Two major corn and soybean market reports are due from USDA Friday morning, but they're fighting with weather for attention.
USDA's Acreage report, issued annually near the end of June, normally is one of the most-watched reports of the season.
This year it's taking a back seat to hot, dry weather that threatens crops across the central and eastern Corn Belt. Still, analysts have been making their best guesses on planted acreage of major crops.
Ahead of the Acreage report to be issued Friday morning at 7:30 Central time, here's how the numbers stack up:
USDA's March Prospective Plantings report projected corn plantings at 95.86 million acres, up 4% from 2012 and the highest corn planted acreage since 1937.
Ahead of Friday's report, trade estimates of corn acreage range from 94.3 million to 96.76 million acres, with an average of just under 96 million.
In March, USDA projected soybean plantings at 73.9 million acres, down 1% from last year and down 5% from 2010.
Trade estimates this week range from 74.5 to 76.5 million acres, with an average of about 75.6 million.
Planting Pace Favors More Corn
"When producers get an open window to plant corn, they plant corn aggressively," noted Rich Nelson, research director at Allendale, Inc., McHenry, Ill., in a webinar this week.
Analysts at Country Hedging, a subsidiary of CHS Inc. based at Inver Grove Heights, Minn., also cited the impact of fast planting.
"Corn planting pace is the most important driver of acreage changes in the June report," while soybean acreage responds more to corn plantings, said CHS in pre-report comments. the 2012 pace of corn planting suggested a 1.5% increase in acreage from March to June, but the ratio of soybean prices to corn prices surged between March 1 and May 1, noted CHS. Nitrogen fertilizer prices also surged during application season.
As a result, CHS estimates corn planting at 96.3 million acres, up 436,000 acres from USDA's March projection.
CHS also projects soybean plantings will be up 898,000 acres from USDA's March estimate, to 74.8 million. Much of the acreage will come from winter wheat, which CHS expects to fall 991,000 acres from the Prospective Plantings report to 40.7 million acres.
At Allendale, Nelson noted that the per-acre premium of corn over soybeans dropped $79 from March 1 to May 1. That may not have made much difference in planting, though. Nelson said that corn acreage projections increased from March to June in three out of four other years when corn revenue fell relative to soybean revenues,
"Producers probably will plant more corn acreage than they said in March," said Nelson. Allendale expects acreage to reach 96.1 million for corn, 75.2 million for soybeans, and 56.3 million for wheat.
Combined acreage for the three major crops of corn, soybeans, and wheat likely will gain at the expense of other crops, said Nelson. In the high-price years of 2007, 2008, and 2012, he said, "Producers went heavy into the main three corps. They took acres out of secondary crops."
Stocks Likely Tightening
Hot, dry weather has already curbed yield prospects for corn. University of Illinois economists Scott Irwin and Darrel Good said in a report this week that the corn crop requires "very favorable weather conditions over a very wide area throughout the entire growing season" to produce an above-trend yield. "Based on weather and crop conditions to date and the hot, dry near-term forecast, an above-trend yield is clearly not in the cards this year."
Declining prospects for this year's production raises the importance of existing stocks.
Friday morning USDA also will issue its new quarterly Grain Stocks report, showing estimated supplies as of June 1.
For corn, trade estimates range from 2.98 billion to 3.5 billion bushels, centering on about 3.2 billion. Last year, June 1 stocks stood at 3.67 billion bushels.
For soybeans, the trade expects stocks of just under 600 million bushels to 660 million, with an average of about 640 million bushels. Last year, June stocks were down to 619 million bushels.
AgWeb.com will have full coverage of the June 29 Acreage and Grain Stocks reports, following the 7:30 a.m. releases.
Below are a few pre-report news items to read before the numbers come out.
AgWeb Radio: Midday Commentary 6-27-12
Doug Werling of Bower Trading says markets are going up, expecting supply to go lower than anticipated. Early planting does not always produce higher yields -- weather is the key. USDA's anticipated numbers are causing speculators to become volatile.
AgWeb Radio: Opening Commentary 6-27-12
Andy Shissler of Roach Ag Marketing says all markets are up this morning. No question: the market is a full-blown weather market. Perhaps some easing as weather forecasters issue new reports.
Ask a Margins Expert: Ready for the Report?
The Allendale Wake-Up Call: Traders Get Positioned For USDA Report
EHedger Report: EHedger Afternoon Grain Commentary 6/26/12
The Allendale Wake-Up Call: Corn Conditions Drop 7% This Week
Standard Grain: Grains Rally on Weather