The March 31 acreage report was a stunner for the markets as the USDA estimates were much lower than anticipated.
After a limit-up close in some contracts, prices quickly eased back as traders found profits in the market. Jack Scoville, an analyst with Price Futures Group, reminded farmers that those USDA numbers are always subject to change, so people may find more planted acres when all is said and done.
“I think people are looking for additional acres to come in,” Scoville said. “Current prices that we have right now aren’t enough to trigger fence post to fence post planting, so we are going to have to find some other way to induce the farmer to plant and that’s generally through price.”
He said if prices hold steady or continue to rise, there is a good chance for year-end acreage numbers to be higher than the March USDA estimate.
“The new crop prices are going to say a lot toward if we produce to the max or not,” Scoville said.
Outside of acreage, the major driver is still the South American crop, Scoville said. Harvest has seen delays in some locations, while other areas, such as Brazil, have had a dry season causing some concerns among traders about the final crop production numbers.
“There’s a lot of attention to the weather down in South America and how things develop,” he said. “Given the demand that seems to be hanging around (in the U.S.), we seem to be needing all the supply we can get. We are going to make sure that both North and South America are producing to their max, and if they are not, we have some changes for higher prices.”
Scoville added that maintaining the current rally in U.S. grain exports is important for the demand equation, but that right now the focus for farmers is on planting and seeing what they can get out of this 2021 crop.
“We’ll keep an eye on the demand side,” Scoville said. “I think we are pretty much locked into those things right now.”