USDA presents market stunner07/02/2020 | Economics
By Bethany Baratta, ISA senior writer
The U.S. Department of Agriculture’s (USDA) acreage report released this week pushed soybean acreage estimates higher, dropped corn acreage lower than the lowest of analysts’ forecasts, and presented a marketing opportunity for farmers.
USDA forecast soybean acreage at 83.8 million acres, up 300,000 acres estimated in March, and within the range of analysts’ forecasts.
In Iowa, 9.4 million acres are expected to be planted to soybeans, up 200,000 acres from 2019.
The surprising note in the June 30 report was in the corn forecast, which was down 5 million acres –at 92 million acres—from the March planting intentions report.
In Iowa, 13.5 million acres of corn are expected to be harvested. This is up 450,000 acres from 2019.
It was forecasted that farmers would shift away from corn and plant more soybeans this year, but with just 300,000 acres added to soybeans, it’s unclear to which crops farmers shifted their planting.
Alabama and Texas had the largest increase in soybean planted acres from March intentions to the June report, up 19% and 17%, respectively, according to a Farm Bureau analysis. Maryland and North Dakota both experienced a decrease in soybean planted acres, down 11% and 9% respectively. Utah and Oklahoma had the largest increase in corn acres planted, 19% and 5%, respectively, while North Dakota and Mississippi had the largest decrease in expected corn acres between the March and June reports, -25% and -23%, respectively. There are also reports of corn acres not yet harvested from the 2019 season in North Dakota.
This shift in acreage from corn to something else could reflect profitability forecasts from earlier this year, said ISA Senior Director of Market Development Grant Kimberley.
“It’s likely a combination of factors,” Kimberley said. “Some fringe areas may not have gotten planted because the market gave no incentive whatsoever to go out and plant marginal acres this spring, even with good weather.”
Staring at tight-to-negative margins, bankers could have also halted farmers’ plans to plant even marginal acres, Kimberley said.
Regardless of the reasons, the markets responded.
August soybean futures on the Board jumped 17 cents on June 30, closing at $8.78 per bushel. Soybeans were trading at $8.91 mid-day Thursday, July 2.
ISA president-elect Jeff Jorgenson took the rally to make soybean sales.
“Prices aren’t back to where we need them to be, but we’re off the low,” said Jorgenson, who farms near Sidney. “It’s still going to be tough at the end of the day, but it’s better than it was.”
“These prices give us a glimmer of hope, but I still think we have a big crop coming,” said ISA Secretary Robb Ewoldt from Davenport. “As farmers, we try our best to yield our way out with prices, but if everybody does that, lower prices become lower yet.”
As of June 1, 1.38 billion bushels are anticipated in soybean stocks, down from the March estimate of 2.25 billion bushels and the June 1, 2019, stocks at 1.78 billion bushels.
Corn stocks were estimated at 5.22 billion bushels, outside the highest of analysts’ pre-report expectations.
It will take increased export opportunities, which have slowed since the COVID-19 pandemic began, to chew through presumed large supplies, Kimberly says.
Ewoldt says it’s also necessary that EPA not grant the 52 small refinery gap waiver applications to companies that are clearly trying to circumvent the Tenth Circuit Court's decision.
“It’s going to take every little bit of the industry to chew up big corn and soybean supplies, and we can’t do that if the EPA keeps granting waivers like they are,” Ewoldt says.
Weather conditions the duration of the cropping season will dictate just how much soybean and corn supplies are available to domestic and export markets.
“If there are any type of weather challenges in July and August, it sets up a volatile year here in the soybean market,” said Al Kluis, a commodity advisor and broker for Kluis Commodities, LLC.
He noted that weather models currently project longer stretches of hotter days and nights in the Corn Belt.
Ewoldt and Jorgenson say their crops are looking good heading into the July 4 holiday.
“There are a few issues with stands in fields that held more water, but all in all, soybeans look fantastic and corn looks excellent,” Ewoldt said. “We’re pretty optimistic about it.”
Contact Bethany Baratta at firstname.lastname@example.org.
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