The U.S. Department of Agriculture is in the process of resurveying corn producers to get a more accurate picture of final planted corn acres. The report is highly anticipated.
Producers and the market were taken aback when USDA came out with its final planted acreage report for corn in June. Most analysts were expecting fewer corn acres in the report given the late and difficult planting season this year. USDA decided to resurvey producers and is expected to release it this month.
“I can’t tell you how much this resurvey of planted acres by USDA means to the market. I think it’s going to be an incredibly important report,” said Ed Usset, professor emeritus and grain marketing economist with the University of Minnesota.
“There are a lot of opinions about how much corn didn’t get planted, how big this crop will be and it’s just a very important question. Certainly the report is going to (indicate) fewer acres,” he added.
But how many fewer acres? Usset believes USDA is being rigorous in their approach in trying to find the answer, so it’s going to be a very important report in that way.
“Basically, USDA came out with acres as they knew them from their surveys (in June), even though they know it’s not that big, and people said, ‘that’s just crazy. Why don’t they change the number?’” he said. “That’s just not the way USDA works. They go on the numbers they know and they’ll let others speculate. Yes, acres are going to be less, both planted and harvested, but they’re not going to guess at it. They’re going to resurvey and come up with a better number and I cannot tell you what I expect. I just don’t know.
“But we’re going to quit guessing and we’re going to put something closer to a hard number on what’s out there,” he added.
On the demand side, Usset said things were softening.
“Demand is not as good as we’d like. It’s softening a bit, and that’s not good,” he said.
Although the acre issue looms over the corn market, the corn crop is made in July, and despite a couple days of uber-hot weather in the middle of the month, the weather has been very conducive for growing corn.
“(The weather) has been pretty mild stuff,” Usset said. “It’s not a stressful situation right now (regarding weather), so the market is a little bit on the defensive just based on good weather. Based on demand, that is a little softer. Then we have this big report coming up in August, so that will be very interesting.”
Usset is also watching spreads in the corn market, mainly December (2019) to the following July. Narrowing spreads, he noted, speak to a tightening market.
“Yes, (the spreads) did narrow up for a while during that run-up in prices, but the spreads are settling back and widening a little bit. They’re not wide, but they’re wider than they were,” he said. “This stuff does not point to an overly tight market at this point.”
Looking at corn prices, Usset noted some new crop prices were about $4.30 which were about 40 cents lower than in mid-June when they got as high as $4.70. So new crop prices have settled back, but not a lot.
“It hurts. But remember, the last rally started at $3.70 or below $3.70, so we’ve gone up a dollar and we’ve given back less than half of that waiting for direction,” he said.
In southwestern Minnesota, Usset pointed out producers are looking at $4 cash corn. Although it’s not as much as producers may want, those prices are “not bad.”
“It’s been five years since southwest Minnesota has had $4 cash corn. You have to go back to June of 2014 to find a bid of over $4 for cash corn and here it is,” he said. “So I am reminding people there’s a lot of news yet to come out, and that news of the planting report could be bullish, but it could also be bearish.
“You have to respect the opportunity for $4 corn if you have old crop in the bin,” he added. “Catch up on something, man, because here you are.”
At one local elevator in west central Minnesota regularly followed in this column, as of July 22, the cash price for corn was $4.08 and basis was 17 cents under. January 2020 price was listed at $4.02 and basis was 36 cents under.