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Trade Poised For Large USDA Corn Acreage, Stocks
DES MOINES, Iowa (Agriculture.com)—What’s everybody talking about? As the final week of the month rolls around, the farmer talk swirls around what the USDA will say in its March 31 Planting Intentions Report.
This year is no exception. In a discussion thread on Agriculture.com on where this market is going, it didn’t take long before the focus was put on the annual report.
“This market is going wherever the USDA lets it go . . . and wherever the funds take it based on what the USDA says. It's been that way for a long time now,” says roarintiger1, a regular contributor to Agriculture.com’s Marketing Talk.
llakmf, a regular contributor to Marketing Talk on Agriculture.com, feels like the market has a mind of its own this year. “The new-crop corn chart looks like USDA does not need any corn, with the price below last fall. With a slope down like that, the (USDA) report will not be relevant.”
So, what does the trade expect the USDA to say Thursday? The average trade estimate for 2016 U.S. corn acres is 89.972 million vs. the USDA’s estimate in February of 90.0 million, according to Reuters news service.
For soybeans, the average trade estimate is 83.057 million, compared with the USDA’s February estimate of 82.500 million. And, in its report, the USDA is expected to peg the 2016 U.S. All Wheat acres at 51.702 million vs. the previous estimate of 51.00.
Like farmers, analysts have been anticipating this annual government report for a while. In fact, Ryan Ettner, Allendale Inc. grain analyst, believes the trade is convinced U.S. corn acres will be large.
“To start next week, the first thought many corn traders will have is to expect light selling ahead of Thursday's acreage report. But there are two things to keep in mind before expecting a sizable setback,” Ettner stated in a weekly note to customers Friday.
“First, the trade is already well prepared for a large corn number, analysts have been pointing that out for over a week already."
Etna added, “First, the trade is already well prepared for a large corn number, analysts have been pointing that out for over a week already. Secondly, we will also see a quarterly stocks report along with acreage, and the recent two to three months of strong ethanol/export demand might generate a slightly bullish report for old crop. Corn might end up calm most of next week to a slight bearish bias awaiting the acreage report.”
This past week, the soybean market rallied. Though most reasons given for the move up included short-covering and inclement weather in the Delta, prepositioning ahead of the USDA report showed up in comments as well.
Mike North, President Commodity Risk Management Group, says that the soybean market is rallying from two supportive factors. "The reality of this move in recent weeks has been the rising energy market coupled with short covering by funds ahead of the report. Soybeans have also gleaned mild support by extra wetness in the Delta."
The USDA will release its March Planting Intentions Report and its Quarterly Stocks Report on Thursday at 11:00 a.m. CT.
QUARTERLY GRAIN STOCKS
A Reuters news service poll of analysts suggests the trade sees U.S. corn stocks, as of March 1, 2016, will come in at 7.801 billion bushels, the largest stocks since 1987 and the second most in records dating to the 1920s.
For soybeans, the average estimate is 1.556 billion bushels. If realized, it would be the most for March 1 since 2007. For wheat, the average estimate of 1.356 billion bushels would be up 1.9% from a year earlier and the biggest March 1 stocks since 2011, according to Reuters.