Trade Eyes Acreage Cuts in Friday's USDA Data

DES MOINES, Iowa (Agriculture.com)—The farm markets will get a new ‘number’ to trade Friday. And, most are hoping it’s a market-friendly USDA October Supply/Demand Report. The report will be released at 11 a.m. CT, Friday.

The government will update its estimates for the U.S. corn and soybean 2015 crops. Plus, the U.S. corn and soybean carryout estimates will be refreshed, compared with what the USDA reported in September.

Other categories the trade will be watching include usage and acreage.

Pete Meyer, PIRA Energy senior grain analyst, says that he is interested in what the USDA reports on harvested acreage. “A lot has been made of a 1 million- to 1.5 million-acre cut in harvested acreage for soybeans, but we don’t see it that way.  We do, however, expect a small decrease in corn acreage. As far as yields are concerned, we’re looking for a reduction in corn yield but a slight improvement in soybean yields, as these late-season rains have proven to be beneficial,” Meyer says.

Jacob Burks, First Capitol Ag, says that the Friday report should be interesting. “Typically, the October report contains some rather large acreage surprises. Yield is what everyone wants to see adjusted, but the total production number will be most important. It will be curious to see if they place acres in abandonment or decrease the yield to reduce production,” Burks says. 

Burks adds, “The way the market is trading into the report, it feels like they are wanting to buy now. Hopefully, lower production will be enough to give us a boost, to sustain a rally. I think it will have to be a significant reduction in production, probably something below 13.25 billion bushels."

What would it take to have the market react positively to the report? 

Meyer says the report would need to show both a corn yield cut and a soybean acreage cut of decent magnitude. “Should that come to fruition, the bullishness will stay in the market until we get a better handle on South American prospects. Beans need to close above $9.05 and corn above $4.02 to gain some additional upside momentum.”

Charts courtesy of Wedbush Futures.