 wheat futures
closed at $7.28, up 11
cents since last Friday.
July 2024 wheat futures
closed at $7.54, up 15
cents since last Friday.
Downside price protection
could be obtained by
purchasing a $7.60 July
2024 Put Option costing
81 cents establishing a
$6.79 futures floor.

FED CATTLE
Fed cattle trade was not
established at the time of
this writing. Asking prices
in the South were $180
to $182, which is $2 to $4
higher than last week.
The 5-area weighted average
prices thru Thursday
were $186.57 live,
down $0.17 compared
to last week and $292.05
dressed, down $1.93
from a week ago. A year
ago, prices were $139.07
live and $225.42 dressed.
Cattle feeders and packers
played a game of
“stalemate” this week
with cattle feeders asking
higher prices and packers
unwilling to agree
to such terms early this
week. If they do not get
some deals done then
they both may be playing
the game of “left holding
the bag.” The simple
truth of cattle and beef
production is that cattle
are a perishable product,
they cannot be fed indefinitely,
and packers have
to slaughter animals to
cover sales agreements
and fixed costs. Who will
blink first in this staring
contest? Will it be the entity
with the glass eye or
will it be the entity with
no eyes? Someone will
eventually make a move,
and that move will be
what determines if prices
increase, decrease, or
stay the same compared
to last week.
BEEF CUTOUT
At midday Friday, the
Choice cutout was
$302.62 down $0.24
from Thursday and up
$0.08 from a week ago.
The Select cutout was
$276.67 down $3.09
from Thursday and up
$0.08 from last week.
The Choice Select spread
was $25.95 compared to
$25.95 a week ago.
Domestic beef production
year to date pushed
over 15 billion pounds
this week, which is more
than 700 million pounds
less than the same period
last year or a decrease of
nearly five percent. Most
of the decline in beef production
compared to a
year ago stems from reduced
beef cow slaughter,
steer slaughter, and
lighter slaughter weights.
Beef cow slaughter is
down more than 12 percent
while steer slaughter
has declined close to five
percent. Alternatively,
dairy cow slaughter has
increased nearly six percent
compared to a year
ago due to declining milk
prices. Heifer slaughter is
not even one percent lower
than a year ago, and it
simply reaffirms what
was presumed in that
heifer retention did not
begin the first half of this
year. All of these points
should support beef prices
remaining elevated in
the near term and in the
longer term. It will be
interesting to see how
imports are adjusting to
meet the demand for lean
grinding beef given the
production decline domestically.
Export data
will also help solidify the
beef availability picture.
OUTLOOK
Based on Tennessee
weekly auction price averages,
steers prices were
$2 to $5 higher compared
to last week while heifer
prices were steady to $4
higher compared to a
week ago. Slaughter cow
prices were steady to $1
higher than last week’s
weighted average price
while bull prices were
steady compared to the
previous week. Since
we are in the midst of
the county fair season,
this is the perfect time to
compare cattle markets
to the county fair. There
are certainly several similarities
and the main one
that comes to mind is
how well those rides are
put together. The county
fair ride is not like a roller
coaster at a theme park
in that it is put together
one time. Instead it is
taken apart moved and
put back together several
times per year. The folks
who do this are probably
really good at what they
do, but taking something
apart and putting it back
together many times increases
the probability
of a mistake. Commodity
markets appear to be
constructed and destructed
every couple of weeks
as traders decide to run
futures to extremely high
levels and then spend the
next week tearing it apart.
There is a season for everything
including constructing,
repairing and
destruction. However, as
cattle market participants
continue to build higher
prices, the question is if
the foundation is strong
enough to carry the
load. Sometimes slower
growth provides time
for the foundation to be
reinforced and repaired
if there is a crack. The
fundamentals in the cattle
market certainly support
strong cattle prices,
but market participants
have built prices higher
at such a rapid pace that
there is a good chance
the foundation did not
have enough time to cure
and settle prior to building.
There is no doubt
a collapse will come in
cattle markets. The key
will be when will it happen
and how abruptly
will it occur. Managed
growth is a good thing.
Just ask weeds after they
are sprayed with 2-4D
resulting in uncontrolled
growth. This idea may be
premature, but know it
was said here first!