Market Forecaster: Reaction to the Acreage Report

Despite cries from U.S. producer of switching acres from corn to soybeans, USDA surprised the trade by increasing its corn acreage estimate to 97.38 million acres from its March forecast of 97.28 ma, higher than the highest pre-report trade estimate. Most traders and analysts believed USDA would reduce acres because of the late planted spring as farmers switched corn acres to soybeans.
The 97.38 ma acreage estimate is the highest since 1936. The USDA did recognize the late planting in the main corn belt states as they said farmers in Illinois will plant 600,000 acres less than last year; Iowa will plant 200,000 acres less than last year; and Minnesota farmers will plant 50,000 fewer acres than last year. To make up for this, USDA estimated record corn acreage in Arizona, Nevada, North Dakota and Oregon.

USDA expects farmers to harvest 89.1 ma of what they planted to corn. USDA estimated the average corn yield at 156.5 bushels per acres in the supply and demand report released June 12. This puts production figures easily over 14.005 bb. Old crop corn stocks came in at 2.76 billion bushels from March's estimate, indicating a disappearance of 2.64 bb compared to a 2.88 bb disappearance in the same quarter last year.

For soybeans, USDA said farmers will plant 77.73 ma, a record high. 76.9 ma are expected to be harvested. Area planted increased 1 percent from 2012 with planted acreage increasing in 18 of 31 soybean growing states. Record acreage is expected in New York, Pennsylvania and South Dakota.

Soybean stocks, projected at 435 million bushels, is the lowest since June 2004 and the third smallest stockpile going back to the 1975-76 marketing year. With stocks at 435 mb, USDA indicated disappearance of 564 million bushels, a 20 percent decline from the same quarter last year. It's the tightest quarterly stocks figure since soybean demand climbed above 3 billion bushels in 2006-07.
All wheat acres increased 1 percent from last year to 56.53 ma. Of the 56.53 ma, winter wheat was planted on 42.7 ma, spring wheat on 12.3 ma and durum wheat on 1.54 ma. Of the spring wheat total, 11.7 ma will be planted to Hard Red Spring wheat. Durum acres are down 28 percent from last year. North Dakota will plant 850,000 acres, a 37 percent decline from last year making it North Dakota's third smallest crop on record. Wheat ending stocks declined more than the traders anticipated, coming in at 718 mb compared to the lowest trade guess of 732 mb. March-to-May disappearance totaled 516 mb, up 13 percent from the same period last year.