Corn and soybeans closed quietly mixed Monday, with cotton and wheat futures lower. Cattle rallied.
Shawn Hackett, Hackett Financial Advisors, says corn and soybeans ended mostly lower after some early strength in the soybean market as the bulls and bears were both disappointed with the lack of direction in the USDA reports.
USDA’s Acreage Report pegged corn acreage close to expectations at 95.2 million acres, which was in line with expectations but still up 4.61 million from last year.
Soybean acreage at 83.4 was down only about 150,000 from March, but well under last year and again in line with estimates.
The June 30 reports have traditionally produced some fireworks, especially as they coincide with the end of the month and quarter which also triggers some portfolio re-balancing by the funds, but that didn’t happen Monday.
He says the market is comfortable with the lack of a weather threat and continues to keep a lid on price rallies despite the fact that USDA’s Quarterly Stocks showed there is little room for error in this season’s balance sheets.
Corn stocks were at 4.64 billion bu., which confirms the USDA’s tight 1.365 billion bu. ending stocks estimate and even with the large acreage, a one or two bushel drop in yields makes the new crop balance sheet fall to near 1.5 billion, which is extremely tight.
The soybean inventory situation is even tighter, according to Hackett, with only 83.4 million acres of soybeans planted.
Even though stocks were 30 million bu. above 2024 at 1.0 billion bu., USDA already has ending stocks for 2025-26 at only 275 million bu. and so a one or two bushel loss in yield could put soybeans down to pipeline supplies below 200 million bu.
Hackett says this means both corn and soybeans are undervalued. “At these tight ending stocks we should not be at only $10 soybeans especially with the prospects for more acres needed next year to meet the EPA’s biofuels belnding requirements.”
Wheat acreage was up just slightly from March and down 1% from last year, but the wheat market reacted more to the build in stocks by nearly 150 million bu. over last year.
Yet, Hackett believes that the wheat market is seeing harvest/hedge pressure and once that is over there is a good chance for wheat to rally.
Cotton acreage came in at 10.1 million acres, which was above trade estimates and seems to cast a negative tone over the cotton market.
Hackett points out acreage is still historically low and down 10% from 2024 and again prices are too low for the current carryout.
He says barring a weather event he’s not sure what will be able to rally the market but the lower dollar should help spur export demand for grains as well as possible trade deals.
