USDA Data Drops Corn 18¢ Tuesday

DES MOINES, Iowa (Agriculture.com)—It’s a big surprise from the USDA Tuesday. 

The U.S. farmers will plant not as many soybean acreage as expected and more corn than expected. 

At the close, the May corn futures settled 18 1/4 cents lower at $3.76 1/4 per bushel. The Dec corn futures closed 17 1/2 cents lower at $4.00 3/4 per bushel.
May soybean futures finished 5 1/2 cents higher at $9.73 1/4. Nov. soybean futures finished 6 cents higher at $9.55.  

The May soyoil futures closed $0.10 lower at $30.39. The May soymeal futures ended $3.60 per short ton higher at $326.80. 

May wheat futures closed 18 1/2 cents lower at $5.11 3/4. 

In the outside markets, the Brent crude oil market is $0.68 lower per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 90 points lower.

On Tuesday, the USDA Planting Intentions Report and Grain Stocks Report proved to be bearish for the corn market, friendly for soybeans.

In its report, the USDA pegged the 2015 soybean acreage at 84.6 million, compared to the average trade estimate of 85.9 million. That is 2.0 million above last year’s planted total.

For U.S. 2015 corn acreage, the USDA sees 89.2 million, vs. the average trade estimate of 88.7 million, about 2.0 million less than a year ago.

Meanwhile, the 2015 U.S. wheat acreage is pegged at 56.8 million, compared with the average trade estimate of 55.6 million, about 1.0 million less than a year ago.

GRAIN STOCKS

Also, the USDA will update its Quarterly Grain Stocks. For corn, the stocks, as of March 1, have been pegged at 7.74 billion bushels, vs. the average trade estimate of 7.628 billion bushels.

The U.S. soybean stocks, as of March 1, are estimated at 1.334 billion bushels, compared with the average trade estimate of 1.341 billion bushels.

USDA pegged the U.S. March 1 wheat stocks at 1.124 billion bushels, vs. the average trade estimate of 1.143 billion bushels.

TRADE REACTION

Pete Meyer, PIRA Energy grain analyst, says the curveball has been thrown. The market was looking for a bearish report in soybeans but in typical fashion a curveball was thrown, this time in the form of corn, he says. 

 

“Whether it’s less demand or a higher yield than advertised, the U.S. just has too much corn.  There’s too much un-priced corn in the countryside with the lot of hope that $4.00 was going to be breeched as a result of the reports.  Unfortunately, that didn’t happen,” Meyer says.  While the market was looking for 7.6 billion bushels, we were looking for 7.7 billion and got an even higher number at 7.745 billion, Meyer says.  “89 million acres in corn is too much given the stocks.  And while we were looking for an 89 million acre number, it’s our opinion that number can only come down from here.”

Soybean stocks were slightly lower than anticipated but pretty much in line, Meyer says.  “Acres at 84.6 million can only go up from here.  The combined soy/corn acres at 173.6 million is probably a bit low, by maybe a million, but a lot will depend on planting weather.”

On wheat stocks, they were slightly lower than expected with a fairly large short in the market.  “All-wheat acreage at 55.367 was also slightly lower than anticipated.  Could be some fireworks in wheat with the large Fund short and weather turning hot in the near term,” Meyer says.

Jack Scoville, PRICE Futures Group vice president, says that the government’s report went the exact opposite of what the market was thinking.

“Planted area is much less than expected for beans and more than expected for corn and probably a little friendly, if anything, for wheat,” Scoville says.

Regarding the Stocks Report, the soybean stocks are friendly too, corn and wheat not so much, he says. 

“We can see if wheat and corn can recover, as they got weather. But, the market was leaning the wrong way that is for sure.”

Anne Frick, Sr. VP/Futures Research, says that based on the USDA Report data, soybean ending stocks could remain high for 2015.

“ Prospective soybean plantings were reported at 84.635 mil acres, lower than the average pre-report estimate but within the range and above last year’s plantings of 83.701 mil acres. We are estimating harvest acreage at 83.890 million.  Total acreage was down 3.179 million acres if winter wheat, hay and CRP are counted.  Spring plantings, without hay, are down 228,000 acres. 

Frick adds the following:

—The distribution of soybean acreage this year would have no impact on yields versus last year’s distribution.

—Using the USDA’s yield of 46 bu/acre and our harvested acreage estimate of 83.89 million, the production would be 3,859 mil bu, 110 mil below last year’s, but the carryover with the USDA’s carryin and usage numbers from the Outlook Forum would be 489 mil bu.

—We are using a yield of 46.5 bu/acre which would result in a crop of 3,901 mil bu and our carryover would be 502 mil bu. .

—March 1 soybean stocks were reported at 1,333.7 mil bu which was lower than the average pre-report estimate but within the range of expectations. Soybeans were “found” during the quarter but less than we expected and this may indicate that the 2014 soybean crop was overstated.  However, the large cumulative residual, of about 262 mil bu is a source of usage on the balance sheet for the second half of the season.  The USDA may recognize the record large March 1 residual by increasing its residual estimate from 24 mil bu to 35 mil bu or more in its April supply/demand report but often the USDA does not make such adjustments until the large residual is confirmed in the June report.”

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