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Beans Surge to End Week After USDA Surprises With Lower Acreage Outlook

Soybean Planted Area Pegged at 89 Million Acres, Corn at 88 Million.

Soybean futures ended the week on a strong note after the U.S. Department of Agriculture surprisingly lowered its expectations for soybean planting while also cutting its outlook for corn acres.

Growers will plant 89 million acres with soybeans this year, the USDA said in a report Thursday, down from 90.1 million last year and a February projection of 90 million acres. Corn area will total 88 million acres this year, down from 90.2 million in 2017 and last month’s forecast for 90 million acres. Analysts had expected soybean acres at 91 million and corn area at 89.4 million acres.  

Soybeans have become more attractive in recent weeks as prices improved on dry weather in Argentina. Futures earlier this month rose to the highest level in almost two years as crop conditions in the South American country worsened amid a lack of rainfall in major growing areas.

Still, survey respondents said they weren’t as bullish on soybeans as traders expected.

“At this point weather is going to be the biggest determining factor” with regard to actual planted acres, said Brian Grossman, an analyst at brokerage Zaner Group in Chicago. “If we warm up it’s going to be a big corn year, but guys are prepared to go heavy on soybeans if the weather doesn’t cooperate or due to market variables.”

Soybean futures for May delivery rose 26 1/2¢ to $10.44 1/2 a bushel on the Chicago Board of Trade. Soy meal futures added $12.70 to $384 a short ton while soy oil rose 0.34¢ to 31.96¢ a pound. 

Corn futures jumped 14 1/4¢ to $3.87 3/4 a bushel in Chicago. 

Grossman said he is skeptical of the USDA's numbers.

"I have a hard time with both corn and soybeans below 90 (million acres)," he said. "I think these numbers are way too low."

All-wheat planted acres will rise 3% to 47.3 million this year, the USDA said. Despite the increase, that’s still the second-lowest acreage since record-keeping started in 1919. Winter wheat acres are pegged at 32.7 million including 23.2 million of hard-red varieties, 5.85 million of soft-red winter and 3.64 million of white winter, according to the agency.

Spring wheat area is projected at 12.6 million acres, up 15% from 2017. Durum acres are forecast to fall 13% from the previous year, the USDA said.  

Wheat was up 6 1/4¢ to $4.51 3/4 a bushel while Kansas City futures gained 6 1/2 cents to $4.67 1/2 a bushel. 

Grain Stocks

The government also released its quarterly grain stocks report this morning.

Inventories of corn on March 1 totaled 8.89 billion bushels, up from 8.62 billion a year earlier. Analysts had pegged carryout at 8.7 billion bushels.

Soybean stockpiles at the start of the month were reported at 2.11 billion bushels, the USDA said, up 21% from a year earlier. Analysts had expected inventories of 2.03 billion bushels.

Wheat was the only decliner as inventories came in at 1.49 billion bushels, below last year’s 1.66 billion and analyst expectations for 1.5 billion bushels.

The increase in stockpiles is indicative of slack demand for U.S. supplies, Grossman said. Zaner correctly pegged corn inventories at 8.89 billion bushels and had said soybean carryout would be 2.06 billion bushels.

“That shows (that) we’re missing out on demand,” he said.  “If you look at sales, that’s just getting the commitment, but inspections are out the door, and we’re behind on inspections. Seeing these larger stock numbers reminds everybody that sales are different than what’s actually out the door.”

See further analysis of today's reports. 

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