The U.S. Department of Agriculture (USDA) released its widely anticipated Planting Intentions report on Friday. As expected, it showed farmers could plant more soybeans and less corn this year.
USDA thinks corn plantings could hover around 90 million acres. If that number holds true, farmers will plant 4 percent fewer acres than they did in 2016. With fewer corn acres, analysts like Bryan Doherty of Stewart Peterson think it could start a bullish story for corn.
“For corn producers, in particular, recognize that corn prices are low and they're cheap, because we have big supplies, but when you start subtracting some acreage, reduce yield or both, those numbers shift quite dramatically on the carryout expectations,” said Doherty on U.S. Farm Report this weekend.
Doherty says USDA’s Planting Intentions report is now old news, but there’s several variables to still watch.
“I'll keep it simple,” said Doherty. “Be prepared. We've got volatility ahead of us, weather, fund money moving in and out of the markets.”
Doherty says if corn acres drop further, the market could get a good rally.
“Make sure on the rallies, you cover your sales, be ready,” he said.
Dan O’Bryan of Top Third Ag Marketing also thinks there could be upside potential in corn.
“There has been tremendous demand,” said O’Bryan. “The rhetoric from the Trump Administration about NAFTA and Mexico has softened a little bit, and now they are talking about just tweaking NAFTA."
O’Bryan says if the strong demand from Mexico continues, that supports the upside potential story in the market. However, he cautions producers that we could see the opposite story in soybeans, so farmers should take action in protecting prices.
“We've had we had a good run-up, a lot of it was fund driven, they may change their tune and with this number,” said O’Bryan. “Anytime you can get good protection in, and we have been aggressive about protecting beans since last fall, you got to take advantage of that.”