Historically the June Acreage and quarterly Grain Stocks reports provide a few surprises. This year was no different, even though farmers and analysts have been questioning the reliability of the data for weeks.
“I thought today’s number would be a non-event,” says Matt Bennett, owner of Bennett Consulting and partner with AgMarket.net. “But, whenever you have an outlier, it becomes an event.”
What was the surprise? Massive corn acres.
Corn planted area for all purposes in 2019 is estimated at 91.7 million acres, up 3% from last year, according to USDA. Area harvested for grain, at 83.6 million acres, is up 2% from last year. Farmers responding to the survey indicated that 83% of the intended corn acreage had been planted at the time of the interview, significantly lower than the 10-year average.
Soybean planted area for 2019 is estimated at 80.0 million acres, down 10% from last year. This represents the lowest soybean planted acreage in the United States since 2013. Area for harvest, forecast at 79.3 million acres, is also down 10% from 2018.
In the March Prospective Plantings report, USDA forecast 92.8 million acres of corn and 84.6 million acres of soybeans.
“I think what is key to remember is the number published today was based on June 1 intentions,” says Jarod Creed, owner of JC Marketing Services. “The common belief is that we had a problem from the last week of May into the middle of June and this ‘intended’ number could still be high. On the other hand, there could have been a handful of areas that actually did increase their corn expected area.”
As a result, Creed says, you have a potential gain in some areas and a potential loss in others for corn acres. USDA has already said it will resurvey the entire Corn Belt for updated corn and soybean production data.
The bigger story moving forward, Bennett says, will be yield.
“A ton of corn was planted right before the prevent plant date, and for a big part of the Corn Belt, that was June 5,” he says. “So, a lot of farmers essentially committed some sins we had to commit because we were trying to get the corn in by June 5.”
From an agronomic perspective, Bennett says, this corn crop is not in prenominal shape, as many fields across the country experienced compaction issues and have corn without strong roots.
Creed agrees the market’s focus will shift to yield.
“We’re going to have some yield estimates in July and August,” he says. “The yield estimates are as wide as much of 20 bu. an acre right now, which is very abnormal for going into the first week of July.”
If those national average corn yield numbers are anywhere in the mid-160s to higher, Creed says, you all of a sudden find a balance sheet right back to the same level of about three months ago.
“An acreage number such as this definitely takes a lot of risk off of having too little of supply with our current supply-and-demand situation,” he says.
In the Grain Stocks report, USDA reported corn stocks in all positions on June 1, 2019 at 5.2 billion bushels, down 2% from June 1, 2018. Of the total stocks, 2.95 billion bushels are stored on farms, up 7% from a year earlier. Off-farm stocks, at 2.25 billion bushels, are down 12% from a year ago.
Soybeans stored in all positions on June 1, 2019 totaled 1.79 billion bushels, up 47% from June 1, 2018. On-farm stocks totaled 730 million bushels, up 94% from a year ago. Off-farm stocks, at 1.06 billion bushels, are up 26% from a year ago.
Creed says it is evident U.S. farmers did not move much grain in the last quarter.
“The year-over-year on-farm stock number was relatively static,” he says. “So, producers are still going to have to move old-crop grain between now and harvest.”
Farmers should take a look back at the corn and soybean prices of the last few months, Creed suggests.
“While old-crop grain is not at its high, it’s still 75¢ off those lows and rallied $1.16 in a month’s time frame,” he says. “Don’t lose sight that we had a big move and a chunk of that move is still on the table.”
If profit opportunities are available, Creed says, farmers should consider marketing grain.