USDA report could provide 'market surprise', analysts say
As U.S. farmers struggle to finish planting the 2009 crops due to inclement weather, market participants wonder how the USDA will see acreage estimates in its upcoming report.
The USDA will release its June Acreage and Quarterly Stocks reports Tuesday, June 30, at 7:30am CST.
"In our opinion, this report has the potential to surprise, as we believe the landscape couldn't be more different than when the initial survey for the March acreage report was conducted," Gavin Maguire, Director of EHedger says.
In March, input costs remained high, crop prices were spiraling lower, and a great deal of uncertainty surrounded the global economy, Maguire says. "Since then, inputs such as fertilizer have declined notably, crop prices have endured an extended rally, and investors have regained an hefty appetite for commodities in general."
Also, new crop corn prices have jumped from $3.90-4.00 when the March 31 survey was conducted to $4.50-4.60 by the end of May. "This may have changed producersâ€™ tune during that period with regard to cornâ€™s appeal as an extensively-planted crop," Maguire says.
Maguire adds, "Though poor weather conditions created abandoned acres, overall $4.50-area per bushel corn is expected to have had a sustained appeal to several producers throughout the planting season." In March, USDA estimated corn acres at 84.9 million.
"We are not expecting a steep decline relative to the March 31 numbers, and indeed would not be too surprised to see total corn plantings to be fairly flat or slightly higher than the 85 million projected this spring," Maguire says.
Glenn Hollander, a CBOT floor trader with Hollander & Feaerhaken, says the quarterly grain stocks report will be just as important than the acreage estimates Tuesday.
"We've planted the corn, but we're not quite finished planting the soybeans. I don't know if the USDA is going to give us acres they anticipate or if these are the final planting numbers that they know," Hollander says.
Regarding acres, Hollander says, "The questions are will we see the government reduce the corn acreage by 1.0, 2.0. or 3.0 million acres compared to their March estimate?"
For soybeans, prices could be tempered by a larger acreage number, but the tight stocks number could balance out a negative acreage number, Hollander says.
In March, the USDA estimated U.S. soybean acreage at 76.024 million.
Since March, soybean prices have moved impressively higher(with Nov prices rallying more than 36% from March 2 till June 1), Maguire says. "So, we are certainly expecting those high prices to have purchased additional acres relative to the March 31 figures. A 2.0 million acre rise to 78 million total planted soybean acres would not be a surprise."
Bryan Doherty, Stewart-Peterson market analyst, says the USDA could estimate U.S. soybeans at 78.5 million. "Input costs for corn would argue this soybean acreage number is feasible as would encouraging soybean prices."