Grain prices have rallied back after the break from the June 30 report. That data showed more corn acreage and stocks were higher than expected, with prices at the levels they were at before the report.
This is surprising, as the crop condition numbers indicate an improving corn and soybean yield potential as the warm weather has pushed crop forward and dried out previously soggy areas around the country.
Grain market bulls have recently been on the run, hoping to avoid being turned into steers in recent weeks as they have lost a lot of equity.
Most of that was due to the recent USDA acreage report, where it was found that a lot more acreage was switched to corn from the March 1 intentions, due to the high prices. If planting conditions had been good, we could have had another 1-2 million acres of corn, but as it was only 100,000 more acres than the intentions report in March appeared.
Today is the USDA report, long awaited as it contains the projected planted acreage for corn, soybeans, and wheat.
These were much anticipated numbers, with all eyes focused on corn acreage and what happened to it in 2011 with late planting and wet conditions. How did farmers respond to the incentive to plant corn over virtually any other crop?
It's been a long bull market for grains, with prices rising for almost one year straight, on the production problems around the world, and demand.
The high use of grains from the U.S. resulted from the lack of availability of grains from the rest of the world. With high prices this spring (corn running to new all time, all world highs two weeks ago), we also are starting to limit the demand for grains - the job the market must do on a short crop year.
This week's rain events, across the northern Plains and North Dakota, likely ended the planting season for the state, leaving a tremendous amount of unplanted HRS wheat, barley, and durum acreage unseeded for the year.
While much was made during the season about the plight of corn acreage (and USDA cut corn planted acreage 1.5 million acres), in the final analysis Pro Ag figures it was the small grains that took the brunt of the loss in planted acreage from intentions.
The past 10 days have been a huge turnaround for the eastern Corn Belt in planting conditions. They went from virtually nothing planted in OH (only 19% of the corn to May 30) to a much improved outlook for production in the region.
It's been a long spring for producers in the HRS wheat belt and the eastern Corn Belt to this date, with planting progress lagging terribly vs. normal at this late time of year. It is becoming absolutely critical for planters to get things done in the next two weeks, as the opportunity to grow a crop this year is quickly closing its window in early June.
Corn prices are within striking distance of their new-crop December highs, as we move into the final stages of what has been a late planted crop for 2011.
The eastern Corn Belt states of OH and PA are struggling mightily with their planting season, barely getting started to date in the progress which is starting to get the trade worried with another wet five-day forecast.
We talked last week about how the market was focused on only the bearish side of the market.
That reasoning was supported by the expectation that prices had already allocated out the short crop from 2010 by cutting demand due to the high prices offered at the time, with $8 corn effectively limiting the market demand for ethanol, exports, and potentially even feed use. The market was intent upon focusing on the negative news items, and ignored the bullish aspects of the late planting to date in the US.
Today's USDA report was filled with information for both the bulls and the bears, but it was the bearish items that got noted in trade, with price plummeting limit down in corn, sharply lower in wheat, and moderately lower in soybeans.