U.S. Corn Acreage Way Above Trade Expectations, Market Falls, USDA/WASDE Says

DES MOINES, Iowa -- The USDA sees the U.S. 2019 corn acreage nearly unchanged from its March estimate, according to its June Acreage Report released Friday.

As a result, the corn dropped 'limit down’ 25¢, basis the Sept. futures contract, while the soybean market moved up 11¢ per bushel, following the report.

•Note: USDA announced Friday that it will resurvey 14 states, regarding planting acreage, due to flooding and inclement weather. The results of the survey will be released August 12, 2019.

At the close, the Sep. corn futures finished 21¢ lower at $4.24¾, bouncing off a daily limit low of $4.20. Dec. corn futures closed 19½¢ lower at $4.31¼.
 
Aug. soybean futures closed 10¾¢ higher at $9.04½. November soybean futures finished 10¾¢ higher at $9.23.

Sep. wheat futures closed 19½¢ lower at $5.27¼.

August soymeal futures closed $2.10 per short ton higher at $315.30. August soy oil futures ended 0.44¢ higher at 28.37¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.55 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 50 points higher.

U.S. 2019 Planting Report

In its report, the USDA pegged the U.S. 2019 corn acreage at  91.7 million bushels vs. the avg. trade estimate of 86.7 million and the USDA’s 2018 June estimate of 92.8 million.

For soybeans, the USDA sees 2019 acreage at 80.0 million vs. the trade’s expectation of 84.4 million and the USDA’s 2018 June estimate of 89.2 million.

All Wheat acreage estimate is pegged at 45.6 million vs. the trade’s expectation of 45.67 million and the USDA’s June 2018 estimate of 45.8 million.

Quarterly Grain Stocks Report

In its report, the USDA pegged the U.S. June 1 corn stocks at 5.202 billion bushels vs. the avg. trade estimate of 5.34 billion and the USDA’s year-ago stocks estimate of 5.305 billion.

For soybeans, the USDA sees June 1 stocks at 1.790 billion bushels vs. the average trade estimate of 1.86 billion and the USDA’s 2018 estimate of 1.21 billion.

USDA pegged the U.S. wheat stocks, as of June 1, at 1.072  billion bushels vs. the avg. trade estimate of 1.10 billion and the USDA’s 2018 estimate of 1.099 billion.

Trade Reaction

Jack Scoville, PRICE Futures Group, says that USDA gave the markets another shocker today.

“Everyone was looking for more beans and less corn and got exactly the opposite. That is why the big reaction, and it is perfectly understandable. A 25¢ range in corn in less than 3 minutes is something. No one understands the corn planted and harvested area, as USDA had not shown that type of progress in the weekly data. The stocks reports are kind of friendly, but the planted area report is the headline and most likely not in a good way for a lot of traders and brokers. These are wild numbers. I do have one farmer who has been telling me that a lot of corn got planted early in the month, but even so, these numbers are hard to believe,” Scoville says.

Sal Gilbertie, Teucrium Trading, says that the USDA corn acreage estimate is telling.

“Farmers were clearly incentivized to plant corn in order to capture government benefits contingent on getting something into the ground this season. Look for the July WASDE to reflect a slightly improved corn balance sheet and to tighten the soybean balance sheet perhaps more than was anticipated prior to today’s acreage report,” Gilbertie says.

Gilbert adds, “Wheat disappearance reflects the healthy rate of wheat exports we’ve seen so far this year.”

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that not a lot of people will believe today’s USDA corn acreage estimate.

“I don’t think anyone saw this coming. I doubt there is much belief in the published numbers.  Trade is telling us that as well. Touched limit down and now trading down 17 to 18,” O’Connell says. “What a wild ride. At one point, we were up 14¢ to 15¢.”  

The confusion is occurring because USDA starts March with planting intentions of 92.4 million acres. After a wet spring with delayed planting, the USDA takes 3.0 million corn acres out of production in its May WASDE, O’Connell says.  

“That’s not a typical move, but nonetheless something that was very easy to rationalize and warrant. Today, USDA places planted acres at 91.7 million acres. Effectively saying that we planted all of the acres that we originally had planned,” O’Connell says.

A further dive into the numbers on a state-by-state look, points to states that have struggled tremendously – Illinois, Michigan, Ohio, to be planting either the same amount of acres of more than last year, O’Connell says.  

“It simply doesn’t add up. This should be viewed as a buying opportunity on corn. Bean number could hold some water, with burdensome stocks continuing to loom over that market.  Even with this bullish news in beans, they can only muster up a 10¢ rally.

Jason Roose, U.S. Commodities, says that today’s USDA Report continues to give shock waves in the grains.

“Last month the large drop in yield for corn, due to poor planting conditions, was considered friendly. The shock today, with an anticipated 4- to 5-million-acre drop in corn, was that USDA reduced corn acreage by only 1.1 million. But the soybean acre number was lowered by 4.6 million acres, with these numbers being shifted by the USDA. The large stocks on beans could be jeopardized. Weather will be watched closer now than most markets we have seen in modern times.”