Wheat, corn acreage provide different surprises

KANSAS CITY, Mo. — An expected large shift away from corn acres didn’t happen, based on a planted acres survey of farmers by the U.S. Department of Agriculture.

The USDA released its planted acres and quarterly grain stocks reports June 30 that included a few surprises, but nothing market rattling.

Arlan Suderman, StoneX chief commodities economist, reviewed the new data and expectations in a webinar after the reports were released.

What’s your initial response to the reports?

Suderman: It looks like the market gave a big sigh of relief that we didn’t see any major changes in acreage. Corn acres pretty much stayed the same as what USDA said in March. I think that really caught a lot of people a little bit by surprise. There was a 5,000-acre difference.

There wasn’t the big shift. Why? December corn probing above $5 during planting. That’s probably a big reason for it, and a lot of the fertilizer was already in position.

There had been a lot of rumors that there would be a big shift from corn to soybeans, and we did see that increase in soybean acres by about 655,000 or so acres, but that was pretty much as expected. So, no surprise there.

The fact that corn acres did not really drop was a surprise, but yet not materially bearish at all because it was offset by the fact that corn stocks were smaller than expected.

The big surprise in acreage was the fact that winter wheat acreage came in 900,000 acres below what we saw in the March prospective plantings report.

I think everyone expected that winter wheat acres should be pretty well locked in. This is the third survey of winter wheat acreage, and you would have thought they would have it pretty much nailed down by now.

When you look at total wheat acres, the lowest on record for those records going back over 100 years, and spring wheat acres were the lowest in the last 56 years. So, overall, wheat losing ground to some of the other crops and that helps tighten up the balance sheet just a bit for wheat.

Should the headlines read that grain stocks are higher than they were a year ago?

Suderman: I think the key here is the market had priced in expectations of bigger stocks coming into these reports. It was kind of leaning totally bearish, acres are going to be bearish, stocks are going to be bearish. But the wheat stocks were not as big of an increase as expected, coming in 14 million below expectations.

Corn stocks came in 113 million bushels below expectations. Although corn stocks were still up from last year, but not as much as expected.

Yes, soybean stocks were up from last year and they were a little higher than expected, coming in about 15 million above expectations. So, soybeans really didn’t have any bullish news when the report came out, but we saw them swept up in this money flow.

I think the market would have reacted much different if this report had come out 20 years ago. We saw the impact that algorithms have, the computers reading the numbers and putting on trades, and some of it, I think, may have been end of the month and end of the fiscal quarter, as well.

As a result, I want to see how we confirm these market moves over the next couple of days now we turn the calendar to July before I have confidence in this market reaction.

But it certainly looks like it’s one thing to say we had priced in the numbers. It’s another thing to say what the whisper numbers were.

I’d say the algorithms were basically trading versus the whisper numbers and suggest that the whisper numbers or what the market feared may have been more bearish than what we saw.

The grain and oilseed markets were well off of their highs there. I think the initial algorithm trading that we didn’t get a more bearish surprise than was maybe whispered out there.

From a trade standpoint, what did you see in the quarterly corn and soybean stocks?

Suderman: We’ve now had back-to-back quarterly stocks reports showing less corn stocks than expected, and I think it confirms for us that USDA overstated the size of last year’s crop. Will they admit that or will they be too proud to admit that?

If they do admit that and lower the size of last year’s crop, they could do it Sept. 30 or in January like they did this past year when they lowered the size of the 2024 crop in January when no one’s watching, when everyone is focused on this year’s crop and this size of this year’s crop. If they do lower the size of this year’s crop, I’d expect them to reduce feed usage, as well.

Could they just say, no, we got it right and we’re going to increase feed usage that much this year? They could, but we’re already looking at a big historical aberration in how high this year’s feed and residual use is. So, it would make more sense to reduce the size of last year’s crop.

Does this mean we’re running out of corn? Absolutely not. We have plenty of corn out there in the bin.

Corn usage and soybean usage disappearance for this past quarter was record high, but because of the size of last year’s crops, we still have plenty. We’re not going to run out of corn before this year’s harvest. We’re not going to run out of soybeans before this year’s harvest.

Soybean usage was really high because of the biofuel program crush numbers. For corn, we have really strong export numbers continuing to go forward and solid feed usage numbers, and even ethanol numbers are good, but not as high as USDA has them.

What’s your big-picture feelings about these USDA reports?

Suderman: For the most part, it was a sleeper. The exception being winter wheat acres down and the fact that corn stocks again suggest that last year’s corn crop was overstated.

But, other than that, no real big surprises, and the algorithms probably overreacted when the report came out, but we’ll need to see that confirmed here in the couple days after the report.