USDA released its much-anticipated June Acreage report on Friday, June 28, 2013. Because of wet planting conditions across much of the Corn Belt, including Iowa and Illinois, many expected about 2 million fewer acres of corn would be planted than reported in the March Prospective Plantings report, with about half of those lost corn acres being switched to soybeans.
However the report indicated that did not occur, said Darrell R. Mark, Adjunct Professor of Economics at South Dakota State University.
In his recent analysis of the report on iGrow.org, Mark said that the USDA estimated 97.379 million acres were planted to corn this year, which is about 97,000 acres more than in the March Prospective Plantings survey and 224,000 acres more than in 2012. Of the 97.379 million acres planted to corn, USDA forecasts that 89.135 million acres will be harvested for grain, in line with historical abandonment rates and acres cut for silage. 2013 shows largest-ever soybean acres planted USDA estimated that 77.728 million acres will be planted to soybeans in 2013, which is almost 300,000 acres less than anticipated, but is still the largest-ever soybean acreage.
“Like corn, soybean planted acres surpassed the acres reported in the March Prospective Plantings survey. USDA forecasted harvested acres of soybeans to be 76.9 million acres in 2013,” Mark said. “The 2013 corn acreage came as quite a bearish shock to the market on June 28. So, the ‘surprise’ generated by the report begs the question: ‘How could actual planted acres be so different than expected?'”
“A couple factors likely led to the discrepancy,” he said. “First, many of the pre-release expectations bantered about in the industry tend to be based on anecdotal evidence and examples of planting problems, etc. While important to the localized areas and farmers affected, it doesn’t have as large of an impact on national numbers as would be expected by aggregating that kind of information to the entire country.”
He added that although the March Prospective Plantings numbers were the best survey-based estimate of planted acres until last week’s report, forecasted profit margins available in April and May would have suggested both corn and soybean acres could be substantially higher from what farmers reported to USDA on March 1.
“If that indeed occurred and some acres were subsequently lost due to prevent planting or switching to soybeans, the June acreage estimates would then be close the March estimates – which they were,” he said. “In fact, almost 300,000 more acres were or will be planted to principle crops in 2013 than was reported in the March Prospective Plantings report.”
Overall, Mark said it appears that few of the Corn Belt states lost as many corn acres to prevent plant or to soybeans as many expected. Iowa and North Dakota each planted 200,000 acres less than expected back in March, and Minnesota planted 300,000 acres less than expected. But, Nebraska planted 300,000 more acres than expected back in March. Other Corn Belt states generally saw no difference between March and June acreage forecasts. Thus, Mark said, the numbers didn’t add up to a 2 million acre loss like many were expecting.
Along with the Acreage report last Friday, USDA released its quarterly Grain Stocks report. That report indicated that June 1 corn stocks totaled 2.764 million bushels, 91,000 bushels less than the average expected. Soybean stocks, at 435,000 bushels, were also below expectations.
“These numbers were both quite friendly to old crop prices and underscore the tightness in old crop supplies,” Mark said.
USDA has been forecasting 2012/13 corn ending stocks to be 769 million bushels on August 31, 2013.
“If realized, that would mean that demand in the June-August quarter would have to be less than 2 billion bushels, which is a level we haven’t seen since 2003 (before ethanol demand),” he said. “Thus, it appears that prices for old crop corn will stay relatively high through the summer – especially compared to new crop prices.”
Mark said bull spreading (buying nearby futures and selling deferred) was a noted feature of the corn and soybean futures trade on Friday following the bullish Grain Stocks report and bearish Acreage report.
For his marketing recommendations for corn buyers and sellers, visit iGrow.org.