More 2020 U.S. soybean and a lot less corn acres, USDA estimates

The U.S. farmers planted a lot less corn acres and a slightly higher amount of soybeans, this year, according to the USDA.

On Tuesday, the USDA released its June Acreage and Quarterly Grain Stocks Reports.

Today, the USDA estimated total corn and soybean acreage at 176 million vs. its March estimate of 180.5 million. So, the question that investors are asking this morning is, where did the acres go? 

As a result, the CME Group’s farm markets moved up 16¢, following the reports. Though corn and soybean prices traded  up 20¢ and 22¢, respectively, today, they finished off of their highs.

At the close, the Sept. corn futures finished 12 1/2¢ higher at $3.41 3/4. Dec. corn futures ended 15 3/4¢ higher at $3.50 1/2.
 
Aug. soybean futures closed 17 1/4¢ higher at $8.78 3/4. November soybean futures ended 20 3/4¢ higher at $8.82 1/4.

Sep. wheat futures closed 5 3/4¢ higher at $4.91 1/2. 

Aug. soymeal futures finished $5.50 per short ton higher at $289.10. Aug. soy oil futures closed $0.36 higher at 28.14¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.46 per barrel lower at $39.24. The U.S. dollar is higher, and the Dow Jones Industrials are 26 points higher.

Quarterly Grain Stocks

In its report, USDA pegged the June 1 corn stocks at 5.22 billion bushels vs. the trade’s expectations of 4.95 billion bushels and last year’s 5.2 billion.

For soybeans, June 1 stocks are estimated at 1.39 billion bushels vs. the trade’s estimate of 1.39 billion and last year’s 1.78 billion.

USDA pegged the June 1 wheat stocks at 1.04 billion bushels vs. the trade’s expectation of 987 million bushels and last year’s 1.08 billion.

Acreage Report

On Tuesday, the USDA pegged the U.S. corn plantings at 92.006 million vs. the trade’s expectation of 95.14 million and the USDA’s March estimate of 96.99 million.

For soybeans, the USDA sees U.S. acreage at  83.82 million vs. the trade’s expectation of 84.83 million and the USDA’s March estimate of 83.51 million.

All wheat acreage is pegged at 44.2 million vs. the trade’s expectation of 44.72 million and the USDA’s March estimate of 44.66 million.

Trade Response

Sal Gilbertie, Teucrium Trading, says that today’s USDA report could cement a bullish slant for the corn market.

“The news is the corn planted acreage number, which, assuming trend line yield, trims the corn balance sheet by almost .5 billion bushels. Corn is king, and there were near record shorts on the futures side, which means today’s price rally in corn could support the whole grain complex for a while,” Gilbertie says.

Jack Scoville, PRICE Futures Group, says that today’s stocks estimates are a little negative, with the corn number above trade expectations. But the planted area estimates were very bullish and are taking the attention of the trade. 

“Corn planted area at just 92.0 million acres was below all trade estimates by a wide margin and a reason to rally and rally hard. Beans planted area was up slightly from March, but not nearly what the trade had expected. So, the plantings report was very bullish everywhere and makes weather that much more important, since we have less planted area to deal with. We will soon return to the negative demand news and the weather as guides for the way forward, but the lower acreage is the surprise and is getting all the attention right now,” Scoville says. 

Britt O’Connell, Cash Advisor for Commodity Risk Management Group, agrees that today’s USDA report brought forward a bullish surprise to the grain markets.  

“The biggest headline is the corn planted acreage number coming in at 92 million acres.  That is a large reduction from the 97 million forecasted this spring and lower than the average trade estimate of 95 million,” O’Connell says.  

However, this is not entirely bullish, the second part to this report is the quarterly stocks, she says.  

“The USDA’s estimate was for 4.95 billion in stocks and came in at 5.2 billion – 3.0 million more than the trade estimate.  A 3.0 million acre reduction at trendline yield results in almost perfectly offsetting the 3 million bushel addition in stocks,” O’Connell says.  

Regarding soybeans, the market seemed to think it was going to plant more acres since the March planted acreage report, she says.

“Since it didn’t and demand is strong, I think this market has some room to run higher.  We  have put together five consecutive record crush months domestically. Plus, we are now back on track to achieve the USDA’s export expectations and China still seems aimed at making good on Stage 1 of the trade agreement,” O’Connell says.  

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