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USDA Roundup: Bearish, Especially for Corn

Friday’s USDA reports on June 1 Grain Stocks and planted acreage were a bit of a shock, particularly for corn, which reacted as expected to a bearish report with losses of more than a dime. The reports were more of a mixed bag for soybeans and wheat, but the cotton acreage number was also very bearish, making for a negative market tone overall on the last day of June.


As noted in our recent discussions about the seminar trail, we were surprised to see more soybeans than corn in many areas, particularly in our trip in the eastern Corn Belt this week. Thus, we were surprised again to see USDA actually raising its corn plantings estimate substantially from the March planting intentions. USDA estimated corn acres at 91.475 million, up from an average trade estimate of 90.353 million, and above the range of trade estimates. It’s also up sharply from March planting intentions of 90.036 million, though down from 94.641 million last year.

A relatively smooth planting season in much of the Corn Belt may have encouraged some more corn plantings, although, another likely factor is that USDA was too low in its total planted acreage estimates in March. The biggest increases were in Kansas, up 600,000 from March, and Iowa, up 300,000 acres. Nebraska and Minnesota also saw large increases.

Soybeans: Acreage of 86.10 million was down from 86.51 million in March intentions, and down from the average analyst estimate of 86.753 million. Still, plantings are up from 83.6 million last year.

Wheat: Spring wheat plantings of 11.27 million were down slightly from 11.33 million in March. Traders had been expecting essentially no change.

For corn, wheat and to a lesser extent soybeans, these acreage estimates coincide with strong early crop condition ratings and a weather forecast that, while far from perfect, also lacks a strong drought threat. The floods in Iowa and surrounding states are more than offset by conditions to the south and east. And even states hit by flood, areas that avoided it will mostly benefit from the rain.

Cotton: This was an even bigger shocker than the corn acreage estimate. USDA estimated cotton acres at 11.67 million, up from 10.23 million planted last year, March intentions of 10.673 million, and the average analyst estimate of 10.829 million. This increase of nearly 10% from March intentions would be similar to adding more than 9 million corn acres to the balance sheet. Most of the increase in acreage was in Texas, and the question will be to what extent the added planted acres actually get harvested. Regardless, this is a number that will linger in the market for a while.


Corn: USDA pegged corn stocks at 4.993 billion bushels, up from 4.103 billion a year ago and above the average analyst estimate of 4.873 billion. Illinois stocks are up a whopping 44% from a year ago. Other states with large increases from last year include Minnesota and Ohio, each up 24%, and Iowa, up 12%.

Soybeans: June 1 soybean stocks came in pretty close to expectations at 970 million, compared to an average survey guess of 962 million. This is still up sharply from year-ago June 1 stocks of 796 million, and would seem to refute some recent chatter, bolstered by cash markets and futures spreads, that supplies are tighter than people realize. As with corn, soybean stocks are up sharply in Illinois – 46% from a year ago. Minnesota soybean stocks are also up 46% from a year ago. Iowa and South Dakota supplies are also up significantly.

Wheat: The stocks estimate was slightly negative for wheat prices at 702 million bushels, up from 570 million a year ago and the average analyst estimate of 684 million. Wheat estimates had ranged from 644 to 705 million.

All told, while not everything about Friday’s reports were bearish for grains and soybeans, there was little for bulls to rally around.


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