Bryan Doherty: Game changer
The much anticipated acreage and stocks report, as expected, had fanfare and sent prices in a limit fashion, at least for corn. Perhaps more importantly than the acreage estimate, which for practical purposes is merely a guess as to what farmers may do, the stocks report in both corn and beans had friendly surprises. While the bushel amounts weren't dramatic, when you relate the drop in quarterly stocks in both, and then take this figure and extract a likewise drop in bushels on the carryout, the reports were gigantic.
In corn, quarterly stocks were 167 million bushels less than the pre-report estimate, or change of 2.5%. However, reduce 167 million bushels from the last carryout estimate of 675 million and this equates to ending stocks of 508 million, or a 24.7% drop.
As for soybeans, quarterly stocks came in 50 million bushels less than expected at 1.249 billion. Current carryout is estimated at 140 million. When subtracting 50 million bushels, this leaves a carryout of 90 million. Or another way to look at this is a potential change of 35.7 percent. Today's figures may not have had much bearing if, in the past, carryout was significantly larger. However, when the gas tank for fuel (soybeans) is running near empty, every drop (or in this case bushels) counts.
So is this a game changer? It is when utilizing carryout. The other variable that will likely come into play is that farmers who are now holding corn or soybeans will likely be even more tight-fisted as summer approaches. The need for an absolutely large crop is paramount for both corn and beans. Soybeans may have the luxury of a significant amount of product coming out of South America, whereas with corn, the world is holding its breath, hoping for a rebound in yield and, therefore, bigger production.
The corn acreage figure at 92.18 was bigger than the pre-report estimate of 91.84. With the market reacting to the stocks figure with a limit-higher move, corn acreage could be even higher. Only time will time. Until then, today's numbers are definitely a game changer.
If you have questions or comments please contact Bryan Doherty at 1-800-TOP-FARM ext. 129.
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