Confusion is the best way to describe the market sentiment when USDA released their June acreage report on Friday. USDA pegged corn acreage at 91.7 million acres and soybeans at 80 million acres, well above the average trade guess on both accounts.
“There's going to be a lot of confusion about this,” Bill Biederman of AgMarket.net told AgDay host Clinton Griffiths. “I mean, the numbers are so far off the mark of what people were looking for. We're trying to figure out what USDA is really trying to communicate with us as far as what was planted.”
According to Biederman, the acreage report was “shocking” with just 91.7 million acres of corn, down just 1 million acres from intentions.
“This is a huge surprise,” he said. “But then again, there were comments made in the week that they're going to count prevent plant acres as planted so that everybody can qualify for payments. I'm confused.”
AgriTalk host Chip Flory once again called the report “junk.”
“We've been calling it a junk number on AgriTalk all week,” he told Griffiths.
For the past week Flory has warned listeners that the National Ag Statistics Service (NASS) that released the report will have a hard time getting down to 89.8 million acres that the World Ag Outlook Board released in the June WASDE. Still, the trade expectation was 86.6 million acres of corn.
“Does 86.6 million makes sense to me long term? Absolutely,” he said. “I hope the market can find a way to ignore the [91.7 million acres]. Unfortunately, the algorithms are going to include anything above 86.6 million being bearish.”
That’s exactly what happened as corn markets went limit down following the report’s release.
In the case of soybeans, USDA came in below the March Prospective Plantings number of 84.6. Still, the 80 million acres as released by NASS today is probably inaccurate, Flory warned.
“If you're going to call the corn number junk, you probably better call the bean number junk too,” he said. “There are some of those corn acres that were switched to soybeans late in the season. But I think this 80 million number really shows us the root of the problem: a lack of financial incentive to plant soybeans in 2019.”
As the late planting window arrived, the market didn’t provide farmers an incentive to keep planting and a lot of them filed prevent plant claims, Flory said.