The USDA released their June acreage report today and the corn and wheat market rallied substantially based upon this report. The actual amount of expected corn acreage came in about 1.6 million acres less than the trade expected and the amount of corn on hand was about 300 million bushels less than expected.
Backing into the usage numbers for the quarter, it appears that the amount of corn used in the quarter was about 25% higher than last year which would be an all-time record for that quarter. What seems to be happening is that global demand and ethanol use is soaking up any record crop that the US is able to produce and as the world economy recovers, this trend will continue to accelerate. All in all, any weather scare for this corn market will most likely cause prices to increase substantially.
The bean crop is the recipient of the extra acres that did not go into corn, and thus, any rally there might be tempered by the extra acres. However, there is little margin of error for any weather issues.
Although the wheat plantings came in a little higher than expected, the total amount of wheat acreage is the lowest since 1971. Wheat rallied over 20 cents on the day and we will see how this carries over in the next few weeks.