Grain Stocks, Acreage Reports Send Corn Lower, Soybeans Higher
Farmers in the U.S. will plant 89.2 million acres of corn this spring, down 2% from last year, while at the same time planting 84.6 million acres of soybeans, up 1% from a year ago. Soybean acreage will be higher in 21 of the 31 major states for that crop, according to Tuesday's annual USDA Prospective Plantings report.
Meanwhile, Tuesday's quarterly Grain Stocks report shows 11% more corn on hand in the U.S. vs. a year ago, with 4.38 billion bushels stored on farms, a 13% increase from a year ago.
"Why we're banging the corn market: Stocks were quite a bit bigger than expected. Soybean stocks are 1.34 billion bushels. The corn number – that's why we're taking the corn market lower," says Kluis Commodities market analyst and grain broker Al Kluis. "These markets always throw us a surprise. Soybeans went from 5 lower to 8 higher."
USDA's numbers came in well within previous trade estimates, for the most part, and the initial market reaction was just as expected, with corn moving lower and soybeans moving higher. Altogether, the data doesn't provide a lot of firepower for grain bulls in either pit moving forward, especially considering how quickly the market's attention is likely to turn to spring planting weather. At this point, Kluis says, that weather is looking more favorable for the Midwest while planting continues to be delayed in the mid-South and Delta.
"We're certainly looking at conditions warmer and drier in the upper Midwest for the time being. We're stuck in that pattern with the jet stream staying south and keeping it wet farther south," he says.
While the trade's attention will ultimately -- and more quickly -- switch to Mother Nature, Tuesday's grain stocks numbers for both corn and soybeans, and their implications for overall acreage and stocks heading into the remainder of 2015, will be what takes charge of prices beyond planting season, adds U.S. Commodities grain market analyst and broker Don Roose. In the meantime, though, look for any disruption in planting weather for market direction.
"Bean numbers on the surface are positive numbers, but in world perspective, they're still negative, with 339 million bushels more than a year ago on beans. That's just a big number. With acres on soybeans, that one can still change," he says. "We have a bigger cushion on corn. Weather is going to take over. This certainly makes weather not as important as it was, but right now it's the big elephant in the room. We're going to have to have severe weather problems for this market to push much higher."
So, will the acreage numbers reach fruition, or will prices resulting from a combination of Tuesday's USDA reports and forthcoming spring planting weather encourage action otherwise? At least at this juncture, the data released by the Fed Tuesday doesn't bode well for farm gate prices through this year if the acreage projections become reality.
With corn already at a low price and going lower, "89.2 million acres of corn seems a bit too high for corn plantings," says Agriculture.com Marketing Talk adviser roaringtiger1. "This might just be the high mark of the year for the USDA-predicted corn acres."
Adds Marketing Talk adviser Hobbyfarmer: "The wooden stake driven through the heart of farm country. When this settles out there will be fewer farmers . . . again, the trend continues. The $4+ corn-cost growers are an endangered species."