MINNEAPOLIS — The U.S. Department of Agriculture was more aggressive than the trade anticipated with its projected 10-bushel per acre average corn yield drop in the June 11 supply and demand estimates report.
“Corn is where a lot of the attention is being focused, and everybody wanted to see what USDA was going to do with the new crop numbers,” Randy Martinson of Martinson Ag Risk Management said in a Minneapolis Grain Exchange-hosted teleconference after the release of the USDA’s report.
Here’s what the trade specialist had to say about the most recent crop numbers.
What were the pre-report corn estimates the trade was anticipating?
The 10-bushel per acre cut down to 166 bushels per acre was 6.4 bushels per acre more than what the trade anticipated. That followed through to cut production by 1.35 billion putting production at 13.68 billion bushels, 571 million bushels more than the trade anticipated.
Of course you’re going to see the supply cut by 1.235 billion bushels. That’s going to push price and then you’re going to see a little bit of demand destruction.
As expected, USDA reduced planted acres by about 3 million bushels and that was pretty close to trade expectations, coming in at 89.8 million acres. Harvested acres were cut by the same amount down to 82.4 million acres.
Ending stocks wound up being cut by 810 million bushels putting it at 1.675 billion bushels. That was 119 million bushels less than expected by the trade. The national average price for new crop corn increased 50 cents to $3.80 per bushel.
Old crop corn exports were reduced by 100 million bushels down to 2.2 billion bushels.
A cut was expected. That followed through to increased stocks by the same amount, putting ending stocks for old crop at 2.195 billion bushels. That was 50 million bushels more than expected by the trade, and we did see the national average price for old crop drop 10 cents to $3.60.
There was much less excitement on the new crop soybean side of the balance sheet.
Yield was left at 49.5 bushels per acre, one-half bushel more than expected by the trade. Production was left unchanged at 4.15 billion bushels, about 27 million bushels more than expected by the trade.
The only change that came into play for soybeans was the increase in beginning stocks of 75 million bushels. That’s all the way through to increase ending stocks and put them at a little bit burdensome 1.045 billion bushels. That’s 52 million bushels more than the trade expected.
The national average price though for soybeans because of the strength that we’re seeing in corn, and they’re somewhat tied yet, we did see the soybean price increase 15 cents to $8.25 per bushel.
USDA reduced old soybean crop exports by another 75 million bushels. How much did that impact the projected ending stocks?
That was the only change and went into to increasing ending stocks by that same amount, putting that to an ever so burdensome total 1.07 billion bushels.
That’s the first time we’ve crossed over 1 billion bushels. That was 59 million bushels more than expected by the trade, and it triggered a national average price reduction of about five cents.
Winter wheat performed a bit better than anticipated despite the growing conditions and USDA increased the average yield by one-tenth of bushel to 48.7 bushels per acre. What was the trade’s expectation?
That increased production by 6 million bushels, putting it at 1.9 billion. That was 13 million bushels more than expected by the trade.
We did see supply cut by 19 million bushels to about 3.15 billion. We also saw a demand cut of 50-million bushel for seed.
Exports were unchanged for the new crop, but we did see a stocks cut of about 69 million bringing it down to 1.07 billion bushels, 35 million bushels less than expected by the trade.
Old crop wheat exports were increased by 25 million bushels.
That was a little bit of a surprise. We just came to the end of the marketing year. We’ve been running a little bit ahead of pace, but that 25 million bushels followed through to show a cut in the ending stocks estimate, putting the stocks at 1.1 billion bushels. That came in at about 18 million bushels less than expected by the trade.
What’s next for the grain market? Do we continue to focus on the U.S. crop and what will get planted or what are you watching now that this report is out?
We’re now going to be watching planting progress. Really, we’re looking at four states right now and three really big ones. Illinois is delayed in planting, and that’s one that we’re going to keep and eye on, but also Indiana, Ohio and South Dakota.
It’s likely that corn planting is done in South Dakota. It probably be just more soybeans on that side. Illinois probably the same as 50-50 that guys will try to do corn anymore.
But when you look into Indiana and Ohio, those guys will try to plant corn for another week, but then we also are going to have a little open weather as far as trying to get some more soybeans planted.
Weather is going to be the big driver to see where planting ends up in those four states, and then we’ll see what the planted acreage report says at the end of the month.