3 Big Things Today, July 1, 2020

Soybeans, Grains Higher Overnight; Surprisingly Low Acres Likely Means No Record Crop.

1. Soybeans and Grains Rise Overnight on Acreage Report

Soybeans and grains were higher overnight after a bullish planting report on Tuesday.

The U.S. Department of Agriculture slashed its estimate for corn acres from a March outlook for 97 million acres to 92 million, while leaving soybean area little changed at 83.8 million acres. Wheat area will hit the lowest level in at least more than a century.

Sal Gilbertie, the head of Teucrium Trading, said the bullish report could buoy the entire grain complex “for a while.”

While the acreage numbers were front and center, the USDA also released its June 1 stocks report on Tuesday.

Corn inventories at the start of last month were reported at 5.22 billion bushels, up less than 1% year-over-year.

Soybean stockpiles, however, plunged 22% from the same date the previous year to 1.39 billion bushels. Wheat inventories on June 1 totaled 1.04 billion bushels, a 3% decline.

Analysts had pegged corn stocks at 4.95 billion bushels, soybean inventories at 1.39 billion, and wheat stockpiles at 980 million bushels.

Soybean futures rose 4¼¢ to $8.86½ a bushel overnight on the Chicago Board of Trade. Soymeal futures jumped $2.50 to $298.40 a short ton, and soy oil gained 0.03¢ to 28.84¢ a pound.

Corn futures for July delivery added 4¢ to $3.54½ a bushel.

Wheat futures for July delivery gained 3¾¢ to $4.95½ a bushel, while Kansas City futures rose 1¢ to $4.40¾ a bushel. 

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2. Unexpectedly Low Corn Acres Likely Means No Record Crop This Year

The surprisingly low corn acreage number from yesterday’s USDA report caught most market-watchers off guard, leading some to bet against a record crop this year.

Growers planted a hair over 92 million acres with corn this year, the agency said Tuesday. While that’s still above the previous year’s 89.7 million acres, it’s way down from the original estimate of 97 million and trade forecasts for about 95 million.

“This makes it questionable whether the record crop – that had almost been regarded as a dead cert – will in fact be harvested after all,” Commerzbank analyst Michaela Helbing-Kuhl said in a note to clients on Wednesday.

To top the record 2016-2017 15.2 billion-bushel crop, yields would have to be above trendline, the bank’s analyst said. That’s certainly a possibility, but it will depend on the weather.

Soybean acres, meanwhile, jumped to about 83.8 million, up from 76.1 million a year earlier but not far from the originally forecast 83.5 million and trade expectations for 83.5 million.

All-wheat area for 2020 is pegged at about 44.3 million acres, down slightly from the March estimate of 44.7 million and consensus for 44.7 million. The planted area is the lowest since record-keeping started in 1919, the USDA said.

The total number of acres planted with main crops will be the smallest since 1993, Commerzbank said.

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3. Heat Advisory Issued in Southern Midwest, Floods a Concern Along Missouri-Illinois Border

It’s going to be hot again in parts of eastern Kansas and much of Missouri again today with heat index values climbing to almost 110°F., according to the National Weather Service.

In southeastern Kansas, the heat index is expected to hit 107°F. this afternoon, the NWS said in a report early this morning. A heat advisory is in effect for the region until 8 p.m. local time.

In the eastern half of Oklahoma and central Arkansas, which are under a heat advisory until Thursday evening, the heat index may hit 110°F. this afternoon, the agency said.

“Take extra precautions if you work or spend time outside,” the NWS said.

Along the Missouri-Illinois border, however, flash flood watches are in effect as up to 2 inches of rain – possibly more locally – are expected to fall.

“Heavy rainfall will result in flooding of low-lying or poor-drainage areas, and ultimately dangerous flash flooding on smaller creeks and streams,” the agency said. “Significant rises on larger streams and rivers will also be possible.”

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