USDA sent the grain market lower after mostly bearish Acreage and Quarterly Stocks Reports, leaving farmers to wonder where prices go from here.
Corn tanked and hit fresh near-term lows with both a bearish quarterly stocks and acreage number, which pushed July corn below the $4 mark.
USDA’s corn acreage at 91.5 million acres was up around 1.4 million from March.
Market analysts say the increase isn’t as much about weather or economics but rather the March planting intentions being too low to begin with.
Matt Bennett, AgMarket.Net, says: “We felt all along those March numbers were artificially low and the grower had seen the lowest prices in about three years. The sentiment was so low most producers weren’t overly optimistic about exactly what they were going to do as far as planting was concerned, especially with high input costs still.”
Bennett says the additional acres will add to an already burdensome corn ending stocks number.
“If you get 181 bu. per acre, you’re starting to talk about a 2.5 billion bushel carry again. Even if you drop down to 179 bu., you are still looking at around a 2.3 billion bushel ending stocks figure.”
USDA’s acreage surveys were taken before the flooding in the northwestern Corn Belt, so those acres will not be accounted for until later in the season.
Prevent plant acres are also not included, and the Farm Service Agency will not release that data until the end of summer.
Soybean acreage was more friendly at 86.1 million, which was down around 400,000 from March intentions with a shift to corn and other crops.
Darren Frye with Water Street Solutions says: “I think corn probably got some of those acres. I know cotton acres were up a whole bunch too, so maybe we had a few less beans planted in the mid-South Delta region because we know cotton was up over a million acres.”
However, he’s doubtful lower acreage will ease the soybean balance sheet a whole lot.
“We have a pretty decent carryout on the balance sheet now. Moving into new crop, I don’t see us being real tight, even with this reduction in acres. You’ve got to remember that China so far hasn’t booked really anything for new crop.”
Quarterly stocks were bearish for soybeans up 174 million from last year. Corn was just under 5 billion bushels, up almost 900 million from last year, which runs counter to the strong cash basis levels.
“There’s a lot of places, especially in the West, with awfully strong basis levels,” Bennett says. “Right here, in the heart of central Illinois, we’ve had a very large processor move from 5 over to 25 cents over in a matter of days over the last couple of weeks. It evidence of a grower who is fairly tight-fisted.”
Total wheat acres were down around 260,000 from March, but quarterly stocks came in at 702 million bushels, up 132 million bushels from last year, which added pressure to prices.
The grain markets had sold off coming into the reports, and Frye says funds were selling with rains in the eastern Corn Belt and cooler temperatures.
He says it will take a big change in the weather during July to get the funds to cover their short position and turn the trend.
