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Trade Eyes Friday’s USDA Acreage Report
DES MOINES, Iowa -- The trade will be surprised if Friday’s USDA Report doesn’t show an increase in the March U.S. corn and soybean acreage estimates.
Along with the June Acreage Report, the USDA will release its June Quarterly Grain Stocks Report at 11:00 a.m. CT.
For the most part, investors see U.S. soybean acres rising by 400 million and corn acres getting goosed by 275 million.
In the past five years, the corn acreage estimate has risen three out of the five years, from the March Intentions Report. Meanwhile, U.S. soybean acreage estimates have risen for eight straight years, according to USDA statistics.
Most trade participants see Friday’s data showing U.S. corn acres at 90.0 million, 4.0 million below a year ago. U.S. soybean acres are expected to come in around 90.0 million or slightly below, vs. 83.43 million a year ago.
Eric Fransen, director, Market360 Grain of Stewart-Peterson, says that this Friday’s report is known to garner a lot of attention.
“I would absolutely expect the report to move the market. It is the most volatile report of the year for corn and the third-most volatile report of the year for beans. The average change on the day of the report for corn is 15¢ and for beans, 22¢. We do not expect acres to vary much from the March intentions report,” Fransen says.
While the trade expects only small revisions to acreage from the March 31 Intentions Report, there are private estimates of higher shifts in acreage from corn to soybeans, according to Ray Grabanski, who is president of Progressive Ag Marketing, Inc.
“We believe that we will see a higher soybean planted acreage estimate than corn, the only question is how much more,” Grabanski stated in a weekly article.
He added, “And alternatively, how much soybean acreage increase has already been built into the market prices? All of that news and more will be out by Friday.”
Deanna Hawthorne-Lahre, StatFutures cofounder and trader, agrees with the general consensus that 90.0 million corn and 90.0 million soybean acres were planted in the U.S. this year.
“I’m hearing all sorts of numbers from the peanut gallery, but we expect 90/90 as we have for months,” Hawthorne-Lahre says. The numbers do seem to be baked in to the market. And, with the strong U.S. exports, combined with large Brazil crops being known, December corn futures are hanging at $380, and November soybean futures at $9.20.
She added, “But we need a surprise to get these markets moving, whether north or south. Seems ridiculous that with all the drones and satellites, we don’t know the acreage out there.”
Regardless of the USDA acreage, the market is now squarely focused on growing weather vs. plantings data and planting weather, according to Cory Bratland, Kluis Commodities.
“Overall, I do feel the market has that data priced into the market and possibly even more of an increase in soybean acres than average trade guesses,” Bratland says.
Bratland added, “We also have ideal weather priced into the market place, too. So yes, post the report and the July 4th holiday, the focus will be on weather.”
One key area to watch is going to be corn pollination, Bratland says.
“With a lot of corn replanted and other parts of the U.S. behind normal, our pollination will be stretched out over the entire month of July and slip into August,” Bratland says. So, this does set up for a better-than-normal likelihood that some portion of the U.S. corn crop does get affected with hot and dry weather during pollination. With the unevenness of the stands, this could cause some wild markets depending on if and where a heat dome would set up.”
Overall, investors see very little change with the U.S. grain stocks in Friday’s report.
“It sure seems like we are understating the exports for corn and soybeans out of the U.S. again this year,” Bratland says. “We just did not see the slowdown like many have thought we would see. Yes, exports have slipped a bit, but the overall world demand and the cheapness of the prices I feel is keeping demand very robust. So, we could see some minor tweaks to the stocks in all positions but do not expect to see any major swings.”