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Bullish Acreage, Fund Short Combine to Dig Corn Out of Hole

The 2020 June Stocks and Acreage reviews from the USDA National Agricultural Statistics Service (NASS) had been simply what farmers wanted. Expecting a modest fall of 1.Eight million corn acres from the March survey, USDA as an alternative shocked most within the commerce with a virtually 5 million-acre drop to 92 million acres (ma). Adding gas to the bullish hearth was the lower-than-expected soybean planting quantity. Although soy planting was pegged at 10% bigger than a yr in the past, the 83.825 ma projection was simply 325,000 acres above the March intentions and 900,000 acres beneath expectations. Traders purchased futures with reckless abandon, in essence ignoring what would end up to be a principally impartial to bearish June 1 shares report.

CORN

USDA estimated 2020 corn planted acreage at 92.006 ma, in contrast to the March intentions of 96.99 ma and final yr’s last 89.7 ma planting. That is down 3% from a yr in the past, however properly beneath Dow Jones’ pre-report estimate of 95.2 ma. Harvested acres had been estimated at 84.02 million in contrast to 81.Three ma a yr in the past. At the time of the survey, there have been thought to be 2.239 million acres left to plant.

Some particular person state adjustments of notice had been North Dakota, which was down 1.1 million acres from a yr in the past; Nebraska and Kansas every fell by 300,000 acres; Illinois, Iowa and Minnesota all jumped by 300,000 to 500,000 acres, with Ohio gaining 800,000 acres on 2019. Using a development line yield of 178.5 bushels per acre (bpa), Tuesday’s 5-million-acre fall from March intentions figures over 800 million bushels (mb) much less corn. Ultimately, the web impact might be a smaller drop than that, as feed and residual may end in a 500 mb to 600 mb decrease ending shares quantity for 2020-21. That may end in a way more manageable, however nonetheless bearish, 2020 ending shares quantity of 2.Eight bb to 2.9 bb.

June 1 corn shares had been estimated to be a higher-than-expected 5.220 billion bushels (bb), simply barely above March 2019 at 5.202 bb however down from 7.953 bb in March 2020. The March-May disappearance of 2.73 bb was 680 mb decrease than a yr in the past. Much of that loss in demand is said to the COVID-19 lockdown measures (which affected corn for ethanol utilization and livestock feeding) and the weak export tempo versus a yr in the past.

New-crop December corn, down 1/2 cent prior to the report, surged to a 15 3/4-cent larger shut on report day.

SOYBEANS

While many within the commerce had been undoubtedly shocked by the lower-than-estimated corn acreage quantity, there was additionally some shock that extra of that acreage didn’t translate into higher-than-expected soybean acreage. Soybean planted acreage was revealed by NASS to be 83.825 ma — simply 325,000 greater than the March intentions. Pre-report expectations had been for an 84.7-million-acre soy planting quantity. Even so, soy acreage was up a hefty 10% from a yr in the past. Harvested acreage was pegged at 83.02 ma versus simply 74.9 ma in 2019. At the time of the June survey, USDA assumed that there have been simply over 12 million acres left to be planted. South Dakota had the most important acquire in soy planting, amounting to 1.7 million acres versus 2019.

Soybean shares as of June 1 got here in very shut to the Dow Jones survey estimate of 1.381 bb at 1.386 bb, which was down 22% from a yr in the past and in contrast to 2.253 bb in March. The 869-million-bushel March-through-May disappearance was 8% beneath a yr in the past. That is definitely the end result of poor exports, together with COVID-19 demand impacts, as China is a good distance from satisfying phase-one commerce deal commitments. Also, till only in the near past, foreign money actions gave South America a value edge into China.

Even although commodity funds didn’t carry a big brief soybean place into the report, the value response in beans would counsel that the commerce was equally stunned that extra misplaced corn acres didn’t transfer into soybeans. Soybean meal and oil, which funds had been brief, additionally rallied sharply as funds lined.

New-crop November beans, up Three 1/2 cents earlier than the report, closed 20 3/Four cents larger for the day.

WHEAT

While there have been few huge surprises within the NASS wheat numbers, wheat bought some further shopping for, as funds got here briefly all three markets. All-wheat acreage was revealed at a barely less-than-expected 44.Three ma in contrast to the pre-report estimate of 44.7 ma and final yr’s 45.2 ma. The planting quantity is the bottom wheat seeding since 1919. Of the entire, 30.6 ma of winter wheat was simply just below the 30.Eight ma common estimate and in contrast to 31.16 ma final yr. Spring wheat planting figured to be 12.2 ma, down 4%, and in contrast to pre-report expectations of 12.57 ma and the March intentions of 12.90 ma.

Wheat shares, as of June 1, got here in at 1.040 bb, about 61 mb above commerce expectations and down 3% from March, which was 1.080 bb. The 372-million-bushel disappearance in March by May — from the March 2020’s 1.412 bb of shares — was down 28% versus a yr in the past.

Wheat futures, following the principally impartial to bearish report, rode on the coattails of corn, ending Three cents larger in Kansas City, 5 cents larger in Chicago and 10 cents larger in Minneapolis.

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