The U.S. Department of Agriculture released June 28 its “Acreage” and “Grain Stocks” reports. The grain-stocks report provided support for both corn and soybeans. The acreage report indicated more-than-expected corn acres and fewer-than-expected soybean acres. The acreage numbers injected a substantial amount of uncertainty into both markets – uncertainty that appears set to stay in place throughout the summer.
A dramatic decrease in principal-crop acreage provided one of the many surprises in the acreage report released on Friday. Driven by much less soybean and wheat acreage, total principal-crop acreage came in at 309.3 million acres, a decrease of 6.1 million acres from the March “Prospective Planting” report.
Principal-crop-acreage estimates decreased by 10.3 million acres from 2018 totals. Significant increases as compared to the previous year’s acreage occurred in corn – by 2.57 million acres – and barley acreage by 314,000 acres. The vast majority of crops witnessed acreage decreases from the previous year. Soybean acreage led the way with a 9.2-million-acre decrease. Wheat acreage decreased by 2.19 million acres.
An extraordinary year for corn production took another unexpected turn. Corn producers reported they intended to plant 91.7 million acres of corn. Corn-planted acres decreased 1.1 million acres from March planting intentions, but at well more than expectations due to delayed planting.
When compared to March planting intentions in major producing states, the June survey revealed changes.
Changes in corn acres
- Kentucky increased by 220,000 corn acres.
- Kansas increased by 200,000 corn acres.
- Nebraska increased by 300,000 corn acres.
- South Dakota decreased by 1.2 million corn acres.
- North Dakota decreased by 350,000 corn acres.
The decreases offset gains seen in other areas of the western Corn Belt.
Surprisingly the major producing states in the eastern Corn Belt saw slight to no changes from the March intentions.
The USDA reported 16.7 percent of the corn acreage at 15.3 million acres remained unplanted as of the survey period.
The agency plans to re-interview 13 of the 18 major corn-producing states in July for the August production report. The prospect of considerable prevented-planting acreage in the eastern Corn Belt places the 91.7 million acres reported in the June report in question.
The shift out of soybeans and most feed grains may indicate an expansion of the base corn acreage intended for planting in 2019. A lack of clarity about prevented-planting acreage reported in the June survey window remains a concern. It points toward further decreases in the August “Crop Production” report.
The corn-stocks report provided some positive news for corn use, June 1 corn stocks came in at 5.2 billion bushels, almost 103 million bushels less than 2018 and 130 million bushels smaller than the average trade guess.
Estimation of total disappearance during the quarter is 3.41 billion bushels. Estimated third-quarter feed and residual use came in at 1.13 million bushels. Estimates of feed and residual use during the first three quarters of the marketing year sit at 4.615 billion bushels.
To reach the projected 5.3 billion bushels of corn projected for feed and residual this marketing year, feed and residual use in the fourth quarter must equal 685 million bushels. Based on current stocks estimate, it appears feed and residual use this year is on track to hit the current USDA projection.
Soybean producers intended to plant 80 million acres of soybeans. The soybean-acreage intentions came in at less than market expectations. Soybean-planted acres decreased by 4.6 million acres from the March planting intentions. At the time of the survey in early June, producers indicated that 41.2 percent of the intended soybean acreage remained unplanted. Soybean acreage came in at less than 2018 totals in every state that reported in the June survey.
- South Dakota decreased by 1.25 million acres.
- North Dakota decreased by 1 million acres.
- Iowa decreased by 900,000 acres.
- Minnesota decreased by 900,000 acres.
The substantial decrease in soybean acreage may indicate issues with planting, but the large totals left to plant place the soybean-acreage-estimate in question as well. The USDA in July plans to re-interview 14 of the 18 major soybean-producing states.
The June 1 soybean-stocks estimate indicated a record 1.79 billion bushels, an increase of 571 million bushels from the previous year. The stocks estimate came in 71 million bushels less than market expectations.
To meet the current USDA projection for soybean ending stocks, 720 million bushels of use is necessary for the fourth quarter. Despite the continued uncertainty in trade negotiations and record stocks, June 1 soybean stocks are neutral for soybean prices. Soybean consumption maintains a pace to meet USDA projections for the marketing year.
Corn-futures prices saw a dramatic decrease with the release of the acreage report. Soybean prices increased on the reduced supply expected from reduced acreage. Uncertainty regarding corn and soybean acreage looks to continue through the August production report. If the corn-acreage total is at