The numbers released by USDA yesterday have raised a lot of eyebrows. Here’s what they mean for farmers.
USDA rocked the markets yesterday by projecting U.S. farmers have planted 92.3 million corn acres this year
. This year’s projected corn acreage is 5% more than last year and the second highest planted acreage since 1944, behind only 2007’s 93.5 million acres.
The increase in corn acres equaled a decrease in soybean acres
. U.S. soybean growers planted 2.2 million fewer acres than last year. A total of 75.2 million acres have been planted to soybeans in 2011, the lowest since 2007.
With the recent weather severities that produced major planting delays and complications, the market raised its eyebrows at the data. (See all of AgWeb's June report data and analysis
So, what does this data really mean for farmers?
“The farmer has the best pulse on what is really happening in the field,” says Allendale’s Bill Biedermann. “They know that if the USDA missed those facts, farmers are going to hold sales.”
Biedermann says if farmers hold off on making cash sales in the next few weeks, he expects USDA will make revisions to yesterday’s numbers.
How Much Longer Will Corn Prices Tank?
With the unexpected increase in acreage, many market analysts have predicted corn prices to come under significant pressure. As of Friday, July Corn closed around $6.40, September Corn at just over $6 and December Corn at just under $6.
Biedermann says the movement in the markets is largely due to speculative money.
Once that gets done, he says, the industry will come in and really determine what’s really happening with supply and demand. “We’ll see some bounces, for sure.”
Biedermann says analysts are guessing corn prices could drop down to $5.50 to $5.75.
Good News for Livestock
The decline in corn prices was a welcome sight to livestock producers, who had been getting squeezed by the recent high grain prices.
“This is actually a healthier environment for agriculture,” Biedermann says. “If we would have gone to $9 or $10 corn like some people we saying, we would have hurt livestock for years.”
He says having this pullback could sustain a nice healthy profit for both the livestock and grain producers. “We can survive with both sides making money.”
For More Information
Listen to Biedermann's complete analysis on AgWeb Radio.
See all of AgWeb's June report data and analysis.