The February WASDE, released this Tuesday, February 11, posted minor changes to our crop portfolio here on the Texas High Plains.
All four crops are currently trading in a tight pattern, still facing uncertainty induced by the coronavirus. Summer crop prices typically see seasonal strength into and through plant emergence, so holding tight at the moment until the market has priced in global health uncertainty is probably the move to make this week. The next big market mover in agriculture will be the USDA Outlook Forum in Washington D.C. (February 20-21).
WASDE
Corn
Several domestic use categories were revised upward. Food, seed, and industrial use increased 0.7%, and ethanol and by-products use rose 0.9% for a total increase in domestic use of 0.4%. However feed and residual use remained flat. Offsetting increases in domestic use was a decrease in exports of 2.9% to leave ending stocks unchanged. Season average farm price remained unchanged as well at $3.85/bu.
The CME DEC Corn contract fell about a cent on the news Tuesday, currently sitting at $3.88. The contract is largely range-bound in a tightening pattern. Based on seasonal indices corn price typically gains strength through planting and emergence. At the moment the local basis is between 10 and 20 cents over; local price quotes north of I-40 range from $3.98/bu. to $4.12bu. Keep in mind the District 1 average break-even price to cover total cost is $4.02/bu.
Wheat
Wheat exports increased 2.6% from 975 mbu. To 1,000 mbu. Domestic price competitiveness led to the increased export expectations. Ending stocks faced a corresponding decrease, however the move was not enough to adjust season average farm price, which remained at $4.55/bu.
The KC JULY Wheat contract is sitting at $4.79, with a local basis approximately 20 cents under. The seasonal pattern for wheat shows stability through the end of February and into early March before falling into harvest. The District 1 average break-even price to cover total cost is $7.84/bu. (irrigated), and $7.83/bu. (dryland, grazed).
Cotton
For the first time in several months the WASDE left yield per harvested acre constant at 817 lbs./acre, halting the decline that began in September. The result was no change to production or demand, but a 1.6% reduction in season average farm price from 63 cents/lb. to 62 cents/lb. The District 1 average break-even price to cover total cost is $0.52/lb. (irrigated), and $0.87/lb. (dryland).
Sorghum
Domestic sorghum use increased 1.4%, but interestingly saw a reduction in season average farm price of 1.5% from $3.40/bu. to $3.35/bu. (about $6.25/cwt). Local cash bids range from $3.27 to $3.72. The District 1 average break-even price to cover total cost is $9.22/cwt.
Chart Challenge
Last week’s chart challenge kept the theme of livestock slaughter. In fact, you might’ve noticed some similarities between the mystery chart and the chart just before it in the post, cow slaughter. The two charts share the same shape because they map similar trends; cow slaughter, which we labeled and the mystery chart, heifer slaughter. Heifer slaughter is a common indicator of changing cow herd size because more retained heifers means more calves on the ground the following year, and vice versa.
Heifer Slaughter
Our next mystery chart is a real doozy, but something you’ve seen me present if you’ve been to some of my more unique presentations. Good luck!
