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USDA feeds bears with stocks, planting data

Jeff Caldwell 03/28/2013 @ 11:36am Agricultural content creator and marketer.

U.S. farmers will plant 97.3 million acres of corn and 77.1 million acres of soybeans this year, according to Thursday's annual USDA Prospective Plantings report.

Wheat farmers will have 56.4 million acres in the ground this year, the report adds. The corn and wheat numbers are right in line with previous trade estimates, and the former's up just slightly from 2012 and 6% higher than 2 years ago, USDA officials said.

"If realized, this will represent the highest planted acreage in the United States since 1936 when an estimated 102 million acres were planted," according to Thursday's report.

On the other hand, the slide in already-tight grain stocks wasn't as pronounced; corn stocks as of March 1 were 5.4 billion bushels, down 10% from a year ago. But, overall corn use was 2.63 billion bushels, down from 3.62 billion bushels the same time a year ago. Soybean disappearance also fell 3% from the same time a year ago, totalling 967 million bushels from December to February.

Thursday's reports held few surprises, with the net result being largely bearish heading into spring planting in the lion's share of the Corn Belt.

Prospective Plantings fell largely within previous trade estimates; corn and wheat were right on the money compared to previous trade guesses, and soybean plantings were pegged slightly lower by USDA than what traders expected before the report's release.

But, throw in a Grain Stocks report that essentially shows the U.S. has adequately rationed grain in the last few months, and it adds up to a bearish combination for the grain markets moving forward, says Don Roose, grain broker and analyst with U.S. Commodities in West Des Moines, Iowa.

"What we have is a shockingly negative [Grain Stocks] report. What it says is we really did a good job of rationing stocks in the last quarter. I think it's all in the feed end of it, possibly through more efficient feeding," Roose says. "We rationed soybeans somewhere in the area of 40 million bushels. There's a lot of competition in the world and there was a lot of rationing in the last quarter."

Despite a projected corn planting of 97.3 million acres in Thursday's Prospective Plantings report -- down from earlier estimates of as much as 99 million acres -- the majority of years sees that number swell between March and June. Combined with the pared-back usage (corn disappearance from December to February, for example, was off just over 1 billion bushels from the same time period a year ago), it creates a "cushion bigger than we thought going forward," Roose says.

The bearish tone cast by Thursday's reports will likely stick around a while, but it won't block out all other influences. Though the trend between December and March 1 was mostly lower, it's been something of a roller coaster ride, Roose says. Though overall grain volume will see upticks at key times during the growing season, tight stocks will still be tight stocks, and they'll require users to not only continue to ration what supply is on hand, but also look to export partners to procure more grain to meet needs, mostly in the feed sector. The net result will be a market remaining in choppy waters likely through the next few weeks.

"This report, and the whole grain market is about whether we are rationing old-crop stocks," Roose says. "It's going to go back and forth and will ask 'Are we going to do a good job rationing?' Keep in mind this market has been going up during the last month, but we were going down from December 1 to March 1. We're chopping around."

But, ultimately, there's one major fundamental factor in the mix that has the potential to overtake any market or USDA data: Mother Nature.

"If we get into weather problems, we've changed the mindset again," Roose adds.

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