Outlook reaction is calm
The basic information started flowing out of the USDA’s annual Outlook Forum this morning. Tomorrow, there will be additional details released, as the second day of the conference focuses more on specific commodities.
So the starting information is on planted acres-94 million for corn, 75 million for soybeans and 58 million for all wheat. The sum of the three crops is 227 million acres and the sum of the 8 major crops is (including sorghum, barley, oats, rice and upland cotton) is 254.4 million acres, the highest since 1997.
The corn number was exactly what the market expected and would be the highest acreage planted to corn since 1944. The wheat number seems like what the trade should have been expecting, based on winter wheat seedings, plus an estimate for spring wheat. Never the less, the market took the 58 million acre figure negatively.
The soybean market got the most positive news, with only 75 million acres planted for 2012. That equals 2011 and is probably about one million acres less than anticipated. Remember these numbers were determined by USDA economists and were not based on survey data. The first survey for spring planting intentions will be released on March 30th.
Today the Rosario Grain Exchange in Argentina put out crop estimates which were small. They estimate the Argentine soy crop at 44.5 million metric tons and the corn crop at 19.8 million metric tons. Small crop estimates, particularly for soybeans, out of South America highlight the potential need for additional bean area here in North America.
Large purchases by China (not including the ceremonial purchases made when Xi Jinping visited) in the past week also show continued demand for soybean supplies. Smaller crop estimates and strong basis levels have shifted some purchases from the south to the US. Using current prices, this could continue into the spring.
What price causes the US farmer to re-evaluate his 2012 acreage plans?
The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.