Corn, soybean acreage report released

On June 30, the United States Department of Agriculture (USDA) released an acreage report on the outlook for corn and soybeans.

Purdue University Agricultural Economist Chris Hurt discussed the data and implications of the report during a webinar presentation on July 3.

Stocks

When looking at the data from the USDA report, Hurt commented the corn stocks number was slightly bearish.

“USDA released stocks on June 1 as 5.225 billion bushels,” he said. “For corn, we actually ended up with slightly higher stocks versus expectations by about 65 million bushels, so that was a touch on the bearish side.”

Wheat stocks also showed to be slightly higher than expected in the report, indicating slightly bearish wheat stocks.

Alternatively, soybeans were slightly lower than the pre-report expectations.

“They were a little bit lower than the expectations by 18 million bushels, so soybean stocks are a little bit friendly there,” commented Hurt.

Percentages

When looking at stocks from the perspective of what percentage of last year’s harvest is still in stocks, Hurt explained there is a range between 25 to 40 percent where prices are not dramatically high or low.

“When stocks of corn are low in June and we only have 25 percent of last year’s harvest still in the grain bins, we’re probably going to be in a high price situation,” he said, noting the most recent time this scenario was seen was 2010-12.

He continued, “We’re starting to see a rise in those stocks numbers. This is why the price of corn has really come down sharply from those extreme highs that we saw.”

Hurt noted the percentage in stocks is currently around 35 percent, which is below the 40 percent boundary.

“We’re not in a stock situation like we saw in the 1980s with the terrible bust financially. I think this again remains encouraging,” Hurt commented.

He stressed, “Stocks are on the higher side, but we’re not buried. We can recover if we see either production come down or demand utilization going up.”

Bushels

Approximately 2.8 billion bushels of corn were on farm as of the June 1 USDA report.

“I’m not sure whether this is a good thing or a bad thing,” stressed Hurt.

He explained the number of bushels of corn is the highest in on-farm stocks in the modern period, which may not be positive for corn prices.

“The good thing is, we’ve got a strong rally going on in the market now driven by weather factors right now, and farmers have a lot of grain on the farm. That means that a lot of the grain probably isn’t priced yet,” said Hurt. “I think we have some optimism as a result.”

Hurt continued, “There are large inventories, and right now, it looks like we’ve got some reasonable pricing opportunities on that old crop inventory.”

Acreage

According to the USDA survey, corn acreage planted exceeded expectations at 90.9 million acres compared to the pre-report expectations of 89.8 million acres.

“Acreage is down on corn this year, but versus the expectations pre-report, there are about a million more acres of corn, which is obviously bearish,” said Hurt.

While a large increase in soybean acres planted was seen, the total acres planted was lower than what was anticipated pre-report.

“There were 440,000 fewer acres of soybeans, so there’s a friendly element to prices on soybeans,” Hurt commented.

Acreage for all wheat was down by nearly 400,000 acres, he continued.

  “This isn’t quite half a million, so it isn’t a huge number, but it is lower acreage on wheat. Most of that wheat acreage lost was in spring wheat up in the Northern Tier and Upper Great Plains,” explained Hurt.

He noted, “This has been a market that’s been on fire with the problems of weather and dryness, in the Dakotas, in particular, and that’s where we had lower acreage. Now, we have not only lower acreage but a major threat of low yields, as well, on that spring wheat.”

Emilee Gibb is editor of Wyoming Livestock Roundup and can be reached at emilee@wylr.net.