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Weather leaps over bearish USDA data

Jeff Caldwell Updated: 06/29/2012 @ 3:34pm Agricultural content creator and marketer.

U.S. farmers planted 5% more corn this year than a year ago and soybean acreage is down slightly, though the numbers rank among the highest planted acreage for both crops. Both numbers are higher than the trade expected, making them bearish, but it didn't take long for bullish weather to overtake Friday's numbers and send corn, soybean and wheat futures sharply higher.

This year's corn crop adds up to 96.4 million acres, USDA said Friday, up 5% from last year. That's the largest planted acreage in 75 years, and includes record high acreage numbers in Minnesota, North Dakota and South Dakota, according to Friday's report.

Farmers intend to plant just over 76 million acres of soybeans this year, up 1% from last year. That makes it the 3rd-highest bean crop in history, with acres expanding in 2/3 of the major soybean-growing states.

USDA also lowered corn stocks by 14% from a year ago, while soybean stocks are 8% higher, according to Friday's USDA Grain Stocks report.

"We got the acres we were looking for on the beans. There was a huge jump there. And, a fairly big jump in corn acres," says Don Roose, trader and analyst with U.S. Commodities in West Des Moines, Iowa. "This gives us a bit of a buffer yield. In the stocks numbers, we had a big drawdown. We're looking at stocks under 2011."

Taken at face value, the USDA numbers released Friday are neutral to bearish. But, in a wider context, the reports look to be dwarfed by Mother Nature, who's exerting extreme pressure on row crop conditions via heat and drought.

"We traded the report the first minute and dropped the market, then we were back up on weather," Roose adds.

It didn't take too long for the markets to turn things around and resume the climb that's been underway the last few days based almost exclusively on the hot, dry crop weather and the damage it's inflicting on the corn and soybean crops.

"There were a lot of mitigating factors in this report that took away the bearish sting," says Jerrod Kitt, director of research for the Linn Group. "Iowa, Nebraska, the Dakotas and Minnesota are kind of the areas that have benefited most from the weather this year, and they lost a million acres combined. Some of the eastern states picked up a considerable amount of acres in this report."

Though the corn acreage number came in near -- but above -- previous trade estimates, the number of those acres that ultimately see the combine this fall could be an altogether different story. But, that departure between planted and harvested acres could be even greater in soybeans, says AgResource Company chief economist Bill Tierney. There were a lot of farmers shooting to raise double-cropped soybeans, but that could change on account of the hot, dry weather, he says. Nobody's quite ready to make the final call on soybeans yet.

"Final plantings for soybeans are going to be smaller than those reported. The abandonment of what got planted may be higher. The issue is weather. What's surprising is if you take a look at what the various yield models are now, you're very hard-pressed to say that yields will be lower than 42 bushels at this time," Tierney says. "So, the market has not yet digested an appreciable decline in expected soybena crop due to lower yields. Most agronomist I talk to say they won't lower their yields for at least 2-3 weeks. We just need a good soaking rain before those plants start putting the blooms on. Sometime in the next 2-3 weeks, you'll see the models break."

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