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Grain Market Attention Turns to June 30 USDA Reports
The grain marketplace is starting to sharpen its focus on next Monday's big USDA Acreage and Grain Stocks reports as analysts' estimates start to pour in on the big numbers that could set the tone for the grain trade moving through summer.
Analysts with Allendale, Inc., see larger corn and soybean acres this year, with the latter crop hitting a record for area planted. The firm sees soybean plantings up 1.711 million acres to 83.204 million, up from USDA's figure of 81.493 million in the agency's March Prospective Plantings report. This would be a record for the U.S. soybean crop.
Corn is seen up 385,000 acres from the March report, according to Allendale, at 92.081 million.
There's been growing speculation that winter wheat could see an uptick in acreage in the near future, but expectations for this year don't reflect those opinions: Allendale sees wheat acres slightly lower than the March USDA estimate, with much of that decline coming in spring wheat.
"I would agree that the corn and bean acreage numbers are important, and if either is 2 million below the trade guess we should get a respectable rally," Alan Brugler, president of Brugler Marketing & Management LLC.
Soybean stocks are important because we are exporting beans we don't think we have, and need evidence from USDA that they exist, he says. "Lacking same, prices will have to go back to $15. Plus, I think corn stocks are also important, and 2010 is the role model. We had similar market psychology in 2010, with analysts like Brock and Sue Martin calling for $2.50 corn. Then the corn stocks report came out smaller than expected and a multimonth rally erupted."
We aren't as oversold this time as we were in 2010, but we are close, Brugler says.
Mike North, senior risk adviser for First Capital Ag, says Monday's corn and soybean acreage numbers will be highly watched. "The acreage is in question for two reasons," North says. "How accurate were the planting intentions reported? Secondly, what amount of shifting took place in the northern tier of the Corn Belt due to wet conditions?"
Regarding whether there is any way this report can be bullish, North says it would have to come from the stocks numbers. "The report can be bullish if bean stocks are tightened further or if corn acres are trimmed significantly (Roach is suggesting a 2 million-acre decline is necessary)."
Once the report is released, weather will again take center stage, North says. "Given the forecasts for mild pollination conditions for most of the Corn Belt, a negative tone is likely," North says.