USDA’s June Acreage Report Leaves More Questions Than Answers
- On Friday, June 28 the USDA released their 2019 survey based report on planted row crop acres for the upcoming 2019/20 crop year. The report compliments the USDA’s Prospective Plantings report that shows planting intentions and is released at the end of March.
- The USDA’s data release on Friday was contentious as it showed large and unexpected increases in planted corn acres. Based on unfavorable weather conditions throughout most of the key corn producing states in the east and west corn belts, pre-report estimates were looking for 3 million acres cut.
- Corn planted area in 2019 is estimated at 91.7 million acres, 3% YoY. Compared with 2018, planted acres are up or unchanged in 40 of the 48 estimating states. Area harvested for grain, at 83.6 million acres, is 2% YoY.
- Soybean planted area for 2019 is estimated at 80.0 million acres, -10% YoY. This represents the lowest soybean planted acreage in the United States since 2013. Compared with 2018, planted acreage is down in all 29 estimating states.
- This was a larger than expected decline from the pre-trade estimates that were looking for a modest cut of 250,000 acres.
- The USDA’s NASS group, (National Agricultural Statistics Service), released a statement on Friday afternoon saying the agency will be resurveying farmers for planted acres in key corn and soy producing states during the first two weeks of July. Any changes will be released in the August WASDE.
- What It Means For The US Farmer: At FBN we believe that the USDA’s corn acres number is unbelievable. We are not the only ones with this thought. We believe that adding corn acres made sense as higher prices can help create more supply. But at FBN we have a problem with the USDA’s initial assumption on corn acres because the USDA’s own weekly crop progress reports both contradicted and suggested that material acres of corn and soybeans were unplanted. We believe that the decision by NASS to resurvey for planted acres is a positive step but that it can also create uncertainty in the corn markets.
U.S./EU Still Battling Over Agriculture in Trade Negotiations
- The United States will not reach a trade agreement with the European Union if agriculture is not included.
- Europe is a top U.S. trading partner and has offered to start negotiations with the United States about removing import duties on industrial goods. However, these talks have not begun in earnest as the two countries continue to debate the treatment of market access for agricultural goods.
- Washington is adamant that agriculture should be included in the talks, but the EU has not included agriculture in its mandate.
- The discussions are part of a deal struck last year between European Commission Chief Jean-Claude Juncker and U.S. President Donald Trump, under which the United States agreed not to impose punitive tariffs on EU car imports while the two sides worked to improve transatlantic trade ties.
- What It Means For The US Farmer: At FBN we believe that including certain adjustments to allow for a more free-flow of GMO crop exports to Europe can be a positive for the U.S. farmer. However, the EU has a long and proven political history of agricultural protectionism. Cracking the EU export market to allow certain GMO based row crops has been a difficult and sticky negotiating point for many U.S. presidents.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)