USDA’s June Quarterly Stocks and Grain, Soybean Planted Acreage report held some big bullish surprises for the market on acreage and mostly lower stocks than a year ago. Acreage came in lower than expected in all categories with corn the biggest shock at only 92 million acres, a 5 million acre drop from the March 30 planting intentions and below the average trade guess of 95.2 million acres. That is still a 3% increase over 2019 or 2.31 million acres. Compared with last year, planted acreage is expected to be up or unchanged in 28 of the 48 estimating States.
Market analyst Shawn Hackett of Hackett Financial Advisors says the bearish fundamentals and economics of the market were at play when farmers planted this spring. “Many bankers just looked at the spread sheets and decided they were not going to lend farmers money to plant corn.” He thinks that shaves ending stocks by 500 to 600 million bushels.
Quarterly stocks for corn were bearish at 5.224 billion bushels, which was above estimates by 225 million bushels and 22 million bushels below last year. According to Hackett, the increase was a result of slow exports and the huge hit to ethanol production, which offset higher feed use. However, with the bullish acreage figure, he thinks new crop corn prices will be well supported from $3.60 to $3.80. Funds were also near record short coming into the report and Hackett says, “If the weather stays hot and drier and they cover their short positions corn prices could run even higher.”
Soybean acreage was also a mild surprise at 83.82 million acres, which was below the trade guess of 84.76 million and only 310,000 acres above the March 30 intensions. However, Hackett suspects acreage was not up as much as expected from the March 30 report due to higher prevented plant acres. States like North Dakota once again which suffered from an extremely wet spring and unharvested corn that left them unable to plant soybeans. Yet, the projected acreage is still 7.72 million or 10% above 2019.
USDA pegged quarterly stocks for soybeans at 1.386 billion bushels, which was in line with trade guesses but still 397,000 bushels below year ago levels. Hackett says that leaves little room for error if a weather issue trims soybean yields by one or two bushels per acre. As a result, he is projecting new crop soybean prices to range from $8.50 to $9.50, depending on how the weather plays out in August.
All wheat acreage was down 2% from 2019 at 44.25 million acres, which is the lowest area planted since 1919 when records began and was also below expectations. The 2020 winter wheat planted area, at 30.6 million acres, is down 2% from last year and down 1% from the previous estimate. Of this total, about 21.5 million acres are Hard Red Winter, 5.63 million acres are Soft Red Winter, and 3.42 million acres are White Winter. Area expected to be planted to other spring wheat for 2020 is estimated at 12.2 million acres, down 4% from 2019. Of this total, about 11.5 million acres are Hard Red Spring wheat. Durum planted area for 2020 is expected to total 1.50 million acres, up 12% from the previous year.
Quarterly stocks on wheat were at 1.044 billion bushels, which was above estimates. The figure is still down 368 million bushels from 1.412 billion bushels of wheat in storage at this same time last year.
