As 2020 hits the halfway point, grain markets are seeing some of their biggest moves of the year following acreage adjustments by USDA.
Grains soared at the open on Wednesday, up double digits nearly across the board. December corn futures were above $3.60, and November soybeans climbed near $9.
USDA called for a surprising 92 million acres of corn versus the near 97 million acres it expected back in March.
“[The number is] implying a 5-million-acre drop,” says Rich Nelson, chief strategist with Allendale. “This was the second largest drop on this June report since 1980. It even surpassed [the drop in] 1995 of 3 million acres. Definitely, a good surprise to the trade.”
USDA tallied soybeans at 83.8 million acres, which is 10% higher than last year. That’s less than what the trade predicted and less than the Prospective Plantings report. The June report also put 2019’s crop at more than 76 million acres.
All wheat acres came in at 44 million. It represents the lowest all wheat planted area since records began in 1919.
When it comes to grain stocks, corn stocks came in at more than 5 billion bushels. That’s up less than 1% from last year (with more of it being stored on farms) but down from March.
Soybeans stocks are down 22% at 1.39 billion bushels. Of that number, 633 million bushels are stored on farm. Current stocks are cut in half compared with March.
“June 1 grain stocks on soybeans came in just under the pre-report trade guess,” says AgriTalk host Chip Flory. “I think it was down 6 million bushels below the pre-report guess. Both are slightly positive, I would say.”
Wheat is coming in at just over 1 billion bushels, down 3% from last year.
“We can subtract out what we know from the corn balance sheet to get that feed residual component,” says Ben Brown, an agricultural professor with The Ohio State University. “Given all the challenges we had on the livestock side the past couple months [and] moving animals through processing facilities, a lot of attention is placed on that feed residual category.
Brown says once you do the math, the feed residual use is a lot lower than what most people were expecting.
“I think this will have implications for corn use to the marketing year as we look ahead,” he says.