From the response by the corn market, there was little doubt that USDA’s June 30 reports were surprising. Both the Planted Acreage Report and the Quarterly Grain Stocks reports for corn contained statistics unexpected by the grain trade. On the other hand, were the soybean reports.
USDA’s June 30 Planted Acreage Report and the Quarterly Grain Stocks Report indicated that demand for corn may surpass that of the supply.
2010 corn acreage was project at 87.872 million acres, a 2% increase from last year, but well under the low end of trade estimates. While Iowa planted 400,000 fewer acres than last year, Illinois and Kansas both bumped up acreage by 600,000. Indiana increased corn by 400,000, Missouri by 300,000. Ohio increased corn acreage by 250,000. South Dakota and Nebraska dropped by 350,000. Planted acres were about 900,000 less than what the March Intentions report projected.
2010 soybean acres projected by USDA topped the trade expectations, and were forecast at 78.868 million acres. That reflects a 600,000 acre increase for Iowa and Nebraska, 400,000 acres more in Kansas, 300,000 acres more in Minnesota, and 250,000 more acres in Missouri. On the other hand soybean acres dropped by 270,000 acres in Arkansas, 100,000 in Illinois, and 150,000 acres in Indiana. Total acreage was a 2% increase from 2009.
The total wheat crop was estimated at 54.3 million acres, down 8% from last year and the least acreage in 39 years. Winter wheat acreage was estimated at 37.7 million, down 13% and spring wheat at 13.9 million acres, up 5% from 2009. Interestingly, USDA reports that North Dakota has more wheat acreage than Kansas, and only three other times has that occurred.
How much of your acreage was planted to a biotech crop? There was not much change nationally from last year. 16% of the corn has insect resistance only, and 23% has herbicide resistance only, but 31% is a stacked gene variety, and totally 82% of the corn is a biotech hybrid. For soybeans, 93% has herbicide resistance.
Wednesday’s other report held as much of a surprise for corn as did the acreage report. USDA’s Quarterly Stocks Report indicated 4.31 billion bushels of corn in storage, some 300 million bushels less than expected by the market. While that is up 1% from June of 2009, that casts a doubt on whether the 2009 crop was correctly estimated, or whether livestock and the ethanol industry chewed through more corn than expected because of low test weights. The quarterly disappearance was 3.38 billion bushels, 690 million more bushels than the same quarter last year.
Soybeans in storage were tallied at 571 million bushels, a 4% drop from year ago levels. The quarterly soybean consumption was 699 million, slightly less than 2009 levels.
Wheat stocks should have depressed the market Wednesday, but corn’s coattails pulled up the wheat market despite the acreage and stocks numbers. Wheat in storage is 973 million bushels, up 48% from this time last year. Both farm and commercial storage is bulging with wheat. Quarterly disappearance was 383 million bushels, slightly less than in 2009.
So what now? USDA will use the numbers to compute a new supply demand report that will be issued on Friday, July 9. The first objective yield survey will be in August, and should take into account some of the soybean acres that never got planted because of early June wetness, along with yield declines from flooded fields in June.
Summary:
Corn provided a significant surprise to the market on Wednesday when USDA projected fewer planted acres and fewer stocks on hand than what the trade expected. However, the bean market went the other way, when more acres and more stocks were projected than what was expected. A new supply demand projection will be forthcoming from USDA next week, and a yield projection is scheduled for early August.
Stu Ellis