From March to June
Apr 07, 2009
Allendale is well aware of the recent findings of the USDA “Planting Intention” report and the obvious surprises which were contained within. Those surprises include lower than anticipated soybean planting intentions, larger than usual second quarter soybean use (974 million bu vs three year ave of 891 million bushels) and the thin amount of spring wheat and durum wheat acres projected.
Now that the report is behind us, the industry is likely transitioning towards focusing on 3-5 day weather forecast, crop progress and keeping an eye on energy futures, US dollar index and DJIA.
An interesting note with regards to the recent March acreage report is Allendale’s research suggest there has been consistency between the March intention and June “Planted Acreage” reports dating back to 2004. The findings are June corn acres have been larger than March acres by an average of 1.74% and soybean acres lower by an average of 1.5%.
In recent history there has been a time when corn futures sold off by forty cents from the March to June reports and soybean futures rallied by a similar amount and yet corn acres increased and soybean acres decreased. Allendale suggest the acreage adjustment for 2009 corn and soybeans are likely to be more of an agronomic decision and not necessarily an economic decision.
Based on USDA’s March acreage intention of 84.98 million for corn and the potential for a 1.74% increase into June, Allendale will be prepared for the June “Planted Acreage” report to be near 86.46 million. As indicated above if the average reduction for soybean acres from March to June has been 1.5%, USDA potentially could flash a June “Planted Acreage” of 74.88 million.
If USDA does reduce soybean acres and increase corn acres, how does this translate to projected end stocks vs Allendale’s present estimates of 1.234 billion bushels for corn and 341 million bushels of soybeans. The acreage adjustment may imply 2009/10 end stocks of 1.446 billion bushels for corn, 17% less than present old crop stocks and 364 million bushels of soybeans, 97% larger than present old crop stocks.
Herein the question you need to ask yourself, how might these acreage adjustments affect your new crop and old crop risk management? Allendale suggest the 2009 Midwest planted acres are likely to experience an adjustment. Will you adjust before the June planted acreage report or after?
Allendale Inc would appreciate your thoughts and ideas regarding the potential for the 2009 acreage adjustments. ….Joe Victor
your Allendale broker to discuss Allendale’s “The Evaluator” program. 800-551-4626
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