Chip Flory: The Bulls are Still Buying Acres

Chip Report Reax 0329

USDA rolled out a surprise in corn and soybean country with a prospective plantings report calling for 88 million and 89 million acres respectively. 

"There are apparently some missing acres, however, because the combined corn and soybean total is about 179 million acres," says AgriTalk Radio host and Farm Journal Economist Chip Flory. "There have been estimates of corn and soybean acres combined could be as high as 182 million acres this year."

That puts the two biggest crops down about 3 million acres. 

"It looks like a lot of them might have gone up into spring wheat country," says Flory. 

He says traders were looking for roughly 12.6 million acres of spring wheat and that's where USDA came in which is 15 percent above 2017. 

"It's head-scratching," says Flory.  "It's a reminder that these are intentions and obviously intentions can change between now and the time that we put the last seed in the ground this Spring."

Flory says it feels like growers have decided to keep their options open and react to any last minute price movement. 

"There is going to be a lot of movement yet this spring," says Flory.

On the stocks side of the ledger, the story is more bearish. 

"Corn stocks had 8.888 million bushels which are 100 million bushels above the average trade guess," says Flory. "I think that's going to be disappointing to a lot of analysts given the number of hogs, cattle, and poultry the market anticipated it would pull that corn stocks number down."

He says now the trade is focusing on the second component of that category which is residual usage. 

Overall, Flory says the story is still being written for markets this Spring. 

"The pregame coverage was all about acres," says Flory.  "The market has to do some work to send the right signals to the growers to get their acreage mix right for 2018 and I don't think the market has done that yet."