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USDA to Bring the Market Heat Friday

U.S. farmers seen planting more soybeans vs. year ago.

DES MOINES, Iowa -- It’s a bird, it’s a plane, it’s the USDA March Prospective Planting Report. Yes, it is considered by many to be that big and that important.

On Friday, the USDA will release its annual report that shows what U.S. farmers are expected to plant this year.

It’s the market’s second time in as many months to react to U.S. acreage estimates, with a third upcoming during an acreage update on June 30.

So, what does the trade think about this year’s corn and soybean acreage split? Let’s first look at how accurate the trade has been at pegging the USDA March report.

In the past 12 years, the trade has overestimated soybean planting intentions and underestimated corn acres half of the time, according to the American Farm Bureau statistics. In four of the last 12 years, the trade has overshot corn acres while underestimating soybean acres. The trade has never underestimated corn and soybeans at the same time.

For corn acres, the average trade estimate is 91.03 million vs. 94 million last year. For soybeans, the average trade estimate is 88.12 million acres vs. 83.43 million a year ago.

Jim Bower, Bower Trading, said in a note to customers that the grain trade sees Friday’s crop report showing a gain in U.S. soybean acres of 4.8 million compared with 2016, which is 200,000 acres above the USDA’s Outlook Forum forecast last month. Also, a 3-million-acre decline in corn vs. 2016, 1 million acres less than USDA Outlook Forum forecasts.

“The above numbers are most likely already dialed into the market,” Bower stated.

Cory Bratland, Kluis Commodities grain strategist, says that as far as the acreage report coming up the trend is more soybeans and less wheat and corn acres.

“If we see any surprises, we could get them with a few more soybean acres. Also watch the total acres planted to principal crops; they could be up too from last year. Again, these are planting intentions and can and will likely change by the June 30 Acreage Report,” Bratland says.

Jason Roose, U.S. Commodities grain analyst, agrees that all eyes will be on the deviation from last year regarding soybean acres.

“Large acres on soybeans have been the popular topic, due to lower input costs. The weather in early April will play a key role in the producers’ decisions,” Roose says.

Joe Vaclavick, Standard Grain founder, says the March 31 report has a history to be a very important to the market.

“This year’s spring insurance guarantee for planting soybeans is $1.40 per bushel higher than a year ago. That is a big incentive,” Vaclavick stated on this week’s CME Group’s Market Mover program. “The acreage numbers are the focus, but there is a lot of weather ahead.”

GRAIN STOCKS

Al Kluis, Kluis Commodities, says the USDA’s Grain Stocks Report is expected to show corn, soybean, and wheat stocks that are larger than last year.

The trade guess is for 8.548 billion bushels of corn (compared with 7.822 billion bushels last year). For soybeans, the guess is 1.676 billion bushels (compared with 1.531 billion bushels last year). For wheat, the estimate is 1.625 billion bushels (compared with 1.372 billion bushels last year).

“That is a substantial increase in supplies of each grain. Growing stockpiles of grain just about always result in lower prices,” Kluis stated to subscribers of Successful Marketing newsletter.

“With low grain prices since harvest and now a lower U.S. dollar, I expect the USDA to report record corn and soybean usage last quarter. Long term, I look for a demand-driven rally to develop in corn, soybeans, and wheat. Also, any threat to this year’s crop will create a sudden and violent rally because the world needs another large crop,” Kluis stated.

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